Italian Income Tax

Individuals, who are registered at the Italian civil registry for the greater part of the tax year or whose habitual abode is in Italy or whose centre of vital interests is in Italy, are regarded as tax resident and are taxed on their worldwide income. Non-residents are taxable on Italian-source income and on income arising in connection with activities in Italy.

Income from employment or self-employment, most benefits in kind, income from immovable property, investments and from business is subject to tax. The mandatory employer and employee contributions are exempt from tax, as well as certain contributions to special funds for medical assistance according to collective employment contracts and voluntary contributions to qualified pension funds or life insurances within strict limits.

The rates of income tax are progressive, ranging from 23% on income of up to EUR 15’000 per year, to 27% on EUR 15’001 to EUR 28’000, to 38% on EUR 28’001 to EUR 55’000, to 41% on EUR 55’001 to EUR 75’000 and to 43% on income of more than EUR 75’000 per year. There are additional regional (0.9 to 1.4%) and municipal (0 to 0.5%) taxes. Tax residents may deduct minor personal allowances.

Married couples are taxed separately on their earned income and on half of the income from communal property or from minor children. Employers have to withhold tax at source on the employment income which is creditable against the individual’s tax liability. 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).