Italy Appears Set to Delay VAT Increases Until 2019

On December 4th, 2017, Italy’s parliament adopted Law Decree no. 148, by way of Law no. 174. Under Article 5 of Law Decree no. 148, the current VAT rate of 10% would be increased to 11.14% effective January 1, 2018. However, the 2018 Italian budget bill currently provides for the reduced VAT rate to be 10% in 2018 and 11.5% in 2019, and for the standard VAT rate to remain at 22% in 2018 and increase to 24.2% in 2019. The 2018 Italian budget bill has been approved by both houses of Parliament: the Senate and Chamber of Deputies. The bill must now be promulgated by the President of the Italy. While the president may opt to resend the law to Parliament for a new review, it appears likely that the President will promulgate it. After promulgation, the law will be published in the Official Gazette of the Italian Republic before going into effect. Thus, Italy's 2018 budget bill will override the previous reduced VAT rate increase of 10% to 11.14%, and will delay an increase in the standard and reduced VAT rates until January 1, 2019.