If you live, work or have done business in the EU, then you are probably familiar with the concept of VAT, or more formally, Value Added Tax. This is a tax that requires registration and is necessary for both resident and foreign companies, who provide goods and services. In short, if you are a non-resident or foreign individual, or company, that is looking to provide products, and (in some cases), services to the population of EU countries, you require a VAT number, that is issued by the local tax office of the country or countries of choice.
Foreign companies VAT registration in Italy is different from other countries. In each country, the requirements and registration eligibility is slightly different. In Italy, the VAT is known domestically as ‘imposta sul valore aggiunto’, or ‘IVA’. You, as a foreign business or entity, are required to register for an Italian VAT number if you are:
Importing any goods into Italy
- Organizing an event, conference, trade show or commercial training event in the Italian jurisdiction
- Installing or providing certain services
- Supplying and/or providing goods to businesses in Italy
- Supplying goods to non-taxable individual consumers in Italy
- Private or distance selling in Italy
- Selling items online, or through online providers, or platforms, such as Amazon or eBay, to Italian residents or consumers
Internet Business and Selling
Foreign companies VAT registration in Italy is essential when online selling, as it is one of the most common ways in which sellers reach buyers in Italy (and beyond); using the powerful reach and selling tool that is the internet. This can be done using your own e-commerce platform on your website, or through sites and platforms such as Amazon or eBay. This is almost more common than importing goods and is usually referred to as distance selling. The tax, in this scenario, is charged to the final customer, and the business, who must be registered, charged and will collect the local VAT. In Italy specifically, you are required only to register if your sales, (annually per the calendar year), exceed the amount of €35000, as this threshold is deemed taxable by local tax authorities.
There is some exception to this threshold, including sales of digital or online services. At the other end of the spectrum, regardless of the amount or number of transactions, you must always be VAT registered to sell alcohol, tobacco and fuel.
Exceptions to VAT Registration for Foreign Entitities
Service-oriented businesses that are not physically located in Italy are often not required to register for VAT, namely business services such as accounting, or other related services. Because of the nature of business services, it is the consumer who will be charged taxes, as they are benefitting, and making money or gains, from the service received. This falls under the Reverse Charge provision and can be looked at more closely on the government’s website and other online resources. Some professions that are exempt as a rule of thumb include:
- Recruiters and staffing agencies
- Telecommunication and related services
- Marketing and advertising services
Documents needed to request and apply for a VAT Number
You will need to have documents that are up to date, (from the last 90 days), that include your original VAT certificate, that is notarised, as well as some sort of certification from the Chamber of Commerce. This should include your company information in full detail, including name, address, registration number, description of products, etc. Further, you will have to ensure that all of your application form, and supporting documentation, is translated correctly and thoughtfully, into Italian, as it will not be accepted in any other language.
How to Submit your VAT return
You will receive a VAT number unique to your business, if and when, approved by the tax authorities. The process, however, does not end here. You will need to make sure to remember to submit a quarterly VAT return, an annual VAT declaration, and a quarterly list of all of your sales and purchases, which is known in Italy as a Quarterly Intrastat. Failure to comply, can and will, result in fines, and late payments, as well as if you provide taxable supplies before registering. It is important also to remember that payment of taxes will also be required in your home country.
VAT payments that are required can be done online, directly in the office or using a certified bank transfer, whatever method you prefer.
You have five weeks from registration to complete this.
In Italy, the VAT rate is 22%, and for certain industries and products, it is 10% (ex: pharmaceuticals) and 4% on food, medical supplies and books.
Before, during and after registering for a VAT number in Italy, it is recommended that you seek professional legal guidance, from someone who is familiar with Italian and EU Vat systems, as well as the overall culture, customs and regulations in Italy, to help you with the process.
If you need further help with Italian VAT registration and compliance, give our experienced advisers a call or fill in the form below for free and no obligation advice.