2023 Budget Law – New provisions in the VAT, excise duties and consumption tax field

Prepared by Alessia Zanatto, Davide Accorsi, Francesco Pizzo, Maria Chiara Turio Bohm, Mariagrazia Di Laudo e Erika Luvarà

Law No. 197/2022 concerning the “Budget of the State for the financial year 2023 and multiannual budget for the period 2023-2025” (“Budget Law”) was approved on 29 December 2022. In this document we briefly analyze the most significant changes introduced with regard to VAT, excise duties and certain consumption taxes (so called “Plastic tax” and “Sugar tax”).

Paragraphs 13-14 (5% VAT rate on the supplies of methane gas for civil and industrial use and for supplies of methane gas under “energy service” contracts made in the first quarter of 2023)

Based on these provisions, the supplies of methane gas for civil and industrial use (provided by article 26, para. 1 of Consolidated Law No. 504/1995) and the supplies of natural gas under “energy service” contracts (provided by article 16, para. 4 of Legislative Decree No. 115/2008) relating to the first quarter of 2023 (i.e., from 1 January 2023 to 31 March 2023) are subject to the 5% VAT rate.

Paragraph 16 (5% VAT rate on district heating services in the first quarter of 2023)

By way of derogation from the ordinary rules set forth in Presidential Decree No. 633/1972, the 5% VAT rate applies to the supply of district heating services, accounted for in invoices issued for estimated or actual consumption in January, February and March 2023.

Paragraph 64 (Deferral of “Plastic tax” and “Sugar tax”)

By amending para. 652 and 676 of Article 1 of Law No. 160/2019, the entry into force of the consumption taxes on single use manufactured goods (“Plastic tax”) and on sweetened soft drinks (“Sugar tax”) is deferred until 1 January 2024.

Paragraph 72 (5% VAT rate on certain infant products)

By adding No. 1-sexies to Table A, Part II-bis, attached to Presidential Decree No. 633/1972 the Budget Law provides for the application of the 5% VAT rate on certain infant products such as:

  1. powdered or liquid milk for the feeding of infants or young children, prepared for retail sale;
  2. food preparations of flour, groats, meal, starch or malt extract for feeding infants or young children nutrition, prepared for retail sale (CN code 1901 10 00);
  3. baby nappies;
  4. child seats to be placed in cars.

Preparations for infant feeding, mentioned in item No. 65) of Table A, Part III, attached to Presidential Decree No. 633/1972  are instead subject to the 10% VAT rate.

Paragraph 73 (10% VAT rate on pellets)

By way of derogation from item No. 98) of Table A, Part II attached to Presidential Decree No. 633/1972, for the year 2023, the 10% VAT rate applies on pellets.

Paragraph 122 (Amendments to excise duties on tobacco products)

The Budget Law amends the regulation of excise duties on tobacco products, provided for in  the Consolidated Law No. 504/1995 (“Italian Body text of excise duties”).

Specifically, the criteria for calculating excise duties for tobacco products and the relevant base rates were modified.

Furthermore, changes were made to the regulation of non-combustion inhalation products (so-called electronic cigarettes), by reducing, in particular,  the consumption tax applicable to these products for the year 2023.

Paragraphs 148-150 (Provisions to prevent the opening of fictitious VAT numbers)

The Budget Law provides for some measures to prevent the opening of fictitious VAT numbers by introducing paragraphs 15 bis, 15-bis 1 and 15-bis 2 to Article 35 of Presidential Decree No. 633/1972. More specifically, the Revenue Agency has the task of carrying out specific analysis of the risk related to the issue of new VAT numbers, at the end of which it may invite the taxpayer to appear in person to produce the compulsory accounting records referred to in articles 14 and 19 of Presidential Decree No. 600/1973 to verify the actual activity carried out and to demonstrate the absence of the identified risk profiles. Should the taxpayer fail to appear or should the outcome of the checks on the documents produced be negative, the Revenue Agency may decide to terminate the VAT number.

The application for a VAT number may subsequently be submitted by the same person, as an individual entrepreneur, self-employed person or legal representative of a company, association or entity, with or without legal personality, set up after the termination of the VAT number. However, this requires the prior issuance of a surety policy or bank guarantee for an amount of no less than EUR 50,000 with a duration of 3 years from the date of issue.

Finally, paragraph 7-quater of Article 11 of Legislative Decree No. 471/97 is introduced, which provides for a penalty of EUR 3,000 to be applied at the same time as the termination of the VAT registration, without the possibility of applying penalty reduction (so-called ‘cumulo giuridico’).

Paragraph 151 (Sales of goods via digital platforms)

Paragraph 151 introduces a specific reporting obligation for VAT taxable persons who facilitate, through the use of an electronic interface, such as a virtual marketplace, a platform, a portal or similar means, the sales of movable goods, to be identified by a decree of the Minister of Economy and Finance and existing in Italy, made to non-VAT taxable persons.

These taxpayers are required to transmit to the Revenue Agency the data relating to the suppliers and the transactions carried out.

Prior to the transposition of the special regime for distance sales provided for in article 14-bis of Directive 2006/112/EC, article 13, para. 1 of Law Decree No. 34/2019, provided for a similar quarterly reporting obligation for VAT taxable persons who facilitate, through the use of an electronic interface, distance sales of imported goods or goods within the European Union, within the month following each quarter. This obligation ceased as of 1 July 2021.

The new reporting obligation could be similar to the one in force until 1 July 2021, differing, however, both in the objective and subjective scope of application.

Paragraph 152 (Violations of obligations relating to transactions subject to reverse charge VAT)

The Budget Law adds a new sentence to article 6, para. 9-bis.3 of Legislative Decree No. 471/1997. 

The first sentences of this article provide for a penalty ranging from 5% to 10% of the taxable amount with a minimum of EUR 1,000 for failure to carry out the obligations related to the reverse charge regime in the case of non-existent transactions.

With the amendments made, it is specified that the above provision does not apply in the case of non-existent VAT taxable transactions when the execution of the transactions was determined by an intent to evade or defraud where there is evidence of the client’s awareness. In this case the penalty provided for by art. 6, para 6 of Legislative Decree No. 471/1997 – equal to 90% of the deducted VAT – applies.

Let’s Talk

For a deeper discussion, please contact:

Alessia Zanatto

PwC TLS Avvocati e Commercialisti


Davide Accorsi

PwC TLS Avvocati e Commercialisti


Francesco Pizzo

PwC TLS Avvocati e Commercialisti