Italy - Tax Guide for Freelance Contractors

Tax residents in Italy:         are liable to pay Italian tax on their worldwide income
Non tax residents in Italy:  are liable to pay tax on Italian-source income and on income arising in connection with        activities in Italy

Individuals will be regarded as tax residents:

• if they are registered at the Italian civil registry for the greater part of the tax year,
• if their habitual abode is in Italy,
• if their centre of vital interests is in Italy.

Married couples are taxed separately on their earned income and on half of the income from communal property or from minor children.

Taxable income includes:

• income from employment or self-employment
• most benefits in kind
• income from immovable property
• income from investments and from business

Certain deductions are permissible including:

• the mandatory employer and employee contributions are exempt from tax,
• certain contributions to special funds for medical assistance according to collective employment contracts,
• voluntary contributions to qualified pension funds or life insurances within strict limits.

Income tax rates are progressive, for 2009:

• 23% for the first EUR 15’000,
• 27% from EUR 15’001 to EUR 28’000,
• 38% from EUR 28’001 to EUR 55’000,
• 41% from EUR 55’001 to EUR 75’000,
• 43% on excess over EUR 75’001.

There are additional regional (0.9 to 1.4%) and municipal (0 to 0.5%) taxes. Tax residents may deduct minor personal allowances.

Employers have to withhold tax at source on the employment income which is creditable against the individual’s tax liability.

Filing date:

Taxpayers who derive taxable income in excess of certain limits must file an annual tax return between 1 May and 31 July of the year following the tax year (by 31 October if filing electronically).