Barter transactions: Italy finalises the new VAT taxable base rules

The 2026 Budget Law (Law No. 199/2025) replaced the “normal value” criterion for determining the VAT taxable base of barter transactions (Article 13(2)(d) of the Italian VAT Decree) with a cost-based approach applicable to all barter transactions carried out from 1 January 2026. This legislative change raised significant concerns, including difficulties in identifying relevant costs, business confidentiality issues, and the absence of transitional rules for pre-existing contracts.

To address these concerns, the rule was amended (see Law No. 88/2026 effective from 23 May 2026) and under the final framework:

• the VAT taxable basis is the monetary value of the goods and services exchanged, as contractually agreed by the parties. However, such value cannot be lower than the costs attributable to each party’s supply, determined at the time of the transaction. Accordingly, costs are no longer the primary basis for determining the taxable amount, but instead operate as a minimum safeguard against abuse;
• the revised rules apply to barter transactions performed under contracts entered into or renewed on or after 1 January 2026. Tax positions adopted between 1 January and 23 May 2026 under either the cost-based or normal value approach remain protected.

In Circular No. 16/2026, Assonime, the association representing Italian joint-stock companies, identified a key unresolved question: whether the cost threshold covers all costs or only VAT-bearing costs. Assonime favours the latter view, considering it more consistent with the provision’s anti-avoidance purpose, although further clarification from the Italian Tax Authorities is still expected.

Key takeaway / recommendation

Businesses engaged in barter transactions should review their contracts to ensure they clearly state the monetary value attributed to each supply. Using values aligned with market benchmarks should help reduce the risk of challenge by the Tax Authorities. Pending official clarification, it remains uncertain whether the minimum cost threshold covers all costs or only VAT-bearing costs. Companies should therefore document the costs attributable to barter supplies and monitor further guidance.

Reference / Link to document

• Law 22 May 2026, n. 88 (conversion of Law Decree no. 38/2026)