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Italy has a complex and multi-level taxation system that includes taxes for individuals and legal entities, as well as various indirect taxes. Let’s take a look at the main aspects of the Italian tax system as of the end of 2024 – beginning of 2025.

Taxes for individuals:

1. Income tax (IRPEF), the country applies a progressive scale of rates:
   • 23% – for income up to €28,000;
   • 35% – for income from €28,001 to €50,000;
   • 43% – for income over €50,000.
2. Additionally, Italy levies regional (from 1.23% to 3.33%) and municipal (up to 0.8%) surcharges.
3. Capital gains tax – gains from the sale of real estate and other assets are taxed at a rate of 26%.
4. Real estate tax (IMU) – the rate varies from 0.4% to 0.76% of the cadastral value of the property.
5. Tax on financial assets abroad (IVAFE): – The rate is 0.2% of the value of the assets, plus a flat fee of €34.2 per year for individuals.

Taxes for legal entities:

1. Corporate income tax (IRES): the flat rate is 24%.
2. Regional Production Activity Tax (IRAP) – the standard rate is 3.9%, but regions may set their own rates depending on the type of activity of the company.
3. Value Added Tax (IVA), its standard rate is 22%, and there are reduced rates of 10% and 5% for certain categories of goods and services. A super reduced rate of 4% applies to basic foodstuffs and some socially important goods.
4. Social contributions should not be forgotten either. For employees: the total rate is about 33% of the salary, of which 9.19% is withheld from the employee’s salary, and the remaining 23.81% is paid by the employer.

Italy also has an interesting example of incentivizing the acquisition of Italian residency – a flat tax for new residents. Foreigners moving to Italy can take advantage of a special regime by paying a flat tax of €100,000 per year on foreign income, which exempts them from the standard income tax.

In 2024, Italy implemented a tax reform aimed at simplifying the system and reducing the tax burden for certain categories of citizens. In particular, IRPEF rates were revised and additional benefits for families with children were introduced. Italy has double taxation treaties with more than 100 countries, which allows avoiding double taxation of income for residents and non-residents.

The Italian tax system is characterized by progressive rates and a variety of different taxes and fees. When planning to relocate or do business in Italy, it is recommended that you carefully study the current tax obligations and, if necessary, seek advice from professional tax advisors.

Source: http://relocation.com.ua/niuansy-systemy-opodatkuvannia-italii/