Press release
Italy Hikes VAT Rate to 21%; Levies Withholding Tax
The increased VAT rate is effective from September 17, 2011.
The aforesaid decrees shall affect investment in Italy by way of:
- A New Withholding Tax of 20% on financial Income
- An increase in VAT rate to 21%
The emergency decree aims to cut the Italian deficit and balance the budget by 2013.
Withholding Tax on Financial Income
Under the new regime, a flat 20% domestic withholding tax shall apply on Interest, Dividends and Capital gains (on non-qualified participation). The new withholding tax regime is likely to be effective from January 1, 2012.
VAT Rules
As the VAT General Laws are different for goods and services, the correct VAT rate to be applied must be identified depending on the point of time when the operation/sale can be considered as "preformed.”.
Accordingly, sales performed before the effective date will remain subject to the old 20% rate; while sales performed starting from the effective date (publication of the new Law in the Official Gazette) will be subject to the new 21% rate.
Additionally, the Italian Government has also imposed a corporate tax surcharge named ‘Robin Hood Tax’ on certain ‘rich’ industry sectors including energy, banks and financial institutions.
About Nair & Co.
Nair & Co. provides an integrated solution in the HR, finance, tax, compliance and legal arenas making a company’s overseas operations less risky, stress free and more strategic. It currently has 750+ client operations in over 50 countries with offices in U.K., India, China, U.S., Japan and Singapore. Nair & Co. was named among the top 100 outsourcing services providers in the world by the International Association of Outsourcing Professionals (IAOP).
Learn more at http://www.nair-co.com
Nair & Co., 1250 Oakmead Parkway, Suite 210
Sunnyvale, CA 94085 United States
Nandita Verma
Nair & Co.
(408) 515-9048
nandita.verma@nair-co.com
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