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Italy is not the exception at the moment to pay taxes. Everyone residing legally in Italy, Italian or foreigner, is subject to taxes. The Italian tax system is considered among the most complicated in the world.

Italy has signed tax treaties with several countries, so the issue of double taxation tends to be reduced. Citizens of US are most affected by this; they have to pay tribute no matter where they live.

The tax system in Italy is administered by Agenzia delle Entrate, the national tax Authority. Its local tax offices give information to all citizens, whether they are Italian resident tax-payers or not.

In Italy, it is the commercialista that prepares your returns and advises you on local issues. Another alternative is the government CAF (fiscal assistance center), here you can have your tax return prepared for free.

Taxes are usually subdivided into Tasse (duty and public service taxes) and Imposte (taxes based on income and profits)
  • Tasse: These taxes are paid in order to obtain, in exchange, a specific service from the body levying the tax.

  • Imposte: Revenue taxes are the most important category of general taxes as they provide approximately 90 percent of State revenue. Revenue taxes can be classified in various ways:

    • Income taxes: Apply to the amount of wealth accrued over a fixed period.
    • Taxes on capital and property: Apply to the possession of assets.
    • Direct taxes: Apply to an 'abstract' form of wealth: acquisition of revenue, possession of capital.
    • Indirect taxes: Apply to an indirect form of wealth: consumption, transfers of assets.
    • Personal taxes: Apply to the total contribution capacity of a person, taking into account all the factors in his situation: the typical example is tax on the income of natural persons.
If you want to open a bank account, to sign a work contact or to receive electrical power or a telephone connection, it is necessary to obtain a Tax number (Codice Fiscale). The application of Tax Number must be made to the Italian Tax Authority (Agenzia delle Entrate). The citizens (Italian or foreign) receive from the Ministry of Finance a plastic card with the tax number.

The main taxes in Italy are:

  • IRE – Personal Income Tax (Imposta dei Redditi): This is the personal income tax to which partners who are physical persons are subject. It’s assessed by percentage of earnings according to tax brackets. All individuals, whether resident or non-resident, are subject to this income tax.

  • IVA - Value Added Tax (Imposta sul valore aggiunto): This is imposed on all transactions involving goods and services. This tax is paid by an entrepreneur on goods and services received and can normally be credited against the tax payable on their own turnover, so that in effect only the value added is taxed.

  • IRAP - Regional Tax on Business Activities (Imposta regionale sulle attività produttive): This is a local tax applied on the value of the production generated in each taxable period by persons carrying out business activities in a given Italian region. Non-Italian resident corporations are subject to IRAP only on the production generated through Italian permanent establishments.

  • ICI - Property tax(Imposto municipale or Imposta Comunale sugli Immobili): This is a local municipal property tax, and is paid by anyone who owns property or land in Italy, whether they are a resident or non-resident.

  • IRES - Corporate income tax(Imposta sul reddito delle società): Italian resident corporations are subject to IRES on their worldwide income. Non-Italian resident corporations are subject to IRES only on Italian source income. The flat tax rate on taxable income is 33%.

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Money and Finance in Italy
MBA Italy