Italy raises VAT 1% to 22% from July 2013

11 October 2012

The Italian government has announced plans yesterday to halve its planned 2% VAT increase scheduled for 2013.  The Italian standard VAT rate will now rise from 21% to 22% from 1 July 2013. 

Whilst the plan was to also increase the reduced VAT rate from 10% to 11%, this has now been dropped.  The super reduced rate will remain at 4%.

The original 2013 2% VAT rise was proposed in December 2011 as a measure to assure nervous financial markets.  It followed a 1% increase to 21% in September 2011 at the start of the latest Euro crisis.

Since that announcement, the technocrat government of Premier Monti has made great strides in reducing government spending, partially in an effort to avoid the 2% rise.  As recently as September the belief was that the rise would not be needed.

However, yesterday the latest budget measures emerged confirming an Italian 1% rise in 2013.  It is estimated that this change in the rise will cost around Euro 3.3 billion per annum.

In addition to the changes in VAT rate, there will also be a cut in income taxes.

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