Campione d'Italia tax system: audit, reporting and optimization of taxation of Italian companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||24% + IRAP (regional tax on productive activities, generally - 3.9%)|
|Capital gains tax. Details||Included in corporate tax base|
|VAT. Details||Campione d’Italia is the only part of Italian territory where Italian VAT is not applied. Swiss VAT a rate of 8% is levied.|
|Other taxes||Social contributions, Overseas property tax, Financial investment tax, Inheritance and gift tax, Registration tax, Stamp duties, etc.|
International tax agreement
|Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Cuba, Cyprus, Czech Republic, Côte d'Ivoire, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, Former Yugoslav Republic of Macedonia, France, Gabon, Georgia, Germany, Ghana, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Japan, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Moldova (Republic of), Mongolia, Montenegro, Morocco, Mozambique, Netherlands, New Zealand, Norway, Oman, Pakistan, Panama, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Senegal, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Syrian Arab Republic, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Viet nam, Zambia|
|Andorra, Bermuda, Cayman Islands, Cook Islands, Gibraltar, Guernsey, Holy See (Vatican City State), Isle of Man, Jersey, Liechtenstein, Monaco, Turkmenistan|
Personal Income Tax
Residents can pay IRPEF at a fix exchange rate fixed each three years by Italian government (Decreto Ministeriale). N So if real exchange rate rises, so residents have benefits because they pay less than the actual value. (Decreto del Presidente della Repubblica n. 917 del 22 dicembre 1986).
IRES Taxpayers of Corporate Tax (IRES, Imposta sul reddito delle Società) are legal entities. Legal entity is resident for tax purposes if its legal seat, place or effective management or main business activity is in Italy for the greater part of the fiscal period (at least 183 days). The following types of companies are considered Italian tax residents as well: a foreign company controlled by an Italian tax resident that holds a controlling participation in an Italian company; a foreign company managed by Italian residents representing the majority of its board of directors is considered Italian tax resident, unless demonstrated otherwise. The provisions related to IRES are included in the Decree of the President of Republic, 22 December 1986, n. 917, called TUIR. The rate of corporate tax in Italy is 24 %. The income which is subject to tax: resident companies are taxed on worldwide income; non-resident companies are taxed on Italian-source income. Tax period is one financial year.
Capital gains tax
Capital Gains generally are treated as ordinary income and taxed at the 27.5 % corporate income tax rate. Only 5 % of Capital Gains generated by sale of shares held in other companies is subject to taxation, upon the following conditions: shares should be owned for not less than 12 months; shares should be classified as a financial fixed asset in the first financial statement closed after the shares were acquired; shares do not refer to companies established in tax heavens; company carries out a business activity.
Domestic companies making certain types of payments (e.g. interest, royalties, professional fees, etc.) are required to withhold taxes at varying rates. Italian legislation has implemented EU Council Directive on taxation of interest and royalty payments 2003/49/EC of June 3, 2003, which means that all payments of interest and royalties between EU companies are exempt from withholding tax.
Dividends paid to a non-resident company are generally subject to a 20 % withholding tax unless the rate is reduced under a tax treaty or the dividends qualify for exemption under the EU parent-subsidiary Directive. To qualify for the exemption under the directive, the parent company must hold directly at least 10 % of the subsidiary for at least one year.
Unless reduced by a tax treaty, Italian-source interest paid to a non-resident is generally subject to a 20 % withholding tax. Interest derived from a direct/indirect investment in government bonds and similar securities are subject to withholding tax at a rate of 12.5 %. Under Italy’s implementation of the EU interest and royalties directive, qualifying interest payments are exempt from withholding tax.
Royalties paid to a nonresident company are subject to a 30 %, withholding tax on 75 % of the gross royalty, resulting in a final tax of 22.5 %. The rate may be reduced under a tax treaty of the EU interest and royalties directive. Licensing fees and some service fees are exempt from withholding tax.
Campione d’Italia is the only part of Italian territory where Italian VAT is not applied. Instead of it a Swiss VAT is applied at a standard rate of 8%. Certain goods and services are subject to a reduced rate of 2.5% (e.g. water supply, food) and others (e.g. most banking services) are exempt. A special 3.8% rate applies to the hotel and lodging industry.
Stamp duty is levied on legal and banking transactions, at varying rates up to 1.5 %. Tax on Company Books is charged every year for 309 – 516 USD (approx. 240 - 400 EUR).
Other taxes and duties
Register Tax is charged for registration of several acts. Registration may be: obligatory (in case it is established by law); voluntary. Typical contracts subject to Register Tax: sale of real estate (whenever they are not subject to VAT); sale of business units; rent contracts; sale of shares; transfer of vehicles. Register Tax may be: proportional in % of value of transaction (from 1 to 12 %); fixed.
Double Tax Agreements
Swiss double tax agreements are not applicable in Campione d’Italia, as it is an Italian territory. As for Italian agreements, although officially they should be applied, in practice they are not used.
Taxes of Campione d’Italia
|Min. rate for corporate tax||24%|
|Capital gains tax||Regular rate|