The Italian taxation system includes various forms of direct and indirect taxation, which depend on the legal nature of the company, as well as on the characteristics of the income production activities.
The direct taxes refer to the assets of the companies and are therefore calculated on the income of the companies and of the sole proprietorships. The main ones are:
- Income tax of individuals (IRPEF): applied to the income of sole proprietorships, except for the property component,
- Tax on company income (IRES): applies to the income of limited liability companies;
- Italian regional tax on productive activities (IRAP): applies to sole proprietorships, to partnerships and to limited liability companies.
- Own Municipal Tax (IMU): this applies to sole proprietorships, to partnerships and limited liability companies that own property, land and building areas, for any use, including those which are instrumental or whose production or exchange is directly related to the activity of the company.
These are taxes which are levied on capital when it is transferred (e.g. the sale of goods) or is spent (e.g. performance of a service).
- Value added tax (VAT): is levied on the added value of each stage of production and exchange of goods and services on national territory, at a standard rate of 22%, at a minimum rate of 4% and a reduced rate of 10% in cases stipulated by the law for certain business sectors.
- Registration tax: applied at the time of registration of documents for specific transactions (e.g. the transfer of property, contracts, registered documents, etc.) at a fixed rate or one that is proportional to the specific case.
- Mortgage tax: applies to acts of transcription, registration, renewal in public property registers, which follow sales, donations, inheritance of immovable property, usufruct or other property rights, at a fixed rate or one that is proportional to the specific case.
- Land Registry tax: these are levied on land registration transactions following acts of transaction, donation or inheritance agreements, at a fixed rate or one that is proportional to the specific case.
- Excise duties;
- Stamp duties;
- Tax on advertising;
- Tax on the occupation of public spaces and areas (TOSAP);
- Tax on the disposal of solid urban waste (TARSU).
Income Tax return
For each tax year (which generally corresponds to the calendar year), the business owner / the company has to submit an Income tax return (single form), in which it indicates its taxable income and the amount of tax (for IRPEF, IRES, IRAP and VAT purposes) based on the income and the costs recorded for the business year.
Submission is made via Internet. through the Agenzia delle Entrate’s website, using Entratel or Fisconline channels, generally within the 30th of September of the year following that in which the income was received.
Tax and the social security Contributions must be carried out online, through the f24 form (on which, apart from the amount, one should indicate the specific tax code).
The Agenzia delle Entrate’s website provides tax information and instructions about most important administrative charges related to:
- the allocation of the tax code, health care card and VAT number;
- lease contracts;
- Tax refunds
- formal notification of irregularities and issue of payment.
In Italy, companies can periodically make use of various tax incentives aimed at supporting business development, promoting employment, developing certain areas and regions, and encouraging research and innovation in particular in Southern Italy. The website of the Ministry for Economic Development predisposes the main measures of incentives and support aimed for companies.