# Taxation in Italy

Taxation in Italy is levied by the central and regional governments and is collected by the Italian Agency of Revenue (Agenzia delle Entrate). Total tax revenue in 2018 was 42.4% of GDP. The main earnings are income tax, social security, corporate tax and value added tax. All of these are collected at national level, but some differ across regions. Personal income taxation in Italy is progressive.

## Income tax

Part of a series on :
Taxation :
An aspect of fiscal policy :
Policies
Government revenue
Property tax equalization
Tax revenue
Non-tax revenue
Tax law
Tax bracket
Flat tax
Tax threshold
Exemption
Credit
Deduction
Tax shift
Tax cut
Tax holiday
Tax amnesty
Tax advantage
Tax incentive
Tax reform
Tax harmonization
Tax competition
Tax withholding
Double taxation
Representation
Unions
Medical savings account :
Economics
General Theory
Price effect
Excess burden
Tax incidence
Laffer curve
Optimal tax
Theories
Optimal capital income taxation
Distribution of Tax
Tax rate
Flat
Progressive
Regressive
Proportional :
Collection
Revenue service
Revenue stamp
Tax assessment
Taxable income
Tax lien
Tax refund
Tax shield
Tax residence
Tax preparation
Tax investigation
Tax shelter
Tax collector
Private tax collection
Tax farming :
Noncompliance
General
Tax avoidance
Repatriation tax avoidance
Tax evasion
Tax resistance
Tax shelter
Debtors' prison
Smuggling
Black market
Unreported employment
Corporate
Tax inversion
Transfer mispricing
Base erosion and profit shifting (BEPS)
Double Irish
Dutch Sandwich
Single Malt
CAIA
Locations
Tax havens
Corporate havens
Offshore financial centres (OFCs)
Offshore magic circle
Conduit and sink OFCs
Financial centres
Financial Secrecy Index
Major examples
Ireland as a tax haven
Ireland v. Commission
Leprechaun economics
Liechtenstein tax affair
Luxembourg Leaks
Offshore Leaks
Paradise Papers
Panama Papers
Swiss Leaks
United States as a tax haven
Panama as a tax haven :
Types
Direct
Indirect
Per unit
Ad valorem
Aviation
Airport improvement
Landing
Solidarity
Capital gains
Expatriation
Consumption
Departure
Hotel
Sales
Stamp
Television
Tourist
Value-added
Dividend
Environmental tax
Carbon
Eco-tariff
Landfill
Natural resources consumption
Severance
Steering
Stumpage
Excise
Alcohol
Cigarette
Fat
Meat
Sin
Sugary drink
Tobacco
General
Georgist
Gift
Gross receipts
Hypothecated
Income
Inheritance (estate)
Land value
Luxury
Payroll
Pigouvian
Property
Resource rent
Single
Surtax
Turnover
Use
User charge/fee
Congestion
Fuel
Road/GNSS
Toll
Vehicle miles traveled
Corporate profit
Excess profits
Windfall
Negative (income)
Wealth :
International
Financial transaction tax
ATTAC
Currency transaction tax
European Union Common Consolidated Corporate Tax Base (CCCTB)
Global minimum corporate tax rate
Robin Hood tax
Tobin tax
Spahn tax
Tax equalization
Tax treaty
Exchange of Information
Permanent establishment
Transfer pricing
European Union FTT
Foreign revenue rule :
Trade
Custom
Duty
Tariff
Import
Export
Tariff war
Free trade
Free-trade zone
Trade agreement
ATA Carnet :
Research
Academic
Mihir A. Desai
Dhammika Dharmapala
James R. Hines Jr.
Ronen Palan
Joel Slemrod
Gabriel Zucman
Advocacy groups
Institute on Taxation and Economic Policy (ITEP)
Oxfam (UK)
Tax Foundation (US)
Tax Justice Network (TJN)
Tax Policy Center (US) :
Religious
Church tax
Eight per thousand
Teind
Tithe
Fiscus Judaicus
Leibzoll
Temple tax
Tolerance tax
Jizya
Kharaj
Khums
Nisab
Zakat :
By country
All Countries
List of countries by tax rates
Tax revenue to GDP ratio
Tax rates in Europe
Individual Countries
Albania
Algeria
Argentina
Armenia
Australia
Azerbaijan
Bangladesh
Bhutan
Brazil
Bulgaria
BVI
Canada
China
Colombia
Croatia
Denmark
Finland
France
Germany
Greece
Hong Kong
Iceland
India
Indonesia
Iran
Ireland
Israel
Italy
Japan
Kazakhstan
Lithuania
Malta
Morocco
Namibia
Netherlands
New Zealand
Norway
Pakistan
Palestine
Peru
Philippines
Poland
Portugal
Russia
South Africa
Sri Lanka
Sweden
Switzerland
Taiwan
Tanzania
United Arab Emirates
United Kingdom
United States
Uruguay :
Business portal
Money portal :
vte :
Employment income is subject to a progressive income tax, IRPEF (Imposta sul reddito delle persone fisiche) applying to all workers. The government sets the tax rate according to income, but the regions can add an additional 0.7 percent to 3.33 percent. In addition to the regional income tax, a municipal income tax can be levied which ranges from 0.1 percent to 0.9 percent. Municipalities can also establish progressive tax rates applicable to the national income bracket.
In 2022, the personal income tax rates were as follows:
| Income range | Tax rate |
| €0 – €15,000 | 23% |
| €15,000 – €28,000 | 25% |
| €28,000 – €50,000 | 35% |
| over €50,000 | 43% |
Individuals are considered resident for tax purposes if for the greater part of the tax year they satisfy any of the following conditions:
* their habitual abode is in Italy,
* the centre of their vital interests is located in Italy, or
* they are registered at the Office of Records of the Resident Population in Italy.

