Italy lowers tax-free threshold to boost tourism

The new measures in the Italian government's 2024 budget highlight the importance of tourist flows. A significant change is the reduction of the tax-free threshold for all non-European tourists visiting Italy. The threshold for tax-free purchases was previously set at €154.90, and the new threshold will now be €70.

This measure, outlined in Article 19 of the new budget law, aims to stimulate the recovery of the tourism sector. Italy previously had one of the highest tax-free thresholds in Europe: in Germany and Spain, there is no minimum amount for a VAT refund, while in France, the threshold was reduced to €100 in 2021, and Greece lowered it from €120 to €50.

According to data provided by the Bank of Italy, foreign travelers' spending in 2019, the pre-pandemic reference year, amounted to €44.3 billion, of which €7.6 billion was spent on shopping (just over 17% of the total). With the new threshold, financial analysts from the Italian Ministry of Tourism estimate that the state could lose approximately €30.7 million in revenue. However, they anticipate increased tourist spending and imports, generating an additional €119 million per year for the state.

While Europe is experiencing a period of economic uncertainty due to the challenging international geopolitical context and slowing markets, foreign tourists are once again choosing Italy as a holiday destination. The Italian government is particularly targeting Chinese travelers who have a taste for luxury goods, especially fashion and leather goods. International tourism stakeholders in Italy had already expressed their desire to facilitate the spending of Chinese travelers by setting up a dedicated counter at Milan Malpensa Airport, an initiative praised by the Italy China Council Foundation, the institution established in June 2022 to promote business and cultural ties between China and Italy.

The Italian Ministry of Tourism aims to make the sector the largest contributor to national wealth, currently accounting for 13% of GDP. According to the Altagamma research firm, tax-free spending on European luxury products has surpassed 2019 levels this year (+15%), partly thanks to the return of Chinese tourists.