Answer ... (a) What taxes are levied and what are the applicable rates?
Taxable income in Italy is subject to personal income tax (Imposta sul reddito delle persone fisiche (IRPEF)). The IRPEF tax rates range from 23% to 43% in different bands as follows.
Taxable income |
Tax rates |
Taxes |
From €15,000 |
23% |
23% on taxable income |
From €15,001 to €28,000 |
27% |
€3,450 + 27% on taxable income over €15,000 |
From €28,001 to €55,000 |
38% |
€6,960 + 38% on taxable income over €28,000 |
From €55,001 to €75,000 |
41% |
€17,220 + 41% on taxable income over €55,000 |
Over €75,000 |
43% |
€25,420 + 43% on taxable income over €75,000 |
(b) How is the taxable base determined?
The taxable base is determined on the basis of taxable income.
(c) What are the relevant tax return requirements?
Natural persons must file a tax return using the Redditi PF form or Form 730, depending on the type of income.
The simplified tax return (Form 730) can be used only for particular types of income (ie, incomes subject to ordinary taxation) if the taxpayer meets the following conditions:
- He or she is tax resident in Italy in the year of filing Form 730 and was also tax resident in Italy in the previous year;
- He or she has a withholding agent in Italy for the period of filing of the Italian income tax return; and
- He or she has no value added tax (VAT) number.
Spouses may submit Form 730 jointly.
To facilitate filing of the annual tax return, taxpayers may also use Form 730 and the pre-completed personal tax return form provided by the Italian Revenue Agency. This contains information that is pre-entered automatically, including deductions for:
- healthcare expenses;
- university fees;
- insurance premiums;
- social security contributions; and
- building renovation and energy efficiency subsidies.
If taxpayers receive income from business, are self-employed and VAT registered or receive other types of income not included in Form 730, they must submit a Redditi PF form.
A tax return must be submitted every year by the following deadlines:
- Form 730: By 30 September, directly online or with the aid of a fiscal support centre or a qualified professional, or with tax deducted at source (ie, by the employer).
- Redditi PF Form: By 30 November, online or with the aid of a fiscal support centre or a qualified professional.
Non-residents who are abroad at the time of filing of the tax return may submit their return by 30 November by registered letter or other equivalent means.
(d) What exemptions, deductions and other forms of relief are available?
Under the 2021 Budget Law, new deductions have been introduced by the Italian legislature with the aim of allowing taxpayers to deduct some expenses and costs from their gross income.
Tax credits can also be offset against a taxpayer’s tax liability.
For example, with regard to taxable employment income, an employee’s mandatory social security contributions are fully deductible and contributions paid to specific complementary pension funds are deductible up to €5,164.57.
With regard to personal income, as long as certain requirements are met, the main deductions from gross taxable income, if they have not been deducted from each kind of income, are as follows, if properly documented:
- Employees’ mandatory social security contributions are fully deductible;
- Social security contributions paid for domestic employees (up to €1,549.37) are fully deductible;
- Medical expenses for disabled individuals are fully deductible; and
- Contributions paid to the specific complementary pension funds are deductible up to €5,164.57.
Contributions to certain religious entities are also deductible up to €1,032.91 (per taxpayer); while alimony paid to a separate or divorced spouse resulting from a court judgment can be fully deducted from taxable income.