### Exemption Area

Due to the different types of income, exemption from IRPEF is determined at:
* €8,000, for subordinate workers, if their employment period coincides with the entire year;
* €7,500, for pensioners under 75 years of age, if the pension is cashed in for the entire year, and for those receiving alimony from ex spouses;
* €7,750, for pensioners aged 75 or older, with a pension period that coincides with the whole year;
* €4,800, no matter how many days they work a year, for taxpayers with other types of income.
The area exempt from IRPEF increases further if there are dependent family members.
New residents of Italy are subject to a more favourable tax treatment on income taxes, providing they were not a tax resident of Italy in the past 24 months. Any taxpayer is entitled to a 70 percent exemption on the employment or self-employment income received for the first five years of tax residency to Italy; the exemption is increased to 90 percent if the taxpayer resides in a Southern region of Italy. The regime is extended for a further five years if the taxpayer meets any of the following conditions:
* has a family dependent of 18 years of age or less living in Italy
* purchases a residential property in Italy

## Corporate tax

Italian corporate entities are subject to Corporate Income Tax, IRES (Imposta sul reddito delle società) and to Regional Production Tax, IRAP (Imposta regionale sulle attività produttive). Italy has one of the highest rates of corporate tax – currently at 24 percent. Across the EU28, the average tax is 21.3 percent (2018).
* The rate of corporate income tax (IRES) since 1 January 2017 is 24 percent (previously it was 27.5 percent, and was at a maximum of 53.2 percent in 1981). Some corporations are exempted from corporate tax, such as charitable foundations, church institutions and sports clubs.
* The standard rate of regional tax (IRAP) is 3.9 percent, however regional authorities may increase or decrease the rate of standard tax by up to 0.92 percent. In addition, different IRAP rates are used to differentiate sectors of the economy in each region. For example, the rate for banks and other financial institutions is 5.57 percent in Abruzzo, Apulia, Lazio, Lombardy, Piedmont and Veneto, but only 4.65 percent in Emilia-Romagna). The tax is calculated differently from IRES, adding the cost of fixed-term workers (before 2016 the cost of every employee was counted). Up to 10% of regional tax (IRAP) is deductible in calculating the tax base for corporate income tax (IRES) purposes.

## Value added tax

Value added tax or VAT, (in Italian Imposta sul valore aggiunto, or IVA) is a consumption tax charged at a standard rate of 22 percent, which came in on 1 July 2013 (previously 21 percent).
The first reduced VAT rate (10 percent) applies to water supplies, passenger transport, admission to cultural and sports events, hotels, restaurants and some foodstuff. The second reduced VAT rate (5 percent) applies to some foodstuff and social services. The super-reduced VAT rate (4 percent) applies to TV licenses, newspapers, periodicals, books and medical equipment for the disabled. A zero VAT rate (0 percent) applies to intra-community and international transport.
The filing deadline for VAT returns is 30 April of the next year.

## Social security
### Employment relationship (staff)

Social security contributions apply to everyone in the workforce, divided into contributions by the employer and those by the employee; both sides are obliged to participate. Employers must register with the Italian Social Security Administration (Istituto Nazionale Previdenza Sociale or INPS). The total contribution rate fluctuates around 40 percent of the employee's wage, depending on their position in the company, on the number of employees in the company, and on the industrial sector of the company. Usually the contributions are apportioned as follows:
* around 30 percent is charged to the employer;
* around 10 percent is charged to the employee.
However, only 33 percent out of this 40 percent is used for INPS purposes; the rest is distributed into several other funds:
* unemployment fund;
* sickness fund (usage of this fund is not applicable for executives);
* maternity fund;
* temporary unemployment compensation fund (separated into ordinary and extraordinary compensation fund; usage of this fund is not applicable for executives);
* social mobility fund (usage of this fund is not applicable for executives);
* other minor funds.
The social security contribution, for employees who registered with INPS after 1 January 1996 without a previous social security position in Italy, is calculated and paid up to a maximum amount of €101,427 for the year 2018.

