1. Income Tax (Imposta sul Reddito delle Persone Fisiche - IRPEF)

• Progressive Rates: Italy uses a progressive income tax system with rates ranging from 23% to 43%, depending on income levels. The tax rates are as follows:

  • 23% on income up to €15,000.

  • 27% on income from €15,001 to €28,000.

  • 38% on income from €28,001 to €55,000.

  • 41% on income from €55,001 to €75,000.

  • 43% on income over €75,000.

• Deductions and Credits: Various deductions and tax credits are available, including deductions for dependents, mortgage interest, and medical expenses.

2. Corporate Tax (Imposta sul Reddito delle Società - IRES)

• Standard Rate: The standard corporate tax rate in Italy is 24%. This applies to the profits of companies and other entities.

• Regional Tax on Productive Activities (IRAP): In addition to corporate income tax, businesses in Italy are also subject to IRAP, which is generally levied at a rate of 3.9% on net value generated by the company.

3. Value-Added Tax (Imposta sul Valore Aggiunto - IVA)

• Standard Rate: The standard VAT rate in Italy is 22%.

• Reduced Rates: Reduced rates of 10% and 5% apply to certain goods and services, such as food, health products, and cultural services. A super-reduced rate of 4% applies to basic necessities like some food items, books, and newspapers.

4. Property Taxes

• Local Property Tax (Imposta Municipale Propria - IMU): IMU is a municipal tax levied on the ownership of real estate properties. The rate varies depending on the municipality and the type of property. Primary residences are usually exempt, except for luxury properties.

• TASI (Tax on Indivisible Services): This tax funds local services such as street lighting and road maintenance and is also based on property ownership.

• TARI (Waste Collection Tax): TARI is a tax related to the collection and disposal of waste, calculated based on the size of the property and the number of occupants.

5. Capital Gains Tax

• Rate: Capital gains from the sale of assets such as real estate or securities are generally taxed at a rate of 26%. Different rules may apply based on the holding period and the type of asset.

6. Inheritance and Gift Tax

• Rates and Exemptions: Inheritance and gift taxes in Italy depend on the relationship between the donor and the recipient:

  • 4% for transfers to spouses and direct descendants or ascendants, with an exemption of €1 million per beneficiary.

  • 6% for transfers to siblings, with an exemption of €100,000.

  • 8% for all other recipients, with no exemptions.

7. Social Security Contributions

• Employee Contributions: Employees contribute around 9% of their gross salary to social security, covering pensions, health insurance, and unemployment benefits.

• Employer Contributions: Employers contribute around 30% to 33% of the employee’s salary to social security.

8. Wealth Tax

• Financial Assets Held Abroad (IVAFE): Italy imposes an annual wealth tax on financial assets held abroad, at a rate of 0.2%.

• Real Estate Held Abroad (IVIE): There is also a wealth tax on real estate held abroad, with a standard rate of 0.76% of the property’s value.

9. Special Tax Regimes

• Lump-Sum Tax Regime for High-Net-Worth Individuals: Individuals who move their tax residence to Italy can opt for a flat tax of €100,000 per year on their worldwide income. This regime can be extended to family members for an additional €25,000 per year per member.

• Special Regimes for New Residents and Retirees: There are favorable tax regimes for foreign retirees and new residents who transfer their tax residence to certain southern regions of Italy, offering reduced tax rates for a period of time.

10. Double Taxation Treaties

• Extensive Network: Italy has an extensive network of double taxation treaties with over 90 countries, designed to avoid double taxation and prevent fiscal evasion.