Taxation in Italy
|An aspect of fiscal policy|
Taxation in Italy is progressive. Taxation is levied by the central government and the regional governments. Revenue is collected by the Italian Agency of Revenue (Agenzia delle Entrate). Tax revenue in 2012 was 44.4% of GDP. Total tax receipts in 2013 was 782 billion euros. Most important revenue sources, include the income tax, Social Security, corporate tax and the value added tax, which are all applied on the federal level.
Employment income earned in subject to a progressive income tax, which apply to all who is in the workforce. Currently, for year 2013, the personal income taxation system is as follows:
|Annual income||Tax rate|
|In between €0 and €15,000||23%|
|In between €15,000 and €28,000||27%|
|In between €28,000 and €55,000||38%|
|In between €55,000 and €75,000||41%|
|In excess of €75,000||43%|
An individual is considered resident for income 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.
- They are registered at the Office of Records of the Resident Population in Italy.
The Corporate income Tax (IRES) in Italy is currently 27.50%, after the last tax reform, which lowered the corporate tax rate. Some corporate enterprises are exempted from corporation tax, e.g. charitable foundations, Church institutions, and sports clubs.
Value Added Tax
Value Added Tax (VAT - IVA) a consumption tax applying on a standard rate 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 Contributions (Istituto Nazionale della Previdenza Sociale - INPS) apply to everyone in the workforce. Employers withhold 9.19% of the employee's wage and furthermore the employer contribute 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.
- OECD revenue as a share of GDP statistics "Revenue Statistics". OECD. 2014-06-25. Retrieved 2014-06-25.
- Redazione internet Agenzia Entrate. "Agenzia delle Entrate - Income tax for individuals". .agenziaentrate.gov.it. Retrieved 2014-10-29.
- "Going to Italy" (PDF). expat.hsbc.com. HSBC.