Italy - Other taxes and levies

Italy - Other taxes and levies

Taxation of international executives

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Social security tax

Are there social security/social insurance taxes in Italy? If so, what are the rates for employers and employees?

Employer and employee

An individual who works in Italy is subject to various compulsory Italian social security contributions.

The employer’s share of these numerous and complex contributions ranges from approximately 29 percent to 32 percent of taxable compensation, depending on many different criteria, such as the seniority of the employee, the kind of the activity, the number of the employees, the collective bargain applicable, and so on.

The employee’s share of these contributions ranges from 9.19 percent to 10.49 percent of taxable compensation, depending on the classification of the employee (worker, executive, or manager) and depending upon the employer’s activity (manufacturing, trading, tourism, and so on). The employer withholds the employee’s social security contributions from the monthly salary.

Italy has full or partial social security treaties with some countries (such as the EU countries) and, in general, employees assigned from these countries may continue to pay their national social security charges.

In case of partial or lacking social security treaty between Italy and the country, the social security representative of the foreign company must be appointed in Italy for the remittance of Italian (total or partial) social security contributions.

FOREIGN INVESTMENT DECLARATION – RW FORM

The foreign investment declaration has to be filed by tax resident individuals who own foreign investments and when they transfer money, shares, bonds, etc. from Italy to abroad, from abroad to Italy and from a foreign country to another foreign country (not including Italy) for any amount during the tax year.

This declaration is a different declaration from the tax return and if due, it is mandatory even if the Italian income tax return is not due. For example the assignee’s spouse who owns joint investment accounts must personally file it.

Since by this information the Italian Tax Authorities may determine higher individual’s Italian taxable income, there are severe penalties for failure to complete this declaration.

These penalties could amount:

  • From 3 percent to 15 percent of the amount not declared;
  • From 6 percent to 30 percent of the amount not declared, if the foreign activities are held in Black List Countries;
  • EUR 258 if RW is presented with a delay not major than 90 days.

GIFT, WEALTH, ESTATE, AND/OR INHERITANCE TAX

Are there any gift, wealth, estate, and/or inheritance taxes in Italy?

As of October 2006, Italian inheritance and gift tax has been reintroduced in Italy.

The tax is applicable to all Italian residents and also to non-residents who have properties in Italy. The tax rates are as follows.

  • 4 percent for recipients in a direct relationship (that is spouse and children) with the donor. An exemption is given for the first EUR1 million of assets and cash transferred to each beneficiary.
  • 6 percent for brothers or sisters of the donor. An exemption is given for the first EUR100,000 of assets and cash transferred to each beneficiary.
  • 6 percent for other relatives; no tax exemption is granted.
  • 8 percent for recipients with no relationship to the donor; no tax exemption is granted.

When real estate properties are inherited or given as a gift, the cadastral tax and the mortgage tax is applicable with tax rates of 1 percent and 2 percent respectively. If the concerned real estate is the principal dwelling of the taxpayer, the cadastral and mortgage taxes are substituted with a fixed tax of EUR200.

REAL ESTATE TAX

Are there real estate taxes in Italy?

Real estate and land situated in Italy are subject to personal income taxes on the basis of their cadastral value. A tax exemption applies to income arising from the first habitual dwelling. Rental income from real estate is included in aggregate taxable income and it is calculated on the rent received by the owner, reduced by a flat deduction of 15 percent.

From 2014 the taxpayer who owns only the principal residence, should pay the unique tax IUC. This is divided in two different parts: TASI and TARI, so two taxes with different tax rates and different causes.

If the taxpayer owns other real estate, different from principal residence, IMU is due. If the property is situated in the same Municipality from the principal house, taxpayer should pay also 50 percent of Irpef (and local taxes) of the Cadastral income.

Sales/VAT tax

Are there sales and/or value-added taxes in Italy?

Yes. The rate depends on the kind of goods sold; however, the common rate is 22 percent.

Unemployment tax

Are there unemployment taxes in Italy?

None.

OTHER TAXES

Are there additional taxes in Italy that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Stamp Duties

Stamp duties are levied on certain documents, contracts, and registers as specified in the stamp duty law. The tax usually takes the form of a nominal lump sum. However, in certain circumstances, it is levied as a percentage of the value of the obligation or the right referred to within a contract.

 

Registration tax

This tax is due on acts and contracts which are subject to registration in public registers or which are placed voluntarily in such registers, which are outside the scope of VAT regulations. Generally speaking, written contracts concluded in Italy for the transfer of property of any kind are subject to registration. The rate of tax varies according to the value transferred. The standard rate varies from 3 percent up to 15 percent.

© 2016 KPMG S.p.A., an Italian corporation and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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