Personal income tax (IRPEF, Imposta sul Reddito delle Persone Fisiche)
This tax is personal and progressive.
The requirement for this tax is the possession of income, in cash or in kind, falling into one of the categories stipulated by law. The tax period corresponds to the calendar year.
|Persons liable for tax||The following persons are liable to tax:
|Tax assessment basis||Tax is applied to the overall income, i.e. the sum of the income of each category, minus any losses deriving from the practice of arts or professions and/or commercial businesses.The relevant categories include:
Once the gross overall income has been determined, any deductions stipulated by law are applied.
The gross tax is calculated by applying the increasing rates by income increments to the net overall income.
The rates currently in force (2015) are as follows:
For tax calculation purposes, tax deductions are available to reduce overall taxable income.
Deductions are usually equal to 19% of the charges borne, reducing the gross taxation applicable.
Until fiscal year 2016 an additional 3% tax will apply to income exceeding EUR 300,000.
Regional and municipal IRPEF surcharges
In addition to the tax calculated, two additional payments have to be made to the local authorities (Region and Municipality) in which the taxpayer is resident:
Expatriates benefiting from the dedicated Italian special tax regime
An important development is likely to take place in 2015 affecting internationally mobile personnel in Italy.
Pursuant to the EU infringement procedure n. 2027 of 25 April 2013, Italy amended its approach to personal tax of non-resident taxpayers who earn at least 75% of their income in Italy.
The Italian Government is committed to adopt a new scheme under which expatriates (non-residents taxpayers), residents in the EU or EEA (European Economic Area), will benefit from full deductions and allowances on their taxable income (so-called “Schumacher-rule”).
Under the new provision, non-resident taxpayers who respect this rule will be treated the same as Italian residents in respect of their tax calculations.