Italy VAT Rates 2025: Practical Guide for SMEs and Ecommerce

Italy VAT Rates and Compliance in 2025

Italian businesses face multiple VAT rates and extensive reporting requirements. Staying current with 2025 rules reduces audit risks and protects profit margins.

Current VAT Rates

• Standard rate: 22% on most goods and services.
• Reduced rates: 10% for hospitality, certain energy supplies, and transportation; 5% for select food items and social services; 4% for essentials like books, primary homes, and medical devices.

E-Invoicing and Digital Reporting

E-invoicing (Fatturazione Elettronica) remains mandatory via the SDI platform. Ensure invoices conform to XML standards and monitor SDI notifications. Cross-border transactions require quarterly Esterometro reporting.

OSS/IOSS Participation

Ecommerce sellers shipping within the EU should leverage the One-Stop Shop (OSS) to simplify VAT remittance. For low-value imports, the IOSS scheme streamlines VAT collection at checkout, avoiding border delays.

Deductible VAT and Pro-Rata

Input VAT is deductible when expenses relate to taxable activities. Mixed-use businesses must apply a pro-rata calculation (pro-rata di detrazione). Track prorated percentages annually and adjust in the final return.

Compliance Tip: Automate SDI uploads, reconcile ledgers monthly, and schedule periodic VAT health checks with your commercialista.