Italian VAT Rate Increasing From 20% To 21%

SUMMARY

VAT ordinary rate increasing from 20% to 21%

2.1 Effective date

2.2 Deferred invoicing for goods' sale

2.3 Taxable event's anticipation

2.4 Credit and debt memos

3. Retailers

4. Pro-forma/Notice invoices issued by professionals

5. Sales to Public Authorities

   INTRODUCTION Turning in to Law the Law Decree dated August 13th 2011 no. 138 (so called "Mid-August Measure"), has introduced new rules for VAT.

   In particular, operations (sales of goods and services) put in place starting from the date of the new law enforcement (the day subsequent to its publication in the Official Gazette therefore Saturday 17th 2011) are subject to the new ordinary VAT rate, increased from 20% to 21%;

   Moreover to invoices issued to the Italian State or other Public Authorities, for whom VAT becomes payable at payment, 20% rate is applied if those invoices have been issued and posted in the accountings before the Law has become effective as above mentioned.

2. ORDINAR VAT RATE INCREASING FROM 20% TO 21%

   Under the change made to article 16, 1st paragraph of the Republic Presidential Decree no. 633/72, the ordinary VAT rate has increased from 20% to 21%, while the extraordinary rates (applicable just to certain goods) – 4% and 10% will remain unchanged.

   2.1 EFFECTIVE DATE

   The correct VAT rate to be applied must be identified according to the moment when the operation/sale can be considered as "preformed" under the VAT general law, different for goods and services.

   In general:

   Movable goods' sales are performed when shipped or delivered; Unmovable goods' (as real estate properties or buildings) sales are performed when the Notary deed is signed; Movable and unmovable goods' sales with constituent effects delayed in respect of shipping, delivering or signature, are performed at the date of effectiveness; Services' sales are performed when the price is paid, despite of their partial or total execution. Therefore:

   Sales performed before the Law Decree effective date will remain subject to the old 20% rate; Sales performed starting from the effective date (publication of the new Law in the Official Gazette) will be subject to the new 21% rate. 2.2  DefeRred invoicing for goods' sale

   In case of invoicing deferred to the 15th day of the month following goods' shipment or delivery, allowed for goods accompanied by the transportation document, the taxable event will be, in any case, the shipment or the delivery.

   Therefore:

   The old 20% VAT rate will be applicable in case of...