Expatriate tax ebook - Italy

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Local inhabitant tax rate
Sample income tax calculation

Pre arrival procedures
Non EU nationals are required to apply for a work permit. Similarly, their spouses and children are required to ask for relevant visas.
Where the expatriate is an EU national the above is not required.

Employment visas
See above.

Tax year
The Italian tax year runs from 1 January to 31 December.

Tax returns and compliance
Most Italian employees working in Italy pay their tax through payroll withholding and are not required to file a tax return (exceptions apply). However, foreign nationals on assignment to Italy may have a more complicated tax position and may be required to file an Italian tax return even if their taxes are being paid by their domestic employer.

The personal tax return (the so-called “modello UNICO”) should be filed by 31 July following the end of the tax year concerned.

Income tax rates
The following are the IRPEF (Individual Income Tax) brackets applicable in 2008.

Taxable Income (€)	Rate (%)	Cumulative IRPEF (€)
0-15,000	23	23% on the total amount
15,001-28,000	27	3,450 +27% amount exceeding 15,000
28,001-55,000	38	6,960 + 38% amount exceeding 28,000
55,001-75,000	41	17,220 + 41% amountexceeding 55,000
Over 75,000	43	25,420 + 43% amountexceeding 75,000

It is possible to take advantage of specific deductions where relevant conditions are met.

From 2007, individuals who are tax residents abroad can take advantage of the IRPEF deductions for dependent relatives only if:

• the gross income of the dependent person does not exceed € 2,840.51 per annum
• if they have not applied for similar deductions where they are tax residents.
  

Sample income tax calculation

	Euro
Employment income	50,000
Benefits provided	9,500
Less
Pension Scheme contributions (by employee)	(3,500)
Gross Income	56,000
Less
Other deductions (medical expenses, interest on mortgages, etc.)	(1,000)
Taxable Income	55,000
Tax Bill	€17,220

Information about Italy:

introduction

facts and figures

basis of taxation

what taxes?

tax planning opportunities