Taxation in Italy

Taxation
An aspect of fiscal policy
Policies Government revenue Tax revenue Non-tax revenue Tax law Tax bracket Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Double taxation Representation Unions Medical savings account Tax, tariff and trade
Economics Price effect Excess burden Tax incidence Laffer curve Optimal tax Theory Optimal capital income taxation
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Private tax collection Tax farming
Noncompliance Tax avoidance Tax evasion Tax resistance Tax haven Smuggling Black market Transfer mispricing Unreported employment Tax shelter
Distribution Tax rate Progressive Regressive Proportional
Types Direct Indirect Per unit Ad valorem In rem Capital gains Carbon Consumption Dividend Ecotax Excise Fuel Georgist Gift Gross receipts Income Inheritance (estate) Land value Payroll Pigovian Property Sales Sin Single Stamp Steering Turnover Value-added (VAT) Corporate profit Excess profits Windfall profits Negative (income) Flat Wealth
International Financial transaction tax Currency transaction tax Tobin tax Spahn tax Tax equalization Tax treaty Permanent establishment Transfer pricing European Union FTT
Trade Custom Duty Tariff Import Export Tariff war Free trade Free trade zone Trade agreement
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country List of countries by tax rates Tax revenues as %GDP Albania Algeria Argentina Australia Azerbaijan Bangladesh Bhutan Bulgaria Canada China Colombia France Germany Greece Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Malta Namibia Netherlands New Zealand Norway Pakistan Palestinian territories Peru Philippines Poland Russia Singapore South Africa Sweden Switzerland Tanzania United Kingdom United States Uruguay

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 2012 was 44.4% of the GDP. The total tax receipts in 2013 were €782 billion. The most important revenue sources are income tax, social security, corporate tax and the value added tax, which are all applied at the national level. Personal income taxation in Italy is progressive.

Income tax

Employment income is subject to a progressive income tax applying to all workers.

In 2013, the personal income tax rates were as follows:

Income range	Tax rate
€0 — €15,000	23%
€15,000 — €28,000	27%
€28,000 — €55,000	38%
€55,000 — €75,000	41%
over €75,000	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 euros, for subordinate workers, if their employment period coincides with the entire year;
• 7,500 euros, for pensioners under 75 years of age, if the pension is cashed in for the entire year, and for those receiving palimony from ex spouses;
• 7,750 euros, for pensioners aged 75 or older, with a pension period that coincides with the whole year;
• 4,800 euros, 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.

Corporation tax

The corporate income tax (IRES) in Italy is 27.50% since the last tax reform. Some corporations are exempted from corporate tax, such as charitable foundations, church institutions and sports clubs.

Value added tax

Value added tax (VAT - IVA) is a consumption tax at a standard rate of 22%. Reduced VAT rates apply at 10% for pharmaceuticals, passenger transport, admission to cultural and entertainment events, hotels, restaurants and 4% on foodstuffs, medical and books. The Italian VAT is part of the European Union value added tax system.

Social security

Social security contributions (Istituto Nazionale della Previdenza Sociale - INPS) apply to everyone in the workforce. Employers withhold 9.19% of the employee's wage and the employer contributes 34.08% of gross pay.

Self-employed individuals must enrol with the Gestione Separata (INPS), unless other specific rules apply (for example, certain professionals, such as lawyers, engineers and accountants, are required by law to enrol in specified pension plans). The contributions to the INPS are calculated at a flat rate ranging from 18% to 27.72% on annual income up to a maximum income of €96,149 in 2012.

Tax evasion and lack of guarantees

Italy has the largest number of "major tax evaders" in Europe, counting, according to the estimated figures, tax evasion for over €180 billion. On the other hand, the problem is the best way to ensure the right of defense from the tax claim of the State.

See also

• Eight per thousand

External links

• How to: Register the VAT number in Italy
• How to calculate your net salary in Italy