For online sellers hoping to grow your business to Italy, knowledge of the Italian VAT system is important. This guide will clarify the whole Italian VAT system for you.

Understanding Italian VAT (P.IVA)

What is P.IVA (Partita IVA)?

The P.IVA (Partita IVA) is your unique tax identification number for doing business in Italy. This identifier helps you manage your VAT filings and keep tax compliance.

Structure of P.IVA Number

The Italian VAT number consists of 11 digits with a specific format and starting with the country code “IT”:

First 7 digits: Company identifier

Digits 8-10: Office code

Last digit: Check digit

Example: IT 12345678901

Why It Matters for E-commerce

P.IVA is the business passport in Italy for online sellers who targeting the Italian market. Without this VAT number, you cannot legally handle VAT-compliant transactions, sell on Italian marketplaces like Amazon.it, or build long-term relationships with Italian customers and suppliers. This is especially important for FBA sellers, because storing inventory in Italian fulfillment centers requires VAT registration.

Italian VAT Rates & Categories

Standard rate (22%):

Applies to most of taxable goods and services

Reduced rate 1 (10%):

Restaurant and catering services including takeaway

Medicines

Baby products

Feminine hygiene products

Reduced rate 2 (5%):

Health and education by welfare associations

Super reduced rate (4%):

Basic foodstuffs:

• Pasta

• Bread

• Daily bakery products

Medical equipment

Books and journals

Zero Rates & Exemptions

General goods and services are subject to the standard or reduced VAT rates, but certain supplies qualify for zero VAT rate or exempt. Although both result in no VAT charged to customers, zero-rated and exempt supplies work differently.

Zero-rated supplies:

Allow you to reclaim input VAT on related purchases

Common examples include:

• Essential foodstuffs

• Books

• Export goods

VAT-exempt supplies:

Do not allow input VAT recovery

Typically include:

• Financial services

• Healthcare services

• Educational services

VAT Registration Requirements

· Registration thresholds

• Who needs to register
• Distance sellers who exceed €10,000 in annual cross-border sales to Italy must register for VAT.
• Who storing goods in Italy including FBA sellers must register for VAT, whether the threshold limit has been exceeded or not.

How to register for VAT

Non-resident entities that need to register for VAT in Italy can choose one of the following options:

1. Appoint a tax representative established in Italy and with Italian VAT number.
2. Register directly for VAT in Italy, i.e. obtain an Italian VAT number.

This second option is only available to entities residing in other EU countries or in a third country with which reciprocal agreements are in place.

How to obtain a VAT identification number

To obtain a VAT identification number it is necessary to complete and submit a Declaration of commencement, change of data or cessation of activity. The registration process can take up to 6 weeks. The Italian Revenue Agency (Agenzia delle Entrate) will then issue a VAT number.

The information to be provided in the declaration includes:

• identification details
• the code of the type of activity to be pursued
• the place(s) of business

New Fiscal Representative Requirements in Italy

Who Must Appoint a Fiscal Representative?

Non-EU businesses must appoint a fiscal representative in Italy for VAT registration. This is a mandatory requirement under Italian VAT law. Direct VAT registration is not an option for non-EU companies.

New Additional Requirements for Existing Fiscal Representatives

In addition to meeting the original qualification requirements, fiscal representatives must now provide financial guarantees in the form of:

• Government bonds
• Bank guarantees
• Insurance guarantees

Guarantee Amount Structure

The minimum guarantee amount is based on the number of represented companies:

Number of Companies Minimum Guarantee (EUR)

2-9 30,000

10-50 100,000

51-100 300,000

101-1000 1,000,000

1000+ 2,000,000

Impact on businesses and sellers

• Service fees may increase
• Verify your provider meets new compliance standards
• Consider switching providers if needed

The guarantee requirements apply to fiscal representatives, not the represented companies. While service costs may increase as a result, this decree ultimately aims to ensure fiscal representatives' financial performance capacity.

Filing & Compliance

VAT filings and deadlines

For businesses operating in Italy, the VAT filing frequency is determined by your annual turnover. Companies can opt for quarterly VAT returns if their annual turnover does not exceed:

• €500,000 for self-employed professionals and companies primarily providing services
• €800,000 for businesses engaged in other activities

If your turnover reaches these thresholds, you must file monthly VAT returns. This flexibility in filing frequency allows smaller businesses to reduce their administrative load, while larger operations maintain proper tax compliance. However, businesses should note that choosing quarterly filing includes a 1% interest surcharge on the VAT due.

Monthly filers submit by the 16th of the following month. Quarterly filers have these deadlines:

Q1: May 16th

Q2: August 20th

Q3: November 16th

Q4: Combined with annual return

Note that quarterly filing incurs a 1% interest charge.

Your Q4 transactions (Oct-Dec) are reported in the annual VAT return, which is due by the end of February. The annual VAT payment deadline is March 16th. You can pay in installments until November, with a 0.33% monthly interest charge.

All payments must be done online via the Italian tax system, using the F24 form. Late filings result in penalties, so consider collaborating with a local tax professional to ensure compliance.

For e-commerce sellers, the key of VAT filings: Set clear reminders for these deadlines and keep organized transaction records, regardless of which platform you sell on.

Late filing penalties

Within 90 days after deadline: Fixed penalty of €25

After 90 days:

• Minimum penalty of €258
• Additional penalty of 120-240% of VAT due

General penalty: 30% of VAT due

Electronic Invoicing and VAT Reporting

Italy uses one of Europe's most advanced e-invoicing systems. All VAT-registered businesses must process their invoices through SDI (Sistema di Interscambio), the government's digital platform. This system links directly to VAT reporting and compliance.

1. All sales and purchase invoices must be transmitted in XML format through the SdI platform.
2. The invoice data automatically feeds into various VAT reporting obligations:

• Quarterly VAT reports
• Cross-border transaction reports
• Annual VAT returns

The digital system allows Italian tax authorities to track VAT transactions in real-time, reducing tax fraud and simplifying business reporting. E-commerce sellers in Italy must adapt the Italian invoicing systems to meet these digital rules to avoid penalties and ensure your VAT recovery.

Selling in Italy requires careful attention to VAT regulations, from timely filings to digital invoicing. It is essential to handle comprehensive VAT management for business success in the Italian market. VATAi provides both fiscal representation and VAT expert guidance to help you handle VAT compliance and keep smooth business operations in Italy.

With professional support and efficient services, you will be able to easily meet VAT compliance requirements, avoid potential legal risks, and focus on business growth. Reach out to VATAi today for a free consultation!