09 January 2026 Italy makes indirect tax changes through 2026 Italian Budget Law and publishes consolidated VAT code
Italy's 2026 Budget Law (Law n. 199 of 2025), which the Italian Parliament approved and the Official Gazette published on 30 December 2025, included indirect tax provisions of interest to businesses. Furthermore, on 22 December 2025, the Italian Council of Ministers had approved a new consolidated value-added tax (VAT) code, which is expected to be published soon in the Official Gazette. (For more on the 2026 Budget Law, see EY Global Tax Alert, Italian Parliament approves 2026 Budget Law with tax measures affecting banks, other financial intermediaries and insurance companies, dated 7 January 2026.) This Alert summarizes key indirect tax measures included in the 2026 Budget Law, which entered into force from 1 January 2026:
The main features of the new consolidated VAT code, which will come into effect on 1 January 2027, are also addressed. The Italian Budget Law amended art. 11 of Presidential Decree no. 633 of 1972, with regard to the quantification of the taxable base for VAT in barter transactions. According to the new criteria for determining the VAT taxable amount of the supplies of goods and services carried out in consideration for other supplies of goods or services (or to extinguish previous obligations), the 2026 Budget Law provides that, from 1 January 2026, the value of these supplies is based on the costs incurred by the transferor or supplier to carry out the supply of goods or services, rather than on the fair market value of the goods or services supplied. From 1 January 2026, a €2 administrative levy is due for the shipment into the European Union (EU) of modest-value goods (i.e., not exceeding €150) from third countries, to be collected by the Customs Offices at the time of final import of the goods. The Italian Customs authority provided technical guidance clarifying that this extra levy applies universally, regardless of the parties involved — i.e., business-to-consumer (B2C), business-to-business (B2B) and consumer-to-consumer (C2C) transactions. The 2026 Budget Law provides that, if a taxpayer fails to submit a VAT return, the Revenue Agency may calculate and request the payment of debit VAT using automated procedures, based on the e-invoices issued and received through the government portal (SDI), the data transmitted by cash registers and the other elements resulting from the communications of the data of the periodic VAT computation filed by the taxpayer. If a debit VAT is to be paid, the Revenue Agency will communicate the outcome of the assessment the taxpayer, which must within 60 days report any data or elements that were not considered or incorrectly assessed in the settlement and provide the necessary clarifications, or provide for the payment of debit VAT with interest and penalties. The entry into force of the plastic tax (tax on the consumption of single-use products-Macsi) and the sugar tax (tax on the consumption of sweetened nonalcoholic beverages) has been postponed to 1 January 2027. The Italian Council of Ministers' approval of the new consolidated VAT code on 22 December 2025 followed several rounds of consultation. The code unifies more than 50 years of fragmented VAT legislation into a single framework comprising 171 articles, structured in alignment with the EU VAT Directive 2006/112/EC. The consolidated VAT code does not make any substantive modifications to the current VAT legislation; the wording of all provisions has been maintained exactly, except where revisions were necessary to update references to superseded regulatory provisions. Recent indirect tax changes require multinational businesses to review their internal procedures and to comply with new regulations. Furthermore, taxpayers operating with an Italian VAT number should update VAT code descriptions in their enterprise resource planning (ERP) systems and invoices to reflect the latest references reported in the new consolidated VAT code.
Document ID: 2026-0150 | ||||||
