Value Added Tax was introduced by Maurice Laure, a well known French economist,in 1954. At that point of time it was known as taxe sur la valeur ajoutee. He was also one of the Directors of the French tax authority. Initially VAT was meant for big businesses but gradually it was applied to every sphere of business. The European Union Value Added Tax or EU VAT is applicable for all the countries that are part of the European Union.
The VAT rates differ in each of the member countries of the European Union. It is fixed at a minimum standard rate of 15%. In some countries, however, the VAT rates are as low as 5% and levied on specific commodities like power and domestic fuel. The maximum VAT imposed in any of the European Union countries is 25%.
In Italy, the Value Added Tax imposed on various business transactions and purchases is 20%. Value added tax charged on basic products is levied at a reduced rates of 4% and 10%. Even services, imports and assets come under the domain of value added tax in Italy. VAT returns are submitted on a monthly basis. They can also be made once in every quarter. At the end of the financial year, an annual VAT return is to submitted on the 15th of March.
Since VAT is also applied to one's assets, the tax rates are fixed in between 4%-8% of the total asset value. Apart from the VAT, the Inheritance tax is also in place in Italy after its re introduction in 2007.
The Value Added Tax system in Italy is in line with the European Union Value Added Tax rules and regulations. According to it, the VAT is paid by the final consumer only. At the production and distribution level, the suppliers of various services and goods deduct the input VAT. The tax is levied on any and every service or article that forms a part of a business transaction in Italy.