iCalculator™ IT: Italy Tax Calculators

Welcome to iCalculator™ IT, your comprehensive suite of free tax calculators for Italy. iCalculator™ has provided free tax calculators for Italy since 2019. Since those early days we have extended our resources for Italy to includes Tax Guides, Tax Videos and enhanced the tax calculators and supporting tax information. The Italy Tax Calculator and salary calculators within our Italy tax section are based on the latest tax rates published by the Tax Administration in Italy. In this dedicated Tax Portal for Italy you can access:

Italy Tax Calculator 2024/25

The Italy Tax Calculator below is for the 2024 tax year, the calculator allows you to calculate income tax and payroll taxes and deductions in Italy. This includes calculations for

1. Employees in Italy to calculate their annual salary after tax.
2. Employers to calculate their cost of employment for their employees in Italy.

Tax in Italy Explained

The Italian republic or Italy as it is commonly known, is a country located in South Central Europe. Italy is surrounded by several islands and its land borders are common with, Switzerland, Austria, France and Slovenia.

Italian is the official language of Italy, however, almost 34 languages are spoken in Italy. The official currency of Italy is the Euro. Italy has one of the most advanced economies that is the 3rd largest in Europe and, when compared with a nominal GDP, the economy of Italy stands at 8th place in the world.

There are various taxes levied in Italy by the Agenzia delle Entrate, let's take a brief look at the agency profile.

Tax authorities in Italy

The Italian Revenue Agency or Agenzia delle Entrate (Italian) is the tax authority of Italy. The agency is responsible for tax compliance and tax collection in Italy. The Italian Revenue Agency is responsible for providing, managing and auditing tax services, this includes assistance to taxpayers, collection of tax revenues, inspections and assessment of taxes.

The Italian revenue agency works under the Ministry of Economy and Finance (MEF). Links to access websites for both Italian Revenue Agency and Ministry of Economy and Finance are available below:

• The Italian Revenue Agency
• The Ministry Of Economy and Finance

We will now review and walk you through the details of the different kinds of tax policies and taxes that are levied in Italy. Let’s start with the personal income tax.

Personal Income Tax (PIT) in Italy

Compliance to be followed by Individual taxpayers in Italy:

The Italian tax year is similar to the Gregorian calendar year i.e. from January to December. If you are deriving income that is subject to personal income tax you will have to file an income tax return, regardless of your residence status in Italy. November 30th is the last date for filing income tax returns.

Individuals who are deriving income from the sources that are exempt from personal income tax or subject to withholding are not required to file income tax returns. Professional fees and salaries are generally subject to deduction of tax withholding at source.

There are Interest and penalties in place for individuals who fail to file in a timely manner, do not comply with regulations or try to avoid paying taxes.

Income determination for Individual taxpayers

Italy has source based taxation for individuals, residents are taxed on worldwide income and non-residents are taxed on Italian source based income only.

An individual’s taxable income has been divided into the following six categories:

1. Employment or salaried income: This income is taxable as a whole. All the cash benefits that you receive in cash or kind are taxed. However, there is a difference in the calculation, cash benefits, such as salary, bonuses, incentives, tax reimbursements, cost of living allowances etc. Are 100% taxed. Fringe benefits, sometimes referred to as “payment in kind”, such as a company car, accommodation, company stock, interest free loans etc. are taxed at normal or lump sum amount as per a defined standard criteria.
2. Income from self employment: The income generated from commercial activities is generally subject to corporate income tax. This is levied on a net profit of the business.
3. Professional income: The income generated by self employed professionals. This as well is collected on a net profit basis, which means the taxable income base includes the total fees collected and occurred business expenses.
4. Investment income: This income is mainly derived from dividends, shareholding and interest.
5. Capital gain income: These are gains derived by the disposal of Italian based immovable properties and are taxed as Miscellaneous Income.
6. Real estate income: This is basically the income that is generated by renting of real estate in Italy.

Personal Income Tax Rates

Individuals are subject to the following three kinds of taxes in Italy:

1. Regional Income Tax: is levied as per the regulations in the region of taxpayer’s residence. This tax ranges between 1.23% & 3.33%.
2. Municipal Income Tax: Similarly, this depends on the municipality of residence of the taxpayer. This tax ranges between 0% & 0.8%.
3. National Income Tax: is levied at progressive rates as per typical international income tax policies.

The total income tax due in Italy is then calculated by combining the three income tax amounts. You can find the latest personal income tax rates and allowances for Italy here, you can also find and review historical income tax rates supported by the Italy Income Tax Calculator.

