Italy VAT on Sales by a U.S. Corporation: A Comprehensive 2025 Guide

Understanding When Italian VAT Applies

For U.S. companies selling goods or services into Italy, Value-Added Tax (VAT) can apply even without a legal presence in the country. VAT obligations depend primarily on where your customer is established and whether the supply is deemed to take place in Italy under EU VAT rules.

Foreign businesses often overlook VAT exposure when expanding into European markets. However, Italy’s tax authority — the Agenzia delle Entrate — enforces strict compliance, making early understanding essential.

VAT on Goods: Import, Fulfilment, and Distance Sales

1. Direct Imports

If a U.S. seller imports goods into Italy (for example, under Delivered Duty Paid – DDP terms), the company must register for Italian VAT. The importation itself is considered a taxable event, and VAT is due at the Italian border.

2. EU Fulfilment and Storage

Holding stock or inventory within Italy — whether in a warehouse, Amazon fulfilment centre, or third-party logistics hub — triggers VAT registration. Even without local employees or a branch, the mere physical presence of goods in Italy establishes a taxable nexus.

3. Distance Sales to Consumers (B2C)

Since the 2021 EU VAT e-commerce reform, there is no distance sales threshold for non-EU sellers. Once a U.S. company sells goods to EU-based consumers, VAT must be charged at the destination country’s rate — in this case, Italy’s.
Businesses can either:

• Register under the One-Stop Shop (OSS) to simplify reporting across the EU, or
• Register directly for Italian VAT.

VAT on Services: B2B vs. B2C

Business-to-Business (B2B) Services

For services provided to Italian VAT-registered businesses, the reverse charge mechanism applies. The Italian customer accounts for VAT on behalf of the U.S. supplier, meaning no local VAT registration is required.

Business-to-Consumer (B2C) Services

When selling electronic, digital, or telecommunication services directly to Italian individuals (non-business customers), the U.S. supplier must register for VAT in Italy or use the Non-Union OSS scheme. This applies to:

• Streaming and digital content
• SaaS subscriptions
• Downloadable software or apps

VAT Registration and Compliance Requirements

There is no revenue threshold for non-EU suppliers. As soon as a taxable transaction occurs, registration becomes mandatory.

U.S. companies can comply by:

1. Appointing a fiscal representative in Italy — required if not using the OSS; or
2. Direct identification with the Italian tax office (Agenzia delle Entrate) under Article 35-ter of the VAT law.

Key registration details include:

• Fiscal representative’s Italian tax ID
• Business documentation and incorporation proof
• Description of intended activities in Italy

Italian VAT Rates and Filing Obligations

• Standard VAT rate: 22%
• Reduced rates: 10% and 4% (applied to essentials like food, pharmaceuticals, books, etc.)

VAT returns are typically filed:

• Quarterly for smaller businesses; or
• Monthly if turnover exceeds the annual threshold set by the Agenzia delle Entrate.

Additionally, Italy mandates e-invoicing via the Sistema di Interscambio (SDI) platform. All invoices must comply with the Italian XML format, even for foreign businesses registered for VAT.

Key Takeaways for U.S. Companies

• Assess Nexus and Storage: Any goods stored or fulfilled from Italian territory create VAT registration obligations — and possibly permanent establishment (PE) exposure.
• Evaluate OSS vs. Local VAT: For online sellers targeting multiple EU countries, the OSS system can streamline compliance, but direct registration may suit those with local activities.
• Keep Robust Documentation: Maintain compliant invoicing, shipping, and cross-border transaction records to avoid penalties.
• Stay Current: Italy frequently updates e-invoicing and VAT reporting rules — monitor Agenzia delle Entrate guidance to remain compliant.

Expanding into Italy offers immense opportunities for U.S. exporters, especially in e-commerce and digital services. However, the complexity of Italian VAT regulations requires a proactive compliance strategy.
Partnering with a VAT specialist or local fiscal representative can ensure your business meets all registration, invoicing, and filing obligations while optimizing your EU tax footprint.