Notes on income tax in Italy for the year ended 31st December 2009
Taxpayers who need not make income tax declarations
Payments on account of income tax for the self-employed
Filing deadline for standard tax return
Deduction for dependant relatives
Other taxes affecting self-employed individuals
Social Security (INPS) contributions
IRPEF - Imposta sul Reddito delle Persone Fisiche Income Tax for individuals
IRAP- Imposta Regionale sulle Attivita Produttive Local Business Tax
Taxpayers
who need not make income tax declarations
In the following situations the taxpayer need not make income tax declarations:
- Their annual income from any source does not exceed 3,000 euro.
- They have only employment or pension income from one source, on which tax has already been withheld at source.
- Their total untaxed employment income from various sources does not exceed 7,500 euro.
- Their only income is from the rental of their principal residence.
- All of their income is exempt, or has been taxed at source.
The tax year in Italy corresponds with the calendar year- from 1st January to 31st December.
Payments on account of income tax for the self-employed
- By 16th June
40% of estimated income tax liability, plus balance for previous year
- By 30th November: 60% of estimated income tax liability.
Alternative calculation for total payments on account: 98% of previous year's liabilty.
Filing deadline for standard tax return
Tax returns filed in paper form: By 30th June following end of tax year.
Tax returns filed via internet : By 30th September following end of tax year.
Combined form (Modelo Unico): Suitable for all taxpayers
Form 730: Optional for employers and pensioners
Filing deadline for Form 730:
30th April - if presented to employer or
15th June - if presented to local Tax Assistance Centre (Centro di Assistenza Fiscale- CAF).
Personal Allowances ("L'area di esenzione ")
| Employees | 8,000 Euros max |
| Pensioners | 7,500 Euros for up to 75
years, 7,750 Euros for 75+ years |
|
Others |
4,800 Euros |
In addtion to these personal allowances, there are the following deductions from the final tax payable, which are income related.
Employees: 1,338 - 1,840 Euros
Pensioners: 1,255 - 1,725 Euros up to 75 years
1,297 - 1,783 Euros for 75+ years
Others: Up to 1,104 Euros
Tax
deduction for dependant relatives
| Relative | Deduction € |
|
Spouse |
800 max |
| Each child |
800 max |
| Extra allowance for child under 3 years old |
100 max |
| Extra allowance for handicapped child |
220 max |
The above amounts are theoretical maximums for low income families; the actual tax deductions are calculated in reference to the total family income.
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Other taxes affecting self-employed individuals
Local business tax (IRAP) : 3.25% - 5.25%
Taxation/ tax
retentions for investment income
| Dividends | 12.5% |
| Royalties | 22.5% |
| Current Account interest | 27% |
| Other interest | 12.5% |
| Directors' remuneration | 20% |
Where a double tax treaty exists between Italy and the country of residence of the recipient, a reduced rate may apply.
If the shareholder is a company in the EU, there is zero withholding tax on dividends if the conditions of the EU Parent-Subsidiary Directive are met.
Social Security (INPS) Contributions 2009
| Employees | 23.81% paid by employer, 9.19% by employee (Note 1) |
| Self-employed | 23.5% |
Contributions for the self-employed (parasubordinati) are paid using Form F24, along with their income tax payments. Contributions for employees are paid monthly out of their payroll (busta paga)
Note 1: The employee contribution increases to 10.19% if their annual salary is over 40,083 Euros.
These notes are for reference purposes only. They are only intended as a guideline and should not be used as a substitute for proper professional advice. Please contact us and we will be happy to assist you.
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