2021 Budget Law – New provisions in the VAT, excise and consumption tax field

Prepared by Federica Panzeri, Lorenzo Ontano, Andrea Werner Beilin, Luca Ghelli, Daniela Brenna, Arcangelo Vitelli and Beatrice Ottaviani

Law no. 178/2020 concerning the “Budget of the State for the financial year 2021 and multi-year budget for the period 2021-2023” (hereinafter the “Budget Law”) was approved on 30 December 2020. In this document we briefly analyze the most significant changes that have been introduced to the Italian VAT, excise and certain consumption taxes legislation.

Paragraph 40 (Concept of food preparations)

The notion of food preparations to which the reduced rate of 10% applies (n. 80), Table A, part III, Presidential Decree no. 633/1972) shall also include the supply of ready meals and meals that have been cooked, roasted, fried or otherwise prepared for immediate consumption, for delivery to a person’s home or for take-away.

Accordingly, based on this provision, the above mentioned supplies shall be subject to a 10% VAT rate regardless of the fact that are qualified or not as a food service; even this does not seem in line with the European provisions (EU Regulation n. 2011/282/UE) and the current jurisprudence of the European Court of Justice. 

The provision is an authentic interpretation of the above-mentioned n. 80, Table A, Presidential Decree no. 633/1972.

Paragraph 452 (Supply of diagnostic instruments for COVID-19)

The supply of COVID-19 diagnostic equipment meeting the regulatory requirements set forth in the Law and the supply of services strictly related to such equipment are exempt from VAT with the right of deduction until 31 December 2022.

Paragraph 453 (Supply of COVID-19 vaccines)

The supply of COVID-19 vaccines authorized by the European Commission or by the Member States and the supply of services strictly related to such vaccines are exempt from VAT with the right of deduction from 20 December 2020 to 31 December 2022.

For completeness sake, the VAT exemption provided for by article 124 of the so-called Law Decree “Rilancio”, in respect of goods aimed at contrasting Covid-19 other than those referred above, has not been extended. As a consequence, for such goods VAT at 5% rate is applicable.

Paragraphs 475-477 (redetermination of pharmaceutical expenditure ceilings)

The Budget Law for the year 2021 implements some new rules regarding the payback mechanism, providing:

  1. the redetermination, starting from the year 2021, of the ceilings related to the conventional pharmaceutical expenditure and to the expenditure for direct purchases (clawback), fixing caps at 7% (from 7.96%) and 7.85% (7.55%) respectively, previously determined by paragraphs 398 and 399 of Law no. 232, 11 December 2016 (Budget Law for the year 2017), without prejudice to the overall percentage value equal to 14.85% and without prejudice of the limit equal to 0.20% related to direct purchases of medicinal gases, provided for by paragraph 575 of Article 1, of Law no. 145 of 30 December 2018 (Budget Law for the year 2019);
  2. the possibility to recalculate the percentage values fixed for the year 2021, “on the basis of the trend of the pharmaceuticals market and welfare”, by means of a proposal of the Ministry of Health, having consulted the Italian Pharmaceuticals Agency (AIFA), in agreement with the Ministry of Economy and Finance, without prejudice to the percentage value of the total pharmaceuticals expenditure equal to 14.85%;
  3. that the redetermination, with reference to the year 2021, of the ceilings related to the clawback, provided for by the paragraph 475 of the Budget Law related to the year 2021, can by granted only in case the clawback for the year 2018 is fully paid by the pharmaceutical companies by 28 February 2021. In this respect, the Law fixes a target amount for the clawback 2018 equal to €895 million. The AIFA shall certify that this target has been achieved by 10 March 2021;
  4. that, once the above-mentioned target is achieved, the clawback for 2018 can be considered as definitive, including the clawback paid from 2018 to 31 December 2020. In this event, all the litigations pending before the administrative courts are considered terminated, implying that the companies that started disputes against the AIFA calculations will be entitled to exercise the right to deduct VAT, according to the “cash accounting” mechanism, on the payback payments executed during the said period;
  5. with reference to the year 2022, the possibility to update the percentage values during the drafting of the Budget Law, by means of a proposal of the Ministry of Health, having consulted AIFA, in agreement with the Ministry of Economy and Finance, pursuant to the provisions of paragraph 476 of the Budget Law for the year 2021. This possibility is granted provided that the pharma companies fully pay the clawback related to 2019 to be executed by 30 June 2021. The full payment shall be certified by AIFA by 10 July 2021. In this event, the payments can be considered as definitive, implying the termination by law of the pending litigation before the administrative courts and the possibility to deduct the related VAT.
Paragraphs 708-712 (Measures relating to the tax regime for pleasure boats and vessels used for navigation on the high seas)