Other taxes on Individuals

1. Stamp Duty: This is mainly levied on banking and legal transaction at different rates.
2. Municipal taxes on real property: This is levied on real estate owned in Italy, and owners are liable for tax regardless of their place of residence. This tax contains 3 different elements:
   1. Wealth tax (better known as IMU): Basic tax rate is 0.76% of the taxable value of property, generally this tax is not applicable on individual’s main residence.
   2. Tax for services (TASI): The rates range between 0% to 3.3%.
   3. Tax on refuse (TARI): The rates vary at the discretion of the municipality of the particular area.
3. Inheritance tax: The basis of the tax generally depends upon the transferred rights and value of assets. Rates vary from 4%, 6% and 8% and considered as per the relationship of the beneficiary and the deceased. You can calculate inheritance tax due in Italy using the Italien Inheritance Tax Calculator
4. Social security: If you are working as an employee in Italy, you will be required to make social security contributions to multiple funds. The total social security amount is around 40% of the total income, out of which almost 30% is paid by the employer and 10% is paid by the employees.
5. Other tax: There is an additional 10% tax collected on stock options, bonuses and variable payments paid to directors who work in the financial sector. The taxable income is the access of basic remuneration.

Other than the above taxes, there are wealth taxes on properties owned outside Italy, financial investments owned outside Italy, luxury taxes and excise taxes as well on individuals. Now, let's take a look at the taxation of corporations.

Corporation Income Tax (CIT) in Italy

Compliance for corporations

Similar to personal income tax, the tax year for corporations is the calendar year. However, it is permissible to set a different tax year for corporations that ties in with their incorporation date. The duration of the tax year may also be different (shorter or longer than 12 months) for corporations that meet certain conditions.

Corporate income tax is also known as imposta sul reddito sulle società or IRES, and imposta regionale sulle attività produttive (regional production tax) or IRAP. They are to be filed by the end of the 11th month after the end of the tax year end.

Payment of tax is done as an advance payment of 40% and 60% by the end of 6th and 11th month respectively in the tax year. There are Interest and penalties in place for those who fail to file, comply with regulations or try to avoid paying taxes.

You can calculate the corporation tax commitments on international profits, national profits in Italy using the Italy Corporation Tax Calculator.

Income determination for corporations

Rates - Corporations are generally taxed at the rate of 24% for IRES and 3.9% for IRAP.

IRAP rates can be slightly changed by the regional authorities and these rates are also different for banking and financial corporations, insurance companies, etc.

Losses - Corporations are allowed to carry forward losses and offset them against corporate taxable income.

Capital gains - Capital gains derived from the disposal of shares by resident entities may be exempt up to 95% given they meet certain conditions. Resident companies are typically taxed at a flat rate of 24% whereas gains derived by non-resident companies are taxed at a flat rate of 26%. Capital Gains in Italy can be calculated using the Italy Capital Gains Tax Calculator.

Other capital gains are generally considered as normal corporate income and are taxed at 24%.

Withholding taxes

Interest - Interest income of non-resident entities derived from an Italian source is taxed at 26%. However, interest generated from government bonds and similar investments is charged at 12.5%.

Royalties - Generally, 75% of Income from royalties is considered taxable, and is taxed at a standard rate of 30%.

Dividends - Dividends are taxed at a rate of 26% of the income that is derived by non-resident corporations.

Technical service fee - This is generally charged on the fees paid to non-resident companies for use of commercial, scientific or industrial equipment.

Other taxes on corporations

Social security - This is a mandatory contribution for all employers and the rates vary based on the employee’s work profile and size of the workforce.

Stamp Duty - This is levied on banking and legal transactions completed by corporations. Rates are different for various kinds of transactions.

Property transfer tax - This is levied on the transfer of properties that are based in Italy. The rates vary depending on the status of transfer, size of properties and other defined factors.

Value Added Tax (VAT)

VAT is levied on imports and supply of goods and services in Italy. This is levied at a standard rate of 22%; however, this is applied at the reduced rate of 4%, 5% and 10% on certain types of transactions.

All entities that deal in taxable products and services must register for VAT, from the 1st January 2019, it is mandatory to have electronic invoicing. VAT returns are filed electronically by the end of April after the tax year end.

Quarterly reports are required by the end of the second month of the quarter to be submitted by the taxpayer.

You can calculate the VAT due online using the Italy VAT Calculator.

How to calculate your salary after tax in Italy

Follow these simple steps to calculate your salary after tax in Italy using the Italy Salary Calculator 2024 which is updated with the tax tables.

1. Enter Your Salary and the Italy Salary Calculator will automatically produce a salary after tax illustration for you, simple.
2. Optional: Select Advanced and enter your age to alter age related tax allowances and deductions for your earning in Italy
3. Optional: Change the number of days you work per week, per year and the number of hours you work per week to allow various rates and allowances to be split for viewing in line ith your employment contract in Italy

That's it! Just a few simple steps to calculate your salary after tax in Italy with detailed income tax calculations. Need more from the Italy Tax Calculator? More detailed salary calculator or a wage calculator? Simply select 'advanced' to access more features of the tax calculator. If there are specific income related allowances or deductions in Italy that are not featured on the Italy tax calculator that you would like us to add, simply contact us and explain your requirement. New features for the Italy are added on request at no cost to you. We build tax calculators to support our community in Italy, whether resident or expats in Italy and expand the tool to suit our communities needs as required.