Taxes

A GUIDE TO ITALIAN TAXES

The law provides for a system based on five taxes:

  1. the Imposta sul reddito(income tax);
  2. the Imposta sul reddito delle società(corporate tax);
  3. the Imposta sul valore aggiunto(VAT or sales tax);
  4. the Imposta sui servizi(tax on services);
  5. the Accise(excises).

IMPOSTA SUL REDDITO DELLE PERSONE FISICHE (IRPEF)

It is an individual income tax. Tax rates are progressive and range from 23% to 43%. Additional taxes are due at the regional (0.9% to 1.4%) and local (0.1% to 0.8%) levels.

If you are a foreign resident working in Italy, you are only taxed on the income earned in Italy. However, if you are an Italian resident, spend more than 183 days a year in Italy, and your “center of economic interest” (i.e. your business and investments) is in Italy, your worldwide income is subject to IRPEF.

After allowances have been taken into account, rates are on a sliding scale. They are currently as follows:

  • 23% for amounts up to 15.000 Euros
  • 27% for amounts between 15.001 and 28.000 Euros
  • 38% for amounts between 28.001 and 58.000 Euros
  • 41% for amounts between 58.001 and 75.000 Euros
  • 43% for amounts over 75.001 euros.

The reporting agent is entitled to a series of deductions (19%) from taxable income relating to health care  (medical expenses), education (university tuition fees) and life insurance.

IMPOSTA SUL REDDITO DELLE SOCIETÀ

It is a personal and proportional tax based on the corporate income. The percentage rate is currently 27,50%.

IMPOSTA SUL VALORE AGGIUNTO

It is an indirect tax burden on consumption. The percentage rates – 4%, 10%, 22% – vary according to the type of product.

IMPOSTA SUI SERVIZI (TASI)

It is a tax on public services provided by the local authorities such as rubbish collection, maintenance of streets and street lighting as well as public safety. It must be paid by owners and tenants of buildings, both dwellings and stores.

ACCISE

It is an indirect tax on the production and sale of certain categories of goods (for example fuel). It is applied on quantity and not on prices.

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