### Employment relationship (executive)

Social contributions due from commercial executives:
* For INPS, the tax level is 9.19 percent of income up to an income ceiling of €46,630. For higher income tax level is set at 10.19 percent of income.
* For Fondo Mario Negri – complementary pension fund tax level is 1 percent on a national annual income, and tax ceiling is €59,224.54 and maximally €129.12 yearly as training charges.
* For Fondo Mario Besusso – also known as FASDAC (Fondo Assistenza Sanitaria Dirigenti Aziende Commerciali), national medical fund, tax level is 1.87 percent of annual income with a yearly maximum €45,940.
* For Fondo Pastore – complementary pension fund; requirement to contribute at least €464.81. This fund consists of insurance and investment (not compulsory).
Social contributions due from industrial executives:
* For INPS tax level is 9.19 percent of income up to an income ceiling of amount €46,630. For higher income tax level is set at 10.19 percent of income.
* For Fondo Assistenza Sanitaria Industria or FASI, medical care fund, is set at a flat rate of €960.
* For Fondo Previdenza Dirienti Aziende industriali or PREVINDAI, additional pension fund, is set at a tax level of 4 percent of income only for those with maximum annual income €150,000.

### Self-employment relationship

For self-employed individuals who are not VAT number holders and are not covered by a compulsory private pension fund is instituted law 335/95, and according to this individuals must register with INPS in a "separate social security regime". This system is provided for three different rates.
* For individuals enrolled in other mandatory security regimes, the tax level is 24 percent of annual income.
* For individuals with VAT number enrolled in exclusive way into Gestione separata INPS (separate social security regime) is tax level 25.72 percent.
* All others individuals enrolled in the exclusive way into the separate social security regime (Gestione separata INPS) differs on providing DIS-COLL. If DIS-COLL is not provided, the tax rate is 33.72 percent of income, and if DIS-COLL is provided, the tax rate is 34.23 percent.
All percentages equals to maximal limit of €101,427 established by law in 2017.

## Other taxes
### Wealth tax on real estate properties owned outside of Italy

The Italian wealth tax on real estate properties (Imposta sul valore degli immobile situati all'estero or IVIE) owned outside of Italy by an individual who qualifies as a resident for Italian tax purposes has been introduced in Italy. The wealth tax due is proportionate to the percentage owned and the size of the property. The applicable tax rate is equal to 0.76 percent. No IVIE is due if the tax is lower than €200; otherwise, the entire IVIE amount is due.

### Wealth tax on financial investments owned outside of Italy

The Italian wealth tax on financial investments (Imposta sul valore delle Attivita Finanziarie detenute all` Estero or IVAFE) owned outside of Italy by an individual who qualifies as a resident for Italian tax purposes has been introduced in Italy. The wealth tax due is proportionate to the percentage owned and the size of the property. The applicable tax rate is equal to 0.2 percent for the year 2018. Only for bank accounts, the above-mentioned tax is a flat amount equal to €34.20 for each bank account. This flat amount is not due if the average saving amount is lower than €5,000, taking into consideration all the bank accounts owned by the taxpayer.

### Inheritance, estate, and gift taxes

A tax on inheritance and donations was reintroduced in October 2006 after a five-year period during which this tax was abolished. The percentage and exemption limits applicable to transfers of money or assets depend on the beneficiary's relation with the deceased person or donor.
* the spouse or relatives in a direct line, the inheritance or donations tax is imposed at 4 percent on the value of the assets exceeding the tax-free threshold of €1 million (per heir)
* a sister and brother, the inheritance or donations tax is imposed at 6 percent on the value of the transfer exceeding €100,000 (per heir)
* other family members up to the fourth generation, the inheritance or donations tax is imposed at 6 percent on the entire value of the transfer, and
* all other beneficiaries not previously mentioned are subject to an 8 percent tax rate to be applied on the entire value of the transfer.
Shares and government bonds received as an inheritance are not taxed.
Specific provisions apply to a handicapped person.

### Regional tax on productivity

The regional tax on productivity (IRAP) is applied at a flat rate up to 3.9 percent. This flat rate is applicable to the productive activity exercised. The taxable base is the difference between the compensation received and the direct business expenses, excluding any cost of personnel and interest.

### Municipal taxes on real estate owned in Italy

The Italian Financial Bill for the year 2014 introduced relevant changes to the municipal tax on real estate owned in Italy. The tax law introduced a 'unique municipal tax' (Imposta municipale unica or IUC).
IUC is composed of three different taxes:
* Municipal tax (Imposta municipale propria or IMU);
* Garbage tax (Imposta sui rifiuti or TARI);
* Indivisible service tax (Imposta sui servizi indivisibili or TASI).

## Tax evasion and lack of guarantees

Italy has the largest number of "major tax evaders" in Europe, according to the estimated figures, tax evasion amounting to over €180 billion. Evasion is sometimes seen by evaders as the best way to ensure the right of defense from the alleged excessive tax claim of the State.