Italy’s standard VAT rate (IVA) is 22%. Most everyday calculations are just adding or removing that 22%, but two special mechanisms, reverse charge and split payment, change who actually pays the tax to the state. Getting those two right matters more than the arithmetic.
Adding and removing VAT
To add VAT: gross = net x 1.22. A service priced at 1,000 euros net becomes 1,220 euros gross, with 220 euros of VAT. To remove VAT: net = gross / 1.22. A price of 1,220 euros gross is 1,000 euros net. The common mistake is subtracting 22% from the gross price, which gives 951.60 euros, not 1,000: percentages work differently in each direction because the base changes.
Reduced rates exist for specific goods: 10% for many food, hospitality, and transport items, and 4% or 5% for some essentials and special cases. The standard 22% is the default, but check the category before invoicing, because the wrong rate is a common audit finding.
Reverse charge
Under reverse charge (inversione contabile), the buyer, not the seller, accounts for the VAT. It applies to certain cross-border B2B supplies inside the EU and to specific domestic sectors such as construction subcontracting. The seller issues an invoice without VAT, noting reverse charge, and the buyer records both output and input VAT, which usually cancel out.
Example: an Italian business buys consulting services from a German supplier for 5,000 euros. The German invoice shows no VAT. The Italian buyer records 22% output VAT (1,100 euros) and the same amount as deductible input VAT. Net VAT effect: zero, but the paperwork must exist. Missing the self-invoice is the classic error.
Split payment
Split payment (scissione dei pagamenti) applies when you supply public bodies and certain public-sector entities. You issue the invoice with VAT shown, but the customer pays you only the net amount and sends the VAT directly to the tax authority. You never hold that VAT, which protects the state against supplier default.
Example: a 1,000 euro net supply plus 220 euros VAT to a public body. You receive 1,000 euros; the body pays the 220 euros to the state. Your invoice must note split payment, and your cash flow planning should assume the VAT never reaches your account.
Practical checklist
Confirm the rate for your goods or services before quoting. Decide whether reverse charge or split payment applies to this customer. Show VAT separately on every invoice. And keep the buyer’s VAT number on file for cross-border reverse-charge sales, since the mechanism depends on both parties being VAT-registered businesses.
VAT numbers and cross-border invoicing
For cross-border business sales inside the EU, the buyer’s VAT number is the key document. With a valid VAT number verified in the VIES system, a B2B supply of goods or services is generally zero-rated in the seller’s country under reverse charge. Without a valid number, the seller must charge local VAT.
For B2C sales of digital services and many goods across the EU, the One-Stop Shop (OSS) scheme lets a seller report VAT for all destination countries through one registration, instead of registering everywhere. The VAT rate is then the customer’s country rate, not the seller’s. Getting the customer location evidence right is essential, since the rate depends on it.
Try it faster with the tool
You can follow every step above by hand, but the free Online Italy VAT Calculator does the arithmetic for you. Enter your numbers and it gives the answer right away, so you can check your hand calculation or skip straight to the result.
Quick tips
- Standard rate 22%: gross = net x 1.22.
- Reverse charge: the buyer accounts for the VAT.
- Split payment: public bodies pay the VAT to the state directly.