Italy 2026 Budget Law: VAT Changes and Indirect Taxes

Italy’s 2026 Budget Law, approved by Parliament and published on December 30, 2025, introduces several indirect tax measures that are relevant for taxable persons. In addition to these measures, the Italian Council of Ministers approved a new consolidated VAT Law, which is expected to be published shortly and will apply from January 1, 2027, aiming to reorganize and modernize the existing VAT system. 

Key Indirect Tax Measures 

The Italian 2026 Budget Law redefined the calculation of the VAT taxable base for barter transactions. Since January 1, 2026, when goods or services are supplied in exchange for other goods or services, or to settle existing obligations, the taxable amount for VAT purposes is no longer determined by the fair market value of what is supplied. Instead, it is calculated based on the costs incurred by the transferor or supplier in providing the goods or services.

From the same date, a new EUR 2 administrative fee applies to the importation into the EU of low-value goods with a consignment value not exceeding EUR 150 when shipped from third countries. This fee is paid to the Customs Offices at the time of final importation of the goods. 

Furthermore, an automatic VAT settlement mechanism has been implemented that applies when a taxable person fails to submit the annual VAT return. In those situations, the Revenue Agency has the power to calculate and assess any VAT payable through automated procedures, using information available from e-invoices issued and received through the government’s SDI platform, data transmitted by electronic cash registers, and other information derived from taxable persons' previous periodic VAT reports.

The 2026 Budget Law also brought one notable postponement. More specifically, both the Plastic Tax, which targets the consumption of single-use plastic products, and the Sugar Tax, which applies to sweetened non-alcoholic beverages, have been postponed once again and will take effect on January 1, 2027.

Conclusion

Looking ahead, the announced and implemented indirect tax measures together with the forthcoming consolidated VAT Law signal a continued focus on administrative simplification, improved compliance, and more effective tax enforcement in Italy. Moreover, all the updated rules and regulations enhance legal clarity and align Italian VAT rules more closely with EU legislation. For taxable persons, it is essential to understand how these rules apply to them, reassess their internal processes, and update their ERP systems and invoices.

Source: Official Journal of the Italian Republic, EY