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Income Tax in Italy

The income tax is one of the taxes charged to natural persons and legal entities carrying a taxable activity in Italy. The rates at which the income tax is charged to natural persons vary depending on the income obtained by the respective person in a financial year. There are several income brackets and the tax rates charged for these income brackets will increase as the value of the income expands. 

Income tax is also charged to companies and it is referred to as the corporate income tax. Businessmen who want to open a company in this country are invited to request in-depth information on the types of taxes they are liable to here from our team of Italian lawyersOur law firm in Italy can offer extensive details on how to register for the Italian income tax and how to pay the amount due. 

What is the tax rate for the corporate income tax in Italy?

The income tax in Italy is also charged to any legal entity set up for commercial purposes. Currently, the corporate income tax is applied at a rate of 24% to any legal entity incorporated in Italy. Foreign businesses operating here must also pay the same tax and this type of tax is charged to branch offices as well. 

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What is the tax system for natural persons in Italy?

The Italian tax system requires natural persons who obtain taxable income to be charged with a specific income tax rate, depending on the person’s overall yearly income. It must be noted that not only the Italian citizens are charged with the income tax, this tax being applied to foreigners as well, if they obtain a taxable income from an activity developed on the Italian territory. Natural persons are charged for their yearly income as follows:

  • any income with a value of maximum EUR 15,000 is charged at a rate of 23%;
  • income with a value from EUR 15,001 to EUR 28,000 is taxed at a rate of 27%;
  • a higher rate – 38% –  is applied to the income of a natural person if the value is between EUR 28,001 and EUR 55,000;
  • an income ranging from EUR 55,001 to EUR 75,000 is imposed with a tax of 41%;
  • any income with a value over EUR 75,001 is taxed with a tax rate of 43%. 

How is the personal income tax charged to individuals in Italy?

The individual income tax, or the personal income tax, applicable only to natural persons, is charged at a national, regional and municipal levels, this being applicable to both Italian tax residents and non-residents. However, the tax scheme can vary and our team of Italian lawyers can present the detailed procedures following the national law.  

It must be noted that in the case of persons who are tax residents in Italy, the income is calculated as the income obtained from activities developed in Italy, as well as the income such persons may have obtained in other countries, this being the so-called worldwide principle. 

In the case of persons who do not have their tax domicile in Italy, they will also be charged with the income tax, but the tax will be charged only to the income they have gained from activities developed in Italy. The foreign income of a person who is not a tax resident here is not taken into consideration for taxation in Italy. You may find out more details on how the tax residency is determined here from our Italian law firm

When is a person considered a tax resident in Italy?

The tax residency of a person is determined by specific conditions. For example, persons who are citizens of Italy living in this country will be automatically considered tax residents here. The same applies to those who have established their residence in Italy and our Italian lawyers can offer legal assistance to foreigners who want to register their residency in this country. 

A person is considered a tax resident in Italy if he or she is registered with the Office of Records of the Resident Population and has his or her residency in this country for a period of at least 183 days of the financial year. The same applies if the person lives in this country for more than 183 days or if the person has a business related activity in this country which lasts for more than 183 days. 

In the case in which a foreigner no longer stays in Italy and he or she has registered with the above mentioned institution, then the person has to cancel the registration with the said institution. You can request more details on how to start this procedure from our team of lawyers in Italy

Please contact our team of Italian lawyers for additional information on the income tax system applicable in this country. Our law firm in Italy can represent foreign natural persons and legal entities who must register for taxation in this country and can also offer in-depth information on the compliance measures one must follow here.