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Income tax in Italy

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If you are going to work in Italy, you will definitely have to pay income tax. Find out more on related procedures in this article.

Going to work in Italy means that you will have to pay income tax. In fact, all foreigners, European and non-European citizens, working in Italy are subject to the national taxation system, that is the ''imposta sul reddito'' (IRE or IRPE). According to this system, all physically present workers in the country have to pay different types of taxes. Note that the fiscal year goes from January to December.

 Good to know:

Income tax in Italy is deducted at source. Thus, you may not always, have to fill in a tax declaration form. Moreover, income tax rates usually vary according to your job's nature and field, your job contract as well as your marital status.

Conditions

You will be considered as an Italian resident if you have stayed in the country for more than 183 consecutive days, whatever your nationality. You will also have to pay tax if you receive wages from any Italian company, even if you do not stay there permanently.

Married couples have to fill in their tax declaration form individually. Moreover, any revenue coming from your whole property has to be divided into two equal shares.

Taxable income

In general, income tax varies according to several important points:

  • real estate income (redditi fondari)
  • capital income (redditi di capitale)
  • work income (redditi di lavoro dipendente)
  • independent work income (redditi di lavoro autonomo)
  • commercial income (redditi di impresa)
  • capital gains income (redditi diversi)
  • insurance income.

Tax thresholds

Income tax deductions vary according to your revenue as follows:

Between 0 and 15,000 euros – 23%

Between 15,001 and 28,000 euros – 27%

Between 28,001 and 55,000 euros – 38%

Between 55,001 euros et 75,000 euros – 41%

Over 75,000 euros – 43%.

Note that you will also have to pay a regional tax amounting to 0.9 to 1.7 %. Moreover, workers whose salaries exceed 300,000 euros per year have to pay an additional solidarity tax amounting to 3%.

Deductions and credits

You may be eligible to deductions under certain conditions:

  • for divorcees in case they have to pay a maintenance pension
  • if you have donated a maximum of 1,032 euros and 91 cents per year to a university, research institutions or religious organization, or a maximum of 70,000 euros per year to any other non-profit organization
  • if you have medical expenses, for instance, helping a handicapped person
  • if you are contributing a maximum of 5,164 euros and 57 cents per year to a voluntary pension fund in Italy
  • if you are contributing a maximum of 3,615 euros and 20 cents per year to a health insurance.

You may also be eligible to tax credits if you reside in Italy. The following conditions apply:

  • if you have purchased real estate property – the tax credit amounts to 4,000 euros at a 19% interest rate
  • if you have done renovation work – the tax credit amounts to a maximum of 36,000 euros at a 36% rate on expenses. The credit can be extended on 5 to 10 years.
  • If you have made donations to legal culture and research foundations or other public institutions – the credit amounts to 19% of the whole amount
  • if you have a child dependent – 900 euros if the latter is less than 3 years old (800 euros if the child is more than 3 years old), plus additional 220 euros if the child is handicapped and additional 200 euros if you have more than 3 children
  • if you have an unemployed spouse who will be considered as a dependent - 800 – [110 x [income/15,000]] if your income is less than 15,000 and 690 – [80,000 - income]/40 000] if your income is between 40,001 and 80,000 euros. You will be entitled to 690 euros tax credit if your income is between 15,001 and 40,000 euros.

Double taxation

You may have to face double taxation if you have moved to Italy. Thus, you will have to pay tax both in Italy and in your home country. You are then advised to check if your home country has signed any non-double taxation agreement with Italy. 

 Useful links:

Agenzia Entreta – Italian Taxation Agency www1.agenziaentrate.gov.it
Italian Ministry of Economy and Finance www.finanze.it
Italian Ministry of Economy and Finance - Double taxation convention www.finanze.it/export/finanze/Per_conoscere_il_fisco/
Miojob – Income tax calculation tool miojob.repubblica.it

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