Italy VAT and TOMS Guide for Travel Businesses | Italy Tax Rules Explained

Complete overview of Italian VAT, travel rates, TOMS margin rules, and compliance requirements for inbound and outbound operators.

Detailed VAT and TOMS guide for travel agents, tour operators, and DMCs working in Italy. Understand VAT rates, place of supply, accommodation rules, event services, and margin calculations. Includes TOMS treatment, compliance obligations, and VAT reclaim guidance.

Italy – VAT and TOMS for Travel Businesses

Modern VAT system introduced: 1973 (Legge IVA 633/1972)
Standard VAT rate: 22 percent
Reduced rates: 10 percent and 5 percent (with super-reduced 4 percent on limited items)
Authority: Agenzia delle Entrate (Italian Revenue Agency)

Italy is one of the most visited destinations in Europe and operates a detailed VAT system with strict invoicing, classification, and documentation rules. Travel agents, DMCs, and tour operators must understand how Italy applies VAT to accommodation, tours, events, and multi-component programmes. Italy also applies the EU Tour Operator Margin Scheme (TOMS) and requires mandatory electronic invoicing (e-fattura) and transmission through the SDI platform for registered businesses.

VAT treatment of travel and hospitality in Italy

Italy uses a mix of standard and reduced VAT rates across the tourism sector. Correct classification is essential because Italian auditors enforce rate accuracy, documentation quality, and the place of supply rules.

Accommodation

Hotels, resorts, agriturismi, serviced apartments, campsites, and similar lodging are taxed at the 10 percent VAT rate when accommodation is the principal supply. This includes breakfast if included in the board arrangement.
If meals, spa access, wellness services, or parking are sold independently, different rates may apply depending on the nature of the service.

Food and beverage

Restaurant and catering services follow the 10 percent VAT rate. Alcoholic beverages supplied with meals normally remain at 10 percent. Premium alcohol served in bars or as standalone items may attract 22 percent.

Passenger transport

Domestic passenger transport supplied by road, rail, sea, or air is generally exempt from VAT under Italy’s implementation of EU transport rules. However, exemptions can be overridden if the transport is bundled within a broader taxable package.

International transport is typically exempt or outside the scope.

Tours, guides, attractions, and cultural activities

The VAT treatment depends heavily on the service type:

• guided tours and excursion services typically: 22 percent
• museum and cultural attraction tickets: 10 percent
• theatre, opera, and classical performances: 10 percent
• entertainment and commercial attractions: 22 percent
• event management, staging, and corporate hospitality: 22 percent

When travel services involve both cultural components and event services, correct segmentation is required for VAT purposes.

DMC and travel organiser services

An Italian DMC must apply VAT based on the underlying type of service.
Fee-based services such as event planning, itinerary design, and corporate programme management usually attract 22 percent.
Bought-in services sold as principal may fall under TOMS.

Place of supply rules

Italy follows EU place of supply rules for VAT. This determines when a foreign supplier must charge Italian VAT.

Key rules for travel businesses:

Accommodation is always taxed where the property is located, meaning any Italian hotel booking triggers Italian VAT on the underlying service.

Event services (conferences, exhibitions, incentive programmes) are taxed where the event takes place, whether B2B or B2C.

Cultural, educational, and entertainment services are taxed where physically performed.

Restaurant and catering services given inside Italy are taxed in Italy.

These rules generally ensure that if the travel or event activity is carried out in Italy, Italian VAT applies even when the customer is outside Italy.

Italy and the Tour Operator Margin Scheme (TOMS)

Italy applies TOMS to travel organisers who buy in travel services and sell them as principal. TOMS is mandatory where the conditions are met, regardless of customer location.

When TOMS applies

TOMS applies when:

• the operator buys in travel services from Italian or EU suppliers
• the services are supplied to the customer in their own name
• the travel takes place within the EU
• the supply is a package or a single travel component

What is taxed under TOMS

Only the margin is taxed, not the underlying costs.
The margin is the difference between the selling price and the direct cost of bought-in services.

Under TOMS, input VAT on components used within a margin scheme supply cannot be reclaimed.

Activities not covered by TOMS

TOMS does not apply to:

• pure intermediary services
• agency commissions
• consultancy or event-design services without bought-in travel elements
• supplies where the travel takes place outside the EU
• standalone services charged with itemised VAT

In these cases, Italy’s normal VAT rules apply.

VAT rate applied to the TOMS margin

TOMS margins are taxed at the standard 22 percent rate, regardless of the underlying service rates.

Zero rating for non-EU travel

Where the travel components take place outside the EU, the margin may qualify for zero rating. Italian established operators must separate EU and non-EU margin pools accordingly.

SDI and mandatory e-invoicing (e-fattura)

Italy has the most advanced electronic invoicing system in the EU. Any business registered for Italian VAT must comply with SDI (Sistema di Interscambio) and issue electronic invoices in the XML e-fattura format.

Who must use SDI

Mandatory for:

• all Italian established businesses
• foreign businesses with an Italian VAT number and a fixed establishment
• foreign suppliers who register for VAT in Italy for local supplies

Not mandatory for foreign operators who do not hold an Italian VAT number (for example, TOMS-only foreign operators with no fixed establishment).

What must be transmitted

Invoices must be created in XML, signed digitally, and transmitted to SDI. Required data includes:

• supplier and customer VAT numbers
• nature of the transaction (N codes)
• taxable amounts by VAT rate
• VAT amount
• description of travel services
• place of supply indicators
• TOMS applicability where relevant (via specific documentation codes)

SDI rejects invoices with missing, inconsistent, or incompatible information.

Interaction with TOMS

Under TOMS, no VAT invoice is issued for the margin, so the e-fattura requirement applies only to:

• non-TOMS services
• intermediary services
• fee-based event work
• any supply where Italian VAT is charged
• input VAT invoices received by an Italian-established operator

Foreign operators under TOMS without Italian VAT registration remain outside the e-fattura obligation.

VAT registration for foreign travel companies

Foreign companies must register for VAT in Italy when they supply taxable services in Italy that fall outside TOMS.
Typical triggers include:

• B2B event services supplied in Italy
• accommodation supplies sold as principal
• restaurant or catering services
• passenger transport services included within a broader taxable event
• where the supplier is not operating exclusively under TOMS

Where reverse charge applies, registration may not be required, but this depends on the nature of the supply and whether a fixed establishment exists.

Foreign DMCs with staff or facilities in Italy are treated as having a fixed establishment and must comply with SDI.

VAT reclaim position

Italy permits VAT refunds to:

• EU businesses under the EU 8th Directive
• non-EU businesses under the EU 13th Directive

Refund eligibility requires correct documentation, compliant invoices issued via SDI, and clear evidence that the costs relate to taxable activity.

VAT on costs used for TOMS activities remains non-recoverable for all operators.

Full details are available on our VAT Reclaim page.

Antravia helps

Antravia supports travel companies with:

• Italy VAT classification
• TOMS margin analysis and cross-border treatment
• SDI and e-fattura onboarding for foreign businesses
• VAT registration and compliance
• DMC invoicing reviews and event industry VAT support
• reclaim feasibility analysis under EU rules
• identifying and preventing VAT leakage in multi-country itineraries

Not based in Italy but looking for Italian VAT Reclaim? Click here

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Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.
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