Italian VAT, known locally as IVA, lands on nearly every purchase you make in Italy, yet plenty of freelancers and small firms still work it out by hand and pick the wrong rate or muddle the pre-tax price with the final one. This guide lays out the rates in force for 2026, walks through converting the taxable base into the customer price in both directions, and shows where VAT ends and your trading margin begins.
Italy’s four VAT rates in 2026
Italy runs four IVA rates, set out in Presidential Decree 633/1972 and confirmed for 2026. Per the Agenzia delle Entrate:
- 22 percent, the standard rate. The default when no lower rate is written into law: electronics, clothing, fuel, professional services and most goods and services.
- 10 percent, reduced. Domestic electricity and mains gas, medicines, passenger transport, restaurant and catering services, shows, and some building work.
- 5 percent, reduced. Certain health and social-care services, some medical equipment, and specific foods named in the rules.
- 4 percent, the minimum rate. Everyday essentials such as bread, milk, farm produce, books and newspapers, plus school canteens.
The rate follows the product, not the seller. A single shop can ring up one line at 22 percent and another at 4 percent on the same receipt. When a particular item is in doubt, the source to check is the Agenzia delle Entrate guidance, since the lists of reduced-rate goods shift over time.
From the net price to the gross price
The taxable base is the amount before VAT, the figure your margin sits on. The gross price is what the customer hands over. To add the tax, multiply the base by one plus the rate:
- A base of 100 euro at the standard rate: 100 times 1.22, which is 122 euro, of which 22 is VAT.
- A base of 100 euro at the reduced rate: 100 times 1.10, which is 110 euro, of which 10 is VAT.
Going the other way is just as common: you have a gross price and want the tax inside it. Here you divide rather than strip off the percentage. A gross price of 122 euro at the standard rate is 122 divided by 1.22, so 100 euro of base and 22 of VAT. Taking 22 percent straight off 122 would give 95.16 euro, a wrong answer that turns up in rushed quotes. The IVA calculator from National Calculators runs both directions for you at the rate you pick.
Quick reference: rates and the VAT inside a price
To keep the right rate and the tax hidden inside a price to hand, these two tables pull it together. The first ties each rate to typical goods and services; the second shows how much VAT sits inside a 100 euro gross price, the figure known as scorporo, so you can see at a glance why dividing and stripping off the percentage give different answers.
| Rate | Example goods and services |
|---|---|
| 22% standard | electronics, clothing, fuel, professional services |
| 10% reduced | restaurants and catering, passenger transport, medicines, domestic electricity |
| 5% reduced | certain health and social-care services, specific foods |
| 4% minimum | bread, milk, books, newspapers, farm produce |
| Gross price | Rate | Taxable base | VAT inside |
|---|---|---|---|
| 100 euro | 22% | 81.97 euro | 18.03 euro |
| 100 euro | 10% | 90.91 euro | 9.09 euro |
| 100 euro | 5% | 95.24 euro | 4.76 euro |
| 100 euro | 4% | 96.15 euro | 3.85 euro |
Note the practical gap: the VAT inside a 100 euro price at 22 percent is 18.03 euro, not 22. The 22 percent is charged on the base (81.97 euro), not on the gross price, which is exactly why you remove it by dividing by 1.22.
Output VAT and input VAT
For a business, VAT is neither a cost nor income: it passes through. You charge VAT on sales (output VAT) and reclaim the VAT paid on business purchases (input VAT). At each settlement you pay the difference, and when purchases with VAT outweigh sales in a period you are left with a credit to carry forward or claim back. Electronic invoicing and the VAT registers keep the two sides apart, but the principle is that simple.
The regime forfettario and the 85,000 euro threshold
Unlike a business on standard VAT, anyone in the flat-rate regime forfettario does not charge VAT on invoices and does not reclaim it on purchases. The 2026 Budget Law keeps the revenue ceiling at 85,000 euro a year: stay under it and you can remain in the scheme, paying a substitute tax in place of income tax and VAT. Go over 85,000 but under 100,000 and you leave the scheme from the following year; cross 100,000 and the exit is immediate, with VAT applying within the same year. That is why it pays to watch turnover during the year rather than only at the end.
VAT and margin are not the same thing
VAT is worked out on the selling price, while your margin is worked out on cost. A trader who buys an item for 50 euro net and sells it for 70 euro net makes 20 euro of profit, which is a 28.6 percent margin on the selling price, or a 40 percent markup on cost. The 22 percent VAT is added afterwards, on the net selling price, and leaves the margin untouched. Keeping the two sums apart stops the idea that a 22 percent discount cancels the VAT, which it does not.
For purchases from suppliers outside the euro area, the exchange rate matters too. A supplier billing in dollars or pounds compares best after conversion: the currency converter gives the euro amount from the European Central Bank reference rates, on which you then apply import VAT.
Frequently asked questions
What is the standard VAT rate in Italy in 2026?
The standard rate stays at 22 percent. It applies by default to every good and service the law does not assign to a reduced or minimum rate.
How do I remove VAT from a final price?
Divide the gross amount by one plus the rate. At 22 percent divide by 1.22, at 10 percent by 1.10, at 5 percent by 1.05 and at 4 percent by 1.04. The VAT portion is the gap between the gross price and the base you get.
Can one purchase carry several VAT rates?
Yes. Each product has a single rate, but the same receipt can mix items at 22, 10, 5 and 4 percent. The document shows the VAT split out by rate.
Does someone in the regime forfettario charge VAT?
No. A business in the flat-rate regime forfettario does not show VAT on invoices and does not reclaim it on purchases, as long as it stays within the 2026 revenue ceiling.
The rates and rules cited come from the Agenzia delle Entrate and Presidential Decree 633/1972. This article is general information and is not tax advice.