The provision supplements article 8-bis of Presidential Decree no. 633/1972 by providing:

  1. the definition of a vessel used for navigation on the high seas: meaning a vessel that has made more than 70% of voyages on the high seas in the previous calendar year or, in case of first use, in the current year;
  2. a definition of voyage on the high seas;
  3. the special declaration to make purchases or imports without payment of VAT;
  4. the declaration related to the effective use into the European Union waters related to the provisions of long-term chartering and leasing of pleasure yachts;
  5. the obligation to indicate on invoices the reference number of the declaration referred to in point 3 and 4;

Introduction of paragraphs 3-bis, 3-ter and 4-ter to the sanction’s rules set out in Article 7 of Legislative Decree no. 471/1997, with administrative sanctions ranging from 100 to 200%.

Paragraph 713 (Airlines companies primarily engaged in international transportation)

Due to the restrictions on the movement of goods and persons imposed to limit the diffusion of the COVID-19, only for the year 2020, airlines companies that predominantly perform international transport are deemed to be considered airlines companies that, pursuant to article 8-bis, paragraph 1, letter c) of Presidential Decree no. 633/1972, met this requirement with reference to the year 2019.

Paragraph 1075-1076 (measure on excise duty on fuel)

In order to combat fraud, the Budget Law established the obligation to use Infoil system for all commercial warehouses (excise duty paid) of energy products subject to excise duty, with storage capacity no less than 3 thousand cubic meters.

In the case of excise duty warehouse also qualified as a VAT deposit, the obligation to submit the guarantee model to the Revenue to avoid prepayment of VAT is transferred to the guarantor. A new communication model is also introduced for the owner or the manager of fuel deposit.

Paragraphs 1079-1083 (Contrasts to frauds carried out using false VAT plafonds)

With the purpose of contrasting VAT frauds carried out using a false plafond accrued by so-called usual exporters (i.e. “esportatori abituali”), the Budget Law provides that the tax authorities will carry out (i) specific risk analyses aimed at verifying the existence of the substantial conditions required to be qualified “usual exporter”; and (ii) subsequent substantial control activities pursuant to article 51 et seq. of Presidential Decree no. 633/1972. Such checks will be aimed at preventing the submission of unduly declarations of intent triggering an automatic invalidation.

Whereby the outcome of the above controls should be negative, the taxpayer will be prevented from issuing new declarations of intent via electronic means.

In this respect, an automatic cross-check between the e-invoicing system and the false letters of intent will be introduced in order to prevent the supplier of the usual exporter from issuing an e-invoice exempted from VAT as a consequence of a false declaration of intent.

A specific act of the Director of the Revenue Agency shall establish the operating procedures for the implementation of the aforementioned provisions.

Paragraph 1084 – Plastic tax

Plastic tax is postponed to 1 July 2021.

Budget Law also introduces some amendments into the application of the mentioned tax. In particular, inclusion, among taxable persons, of those on whose behalf the MACSIs are manufactured; introduction of tax exemption threshold to 25 euros; attribution of joint and several liability for payment to the legal representative of non-residents; reduction of administrative penalties for non-payment or late payment of the tax and for the late submission of the required quarterly return.

Paragraph 1086 – Sugar Tax

Sugar Tax is deferred to January 1, 2022.

Budget Law also introduces some amendments into the application of the mentioned tax.

