Italy
Financial Year – 1 January – 31 December
Currency – EUR
Corporate Tax Summary
Residence – A company is considered resident if its registered office (or legal seat), place of effective management or main business purpose is in Italy for the greater part of the fiscal year. Italian legislation provides for a rebuttable presumption of residence for non-resident company to the extent that it controls a resident company and either (i) is directly or indirectly controlled by an Italian resident person or (ii) the non-resident company’s board of directors is mainly composed of resident persons.
Basis of Taxation – Resident companies are generally taxed on worldwide income. A non-resident company is generally subject to tax only on income derived from Italian sources. The tax rates and treatment are the same for companies and branches of foreign companies.
| Reference | ||
| Corporate Income Tax Rate (%) | 24% | a 3,5% CIT Surtax is provided for banks and financial intermediaries (excluding financial asset manager and financial brokers) and for income deriving from management of public licences (motorways, airport, ports and railways). |
| Branch Tax Rate (%) | 24% | |
| Withholding Tax Rate: | ||
| Dividends – Franked | n.a. | |
| Dividends – Unfranked | 26% – 1.2% – 0% | Dividends paid by Italian companies are generally subject to a 26% witholding tax. 1.2% when paid to beneficial owners (companies or entities) resident in another EUA country (EU, Liechtenstein, Norway and Island). No withholding tax is levied on dividends paid to parent companies (EU Parent-Subsidiary Directive), to the extent that the EU parent has held at least 10% of the capital of the subsidiary continuously for at least 1 year. |
| Dividends – Conduit Foreign Income | n.a. | |
| Interest | 26% – 12.5% – 0% | Interests paid by Italian companies are generally subject to a 26% withholding tax (12.5% on public bonds). No withholding tax is levied on interests paid to associated companies (the EU Interest-Royalties Directive). It is required that the beneficial company holds 25% of the voting rights (directly or through a common shareholder) for at least 1 year. |
| Royalties from Intellectual Property | Royalties paid to non-resident companies are subject to a 30% withholding tax (on 75% of the gross amount of the payment). No withholding tax is levied on royalties paid to associated companies (the EU Interest-Royalties Directive). It is required that the beneficial company holds 25% of the voting rights (directly or through a common shareholder) for at least 1 year. | |
| Fund Payments from Managed Investment Trusts | ||
| Branch Remittance Tax | 0% | |
| Net Operating Losses (Years) | ||
| Carry back | no | |
| Carry forward | Yes. Indefinite. |
Individual Tax Summary
Residence – An individual is considered resident, for tax purposes, if for the greater part of the tax year is registered in the Civil Registry of the Resident Population or is resident or domiciled in Italy (habitual abode or principal centre of vital interests). Italian nationals who moved to Country included in the black list (DM of 4 May 1999) are deemed residents of Italy unless proof to the contrary is provided.
Basis of Taxation – Resident individuals are generally taxed on worldwide income with a Foreign Tax credit granted on foreign income.
Non-resident individuals transferring their residence to Italy after residing abroad for at least 9 of the previous 10 tax years may benefit of a special tax regime (lump-sum substitute tax of EUR 100,000).
A non-resident individual pays taxes only on income derived from Italian sources (rentals from lands and bulding situated in Italy, employment income performed in Italy or paid by Italian companies, permanent establishment income, capital gains realized with the sale of participations in Italian companies, etc.).
Filing Status – Each taxpayer is required to fill a separate return each financial year and to pay annually the taxes due.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| up to 15,000 | 23% | 23% |
| 15,001-28,000 | 27% | 27% |
| 28,001-55,000 | 38% | 38% |
| 55,001-75,000 | 41% | 41% |
| over 75,000 | 43% | 43% |
Regional Surcharge (till 3%) and Municial surcharges (up to 0.9%) are applied. Several deduction and tax credits are granted to taxpayers.
Goods and Services Tax (GST)
| Rate | 4-22% |
| Taxable Transactions | VAT is a EU tax and it is applied on sale of goods, supply of services, import and intra-EU acqusition carried out within Italy. |
| Registration | A non-resident taxable person having a fixed establishment in Italy is obliged to register as a VAT taxable person (direclty or through a VAT representative). Supply of goods and services rendered B2C generally requires the registration for VAT purposes. EU companies are entitled to apply for the VAT registration directly. |
| Filing and Payment | VAT persons must calculate and pay the amount of VAT on a periodical basis (monthly or quarterly) and to file the VAT annual return between 1 February and 30 April of the following year. |
Other Taxes Payable
| Tax | Reference |
| Payroll Tax | Personal Income taxes are levied monthy by the employer based on salaries and benefits in kind. |
| Payroll Tax | Stamp duties are levied on certain documents, contracts and registers (e.g. bank cheques, statements of accounts, bills, written contracts, judicial acts, accountancy books). Italian legislation includes Registration tax, mortgage tax and cadastral tax upon the transfer of immovable properties and other assets. |
| Land Tax | Municipal tax |
| Financial Transaction tax | |
| Motor vehicle tax | |
| Insurance premium tax | |
| Tax on waste material |
Last updated: 22.04.2020