Italy-SAS

Basic taxes (briefly)

Personal tax 23-43%
Corporate tax (in detail) 24% + IRAP (regional tax on productive activities, generally - 3.9%)
Capital gains tax. Details Capital gains are included into corporate tax base
VAT. Details For some goods and services, the tax rate is 10% and 4%.
Other taxes Social contributions, Overseas property tax, Financial investment tax, Inheritance and gift tax, Registration tax. Stamp duties, etc.
Government fee
Stamp duty 1.5%

International tax agreement

Tax treaties entered 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
   
Tax Exchange Information Agreement (TEIA) Andorra, Bermuda, Cayman Islands, Cook Islands, Gibraltar, Guernsey, Holy See (Vatican City State), Isle of Man, Jersey, Liechtenstein, Monaco, Turkmenistan


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TAXES

Personal Tax

IRPEF
Taxpayers of personal tax in Italy are individuals:
  • all people having their residence in Italy for all their incomes;
  • people having their residence in other countries for certain incomes produced in Italy.

For income tax purposes, an individual is deemed to be a resident if he/she is domiciled in Italy for more than 183 days in a year.
The rates of personal tax in Italy are as follows:
  • 23 % on income up to15,000 EUR;
  • 27 % on income from 15,001 to 28,000 EUR;
  • 38 % on income from 28,001 to 55,000 EUR;
  • 41 % on income from 55,001 to 75,000 EUR;
  • 43 % on income exceeding 75,000 EUR.

Additional regional tax may range from 1.2 % to 2.03 % depending on the region in which the individual lives, and an additional municipal tax may apply at 0 % to 0.8 % depending on the taxpayer’s municipality.
An additional 3 % solidarity surtax is applied until 2013 on all income exceeding 300,000 EUR.
The income which is subject to tax:
  • employment income;
  • income from a profession or business;
  • investment income;
  • income from immovable property;
  • other income from worldwide sources.

All entries are summed up by the tax return.
The tax period is the calendar year (1 January to 31 December).
An individual whose only income is from a salary is not obligated to file an annual tax return. His employer deducts tax from the employee and transfers the payment immediately to the tax authorities on a monthly basis.
The date for filing an annual return for an individual is July 31.
Fines are imposed for arrears in filing an annual return at the rate of 120 % – 240 % of the tax, depending on the length of time that the return is in arrears.
Exemptions from filing a tax return
Exempted from the obligation to submit a tax return are those who:
  • do not carry out a business or professional activity;
  • have not received any income;
  • have only received income exempt from tax.

Corporate Tax for S.A.S. in Italy

The partnership is a taxable entity only for the purpose of IRAP (local income tax).Once the income has been determined, it is allocated to the individual partners who will then pay corporate (IRES if the partner is a company) or personal (IRPEF) income tax on the amounts allocated. The taxable income for IRAP purposes and the allocation of the individual income must result from the tax return that the partnership has to file each year.
Regional Tax on Productive Activities (IRAP)
Taxpayers of the Regional Tax on Productive Activities (IRAP):
  • firms;
  • professional autonomous activities.

For professional activities, individuals may be exempted if they prove that they act without any organised structure (no employees).
The rate is different in each Region. The ordinary rate is 3.9%. If profit is produced abroad, Regional Tax does not apply.
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 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.

Withholding tax

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
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.
Interest
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 an 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
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.

VAT

All services and goods sales from firms are subject to VAT.
Procedure of getting VAT-number required for every Italian entity. No business can be carried out without VAT even in case of one-man firm.
Ordinary rate is 21%.
Lower rates are established for:
  • food;
  • transfer of real estate;
  • maintenance of buildings and other cases.

Some services are exempt:
  • medical;
  • gambling;
  • banking;
  • insurance, etc.

Export both to the EU and outside EU are not subject to VAT
Tax period:
  1. One calendar month: companies with turnover exceeding 516.000 EUR (in case of sale of goods) and 309.000 EUR (in case of services);
  2. One calendar quarter: firms with lower turnover than 516.000 EUR (in case of sale of goods) and 309.000 EUR (in case of services);
  3. One calendar year: one man firms with special regimes.

Other taxes

Register Tax
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.


Gift and Inheritance Taxes
Inheritance tax is payable on any inheritance from a deceased person’s estate in Italy. Gifts are subject to a gift tax at the same rate as inheritance tax. Rates depend on the relationship of the donor to the donee.
Chamber of Commerce duties are charged yearly from 200 to 2000 EUR depending on the annual income of the company.

Stamp Duty

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).

Exchange Control

There is no exchange control in Italy.
Residents and non-residents may hold foreign currency inside and outside the country, and direct and indirect investments may be made in any currency. For tax purposes, however, all holders of currency are required to declare funds held outside Italy and funds that are repatriated to Italy without a bank intermediary.

ACCOUNTS

Accounts

The bookkeeping rules are the same as for companies, but partnerships do not have to file their financial statements with the Register of Enterprises

Accounting

Bookkeeping is compulsory for every natural and legal person that owns a business in Italy.
The principle requirements for accounting in Italian Companies:
  • there is no obligation to employ an accountant;
  • accounting year normally corresponds to calendar year;
  • accounts should show only profit generated within accounting year;
  • accountancy must be kept in accordance to rules established by Civil Code and Accounting Policies of Italy.

Partnerships are free to adopt any bookkeeping system they find desirable, and are also free to use all types of processing techniques, as long as they provide all the information necessary to prepare statutory annual balance sheets and annual income statements.
A partnership must keep accounting records (Article 2302 of Italian Civil Code). Enterprises carrying out business activities need to keep a journal and inventory book, together with any relevant correspondence related to the business activity. The managing partners must draw up the inventory book before the commencement of the activity, containing a description and valuation of the assets and liabilities of the partnership.
The records must be maintained for a period of at least 10 years.
Article 18 of the Presidential Decree No. 600 of 29th September 1973, lays down that if subjects (like natural person s and partnerships) have an annual turnover that doesn’t exceed the limit of 309,874.14 EUR (for supplies of services) or 516,456.90 EUR (for supplies of goods), they are permitted to apply a single entry bookkeeping (for VAT and tax purpose) by keeping only VAT Sales and Purchases registers.

Annual Return

The Italian Civil Code establishes that the annual financial statements for the partnerships are used by the associate for annual profit sharing (Article 2262 Italian Civil Code).
Partnerships are exempted from publication of annual financial statements and from drafting the director’s report.

Audit

Auditing is not compulsory, but can be adopted on a voluntary basis.

    Taxes of Italy

    Min. rate for corporate tax 24%
    Capital gains tax Regular rate
    VAT 22%
    Withholding tax 26%/26%/30%
    Exchange control No
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