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Understanding the Taxes in Italy

July 30, 2020
Everyone who wants to or who are planning to move to Italy should know that it's not all fun and festivals here. Sure, because of movies, TV series, and the like, the world has gotten to know Italy as this dream destination for fun, romance, and having a good time. And that's all well and good until you have to do your part as someone who lives in the country. Like practically every other country out there, Italy survives on the taxes paid by its people. Here are what you need to learn regarding them if you plan to move to the country.

Understanding the Taxes in Italy

 

The Requirement of Paying Taxes in Italy

First thing's first: are you required to pay taxes in Italy? Well, if you're here 183 days of the year, yes, you are! Citizens and residents are required to contribute their fair share to help keep various systems in the country intact. Now, if you only work in Italy and haven't officially moved here yet, you're still required to pay certain taxes but they're very limited. In fact, for such taxes, you'll need to pay for only the income you earn in the country itself. As for citizens and residents? Any income they earn worldwide would be subject to Italy's income tax. 

 

Rates of Income Taxes

So, if you're a citizen or resident of Italy, how much of your total income do you have to pay in taxes? The rates differ on the amount you earn annually. For instance, if you earn up between €15,000.00 to €28,000.00 a year, you only have to pay 27% of your income. If you earn an annual income of €28,000.00 to €55,000.00, the rate goes up to 38%. Any annual income amounting to €55,000.00 to €75,000.00 requires the taxpayer to pay 41% of his/her total income. And finally, anyone earning up to or more than €75,000.00 a year is subject to pay 43% of the total income. 

 

Understanding the Taxes in Italy

 

Filing Your Taxes in Italy

So, what do you need to know when filing your annual tax return in Italy? For one thing, the deadlines are between May 1 and June 3 of each year. You can also do it online or via paper too. More often than not, it's your employers who have to file them for you by the end of each tax year. But if you're self-employed, you'll have to do it yourself. Once the deadlines have come up, ensure that you've paid everything that you needed to for less hassle. Italy has a number of penalties and punishments for those who file and pay their taxes late. 

 

Real Estate Taxes

Similarly in many other countries, once you've purchased a property in Italy, you're required to pay the corresponding taxes on it. And yes, this goes for those who are not citizens or residents of the country. As long as you own property in Italy, you're required to pay your fair share for it. Typically, the rates differ in terms of your property's location, current state, and demand for when you bought it. Though the rates only just stay within a range of 0.4% to 0.7% of the total value of the property. 

 

Understanding the Taxes in Italy

 

Sales Taxes

Now, it's no question that Italy is a tourist haven of a country and because of this, the national government installed the sales tax to earn from it. What does this mean? Simply put, practically everything you buy has a corresponding tax attached to it. A beautiful souvenir, for instance, might cost around €5.00 on its own, but because of the VAT, you have to pay a total of €6.50 to get it. Notably, unlike other taxes in the country, Italy's sales tax has a fixed rate of 20%, meaning the final price isn't as far off from the original price as it may seem.

 

Capital Gains Taxes

Similar to the sales tax, Italy also has a fixed rate for its capital gains tax: 24%. But when are you required to pay it? When you earn corporate income in Italy. Corporate income is basically your net earnings, and according to Investopedia, it's "calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses." More often than not, this only applies to the big businessmen in the country. However, it's important that you know about it because you never know where you career will take you in Italy. 

 

Inheritance Tax

Let's say you're an Italian New Yorker whose roots come all the way back in Southern Italy. Then, you get the news that your grandmother, who never left the "old country," recently passed away, and with it, you inherited a small fortune. As the heir to your grandmother, not only are you entitled to inherit her estate, you're also required to pay Italy's inheritance tax. The country holds different rates depending on the estate inherited and the relationship of the heir to the deceased. In this situation, you have to pay 4% of what you inherited to the government. 

 

Understanding the Taxes in Italy

 

Living and working in Italy may be the dream but it can also become a nightmare if you know nothing about the taxes in this country. It's better to familiarize yourself with them before you even think of moving here! 


Once you're done with your taxes, wouldn't it be better if you relaxed in an Italian luxury apartment? These are the types of accommodations you should go for when you move here!




Destinations

TRAVEL GUIDE

Destinations

PROPERTY LISTING

poggio alla rocca - sole

Civitella Paganico, Italy
On request
2 bedrooms1 bathroom6-6

poggio alla rocca - sughera

Civitella Paganico, Italy
On request
2 bedrooms1 bathroom6-6

poggio alla rocca - alba

Civitella Paganico, Italy
On request
1 bedroom1 bathroom2-2

poggio alla rocca - ginestra

Civitella Paganico, Italy
On request
1 bedroom1 bathroom3-3


poggio alla rocca - corbezzolo

Civitella Paganico, Italy
On request
1 bedroom1 bathroom3-3

Lake Maggiore - Villa Camilla 4 Bedrooms

Stresa, Italy
On request
4 bedrooms4 bathrooms8-8

Villa Falcone 3 CAMERE 6 PAX

Belgirate, Italy
On request
3 bedrooms2 bathrooms6-6

Lake Maggiore - Villa Falcone 5 Bedrooms

Belgirate, Italy
On request
5 bedrooms3 bathrooms10-10

Lake Maggiore - Villa II Grotto 3 Bedrooms

Pallanza, Italy
On request
3 bedrooms4 bathrooms8-8

Lake Maggiore - Villa Isabella 4 Bedrooms

Nebbiuno, Italy
On request
4 bedrooms3 bathrooms8-8