In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information
Corporate tax (IRES - Imposta sul Reddito delle Società) | 24% |
Regional Tax (IRAP - Regional tax on productive activities) | 3.9% for general companies, 4.65% for banks and financial institutions and 5.9% for insurance companies (average rates, vary region by region). Regional authorities have the right to increase or decrease the Irap rates within the limit of 0.92%. |
An "allowance for corporate equity” (ACE) is available, consisting of a deduction equal to the net increase in the equity employed, multiplied by a rate determined each year (1.3% in 2022). The deduction is available each year, provided the equity increase is not diminished.
Company car expenses can be deducted up to 20% for cars that are not assigned to employees or are granted to employees solely for business use, and 70% if they are destined to employees for both business and private purposes. Mobile and landline telephones expenses are deductible up to 80%.
Deductions are available for charitable contributions. Meals and lodging expenses incurred within the municipality are deductible up to 75% of the expense incurred, whereas the cap for telephone expenses is set at 80%.
Losses may be carried forward and offset against corporate taxable income; however, 20% of taxable income in any year cannot be offset by carried-forward losses and is subject to corporate tax. Losses incurred in the first three tax periods may be carried forward to be offset against 100% of taxable income if these losses are linked to a new business activity. The carryback of losses is not permitted.
A tax credit equal to 50% of expenses for sanitizing the environment and work tools has been granted due to the COVID-19 pandemic. Furthermore, donations made over the course of 2020 to fight the pandemic are fully
The patent box regime and R&D credit scheme grant tax credits subject to qualifying provisions to companies that invest in R&D. The tax exemption is up to 20% of the expenditure (capped at EUR 5 million) and can be granted to the permanent establishments of foreign companies if the latter are based in countries with which Italy has concluded a tax treaty and which exchange tax information with the company.
A Digital services tax (DST) was introduced in 2020. It is levied on taxpayers that, at a group level, have annual global turnover over EUR 750 million in the previous calendar year and annual revenue from digital services rendered in Italy of over EUR 5.5 million in the previous calendar year, irrespective of their tax residency. The rate is 3% of gross revenue net of VAT or indirect taxes. Companies subject to the tax must maintain monthly records of relevant transactions.
Social security contributions depend on the activity performed by the company, the number of employees, and the employee's position. For employers, the contribution is generally around 30%.
Italy | OECD | Stati Uniti | Germania | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 14.0 | 10.1 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 238.0 | 163.6 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 59.1 | 41.6 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
From 20 December 2020 to 31 December 2022, an exemption with credit applies in respect of the supply of COVID-19 in vitro diagnostic medical devices and related services, as well as for the supply of COVID-19 vaccines.
EUR 0 - 15,000 | 23% |
EUR 15,001 - 28,000 | 25% |
EUR 28,001 - 50,000 | 35% |
EUR 50,001 and over | 43% |
Municipality Tax | 0 to 0.8% |
Regional Tax | 0.7% to 3.33% |
Self-Employed Resident Individuals | Flat tax of 15% on up to EUR 65,000 of business and professional gross income, without being subject to additional regional and municipal taxes (conditions apply) A reduced flat tax of 5% applies for new activities (conditions apply) |
Law no. 21/2020 and the Italian Budget Law for FY 2021 introduced a distinct mechanism for reducing taxes, consisting of an additional tax deduction. It is due, from 1 July to 31 December 2020, in the case of incomes between EUR 28,000-40,000, in two separate measures, which decrease with increasing income:
- EUR 480 from 1 July 2020 to the end of December 2020 and EUR 960 from 1 January 2021 onwards, increased by the product between EUR 120 (from 1 July 2020 to the end of December 2020) and EUR 240 (from 1 January 2021 onwards) and the amount corresponding to the ratio between EUR 35,000, less the total income, and EUR 7,000, if the total income is greater than EUR 28,000 but not EUR 35,000.
- EUR 480 from 1 July 2020 to the end of December 2020 and EUR 960 from 1 January 2021 onwards, if the total income is greater than EUR 35,000 but not EUR 40,000; the deduction is due for the part corresponding to the ratio between the amount of EUR 40,000, less the total income, and the amount of EUR 5,000.
Self-employed individuals with a structured organisation and non-resident taxpayers exercising business activity in Italy throughout a permanent establishment or a partnership are also subject to IRAP (whose flat rate can go up to 3.9%).
Directors operating in the financial sector are subject to an additional 10% tax levied on the variable compensation exceeding the fixed remuneration on bonuses of stock options and variable payments.
Resident individuals are taxed on interest at a flat rate of 26% (12.5% for interest on Italian treasury bonds). Capital gains derived by an individual on the disposal of Italian immovable property normally are taxed as miscellaneous income, but are exempt from tax if the individual held the property for more than five years. Gains arising from the sale of a principal residence are not subject to tax.
Withholding taxes may be reduced under an international tax treaty.
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Latest Update: January 2023