In particular: inclusion, among taxable persons of the company who sell the drinks made by a third party but on behalf of the same company; reduction of administrative penalties for non-payment or delayed payment of the tax and for the late submission of the required monthly return

Paragraphs 1095-1096 (Lottery receipts)

With reference to the so-called receipt lottery, the Budget Law provides that the receipt lottery will apply to transactions paid electronically only. In other words, there will be no draws for transactions paid via cash.

Moreover, the Decree-Law no. 183/2020 (the so-called “Decreto Milleproroghe”) postponed the Lottery receipts to 1 February 2021.

Paragraphs 1102-1107 (Tax simplifications)

In the area of tax simplifications, the Budget Law provides for:

  1. simplifications of the obligations for small taxpayers (i.e. entities that in the previous year achieved a turnover not exceeding 400 thousand euro, if self-employed or service companies, or 700 thousand euro, in case of other activities). Small taxpayers should, indeed, register invoices in the VAT registers with the timing provided for the settlement of the VAT. In particular, invoices should be registered within the end of the month following the quarter in which the transactions are carried out and with reference to the month in which the transactions are carried out;
  2. the abolition of the so-called “esterometro” from 2022 (i.e. communication of cross border transactions). Accordingly, taxpayers will be required to send invoices data of transactions with foreign counterparts through the “Sistema di Interscambio” (hereinafter ‘SdI’);
  3. the amendments of the penalty regime for the transmission of the data referred to in point 2 above, from 2022. In particular, a penalty of € 2 for each invoice, up to a maximum of € 400 per month will be applicable. The penalty is reduced by half, up to a maximum of € 200 for each month, if the transmission is made within fifteen days from the deadline.
  4. extension to 2021 of the prohibition to issue electronic invoices through the SdI in relation to healthcare services provided to private consumers;
  5. further clarifications concerning the VAT pre-filled form.
Paragraph 1108 (Application of stamp duty on electronic invoices issued by a party other than the supplier)

The provision clarifies that the supplier of the goods or services must be considered jointly and severally liable to pay the stamp duty also in case the document is issued by a third party on its behalf.

Paragraphs 1109-1115 (Provisions on the telematic storage and transmission of considerations)

With reference to the telematic memorization and transmission of considerations, the Budget Law provides:

  1. that the new deadline for the electronic storage of the data of the relevant receipts and the delivery, at the customer’s request, of the documents certifying the transaction itself (commercial document and invoice) is set at the completion of the transaction;
  2. a change in the penalty regime, inter alia:
  3. in the case of omitted, late and/or incorrect transmission (or memorization), a penalty equal to 90% of the VAT. The penalty applies only once when the late/omitted transmission is caused by the incorrect memorization;
  4. in case of omitted, late or incorrect transmission, not affecting the settlement of the VAT, a fixed penalty of €100 for each transmission;
  5. in case of a violation already ascertained, it is not possible to apply the sanction for omitted storage of receipts or for storage with incomplete or inaccurate data.

Finally, the Budget Law postponed to 1 July 2021 the possibility of use of advanced collection systems to fulfil the obligation of electronic memorization and transmission of daily consideration.

Paragraphs 1024 – 1126 (Electronic cigarettes and tobacco)

Consumption tax on smoking products is increased, in particular on liquid for smoking without combustion, whether or not containing nicotine, as well as on tobacco for smoking without combustion.

Paragraphs 1128-1129 (Provisions for warehouses of energy products subject to excise duty)

The Budget Law has introduced new measures in order to reduce the operation of subjects of dubious fiscal reliability into the distribution chain of energy products.

In particular, among these, a prior communication to the Customs Agency by the subjects on behalf of which the holders of commercial warehouses hold or extract petrol or diesel used as fuel.

Let’s Talk

For a deeper discussion, please contact:

Luca Lavazza

PwC TLS Avvocati e Commercialisti


Federica Panzeri

PwC TLS Avvocati e Commercialisti

Senior Manager

Lorenzo Ontano

PwC TLS Avvocati e Commercialisti

Senior Manager

Andrea Werner Beilin

PwC TLS Avvocati e Commercialisti

Senior Manager

Luca Ghelli

PwC TLS Avvocati e Commercialisti

Senior Manager

Daniela Brenna

PwC TLS Avvocati e Commercialisti

Senior Manager