As employees, the bulk of the work is with your employer. Italy has a sort
of pay-as-you-earn system (generally referred to as
730 after the form used,) which incorporates various personal deductions. You
will be asked by your employer to provide information on your family status
(if you have a dependent spouse and/or children), if you are making deductible
mortgage payments, life insurance premiums or supplementary pension contributions,
if you have other deductibles such as medical expenses, or if you have other
income needing to be declared. Make sure that you keep your company up to date
with any changes in these situations.
If you would prefer not to let your employer know about certain situations
- say other sources of income that you would prefer to keep secret - then you
can use an outside CAF (centro di assistenza fiscale) or a commercialista when
it comes to filing yout tax return.
In straightforward situations, all of your income tax payment and filing requirements
will be fulfilled through the 730 system. The company will deduct each month
an amount of tax that is one-twelfth (assuming 12 monthly payments) of the total
tax expected to be due for the year. There will then be an equalisation (conguaglio)
at the end of the year, which usually affects your January salary.
In more complicated situations, you may have to file a separate tax return
(dichiarazione dei redditi), which is now called a Modello Unico,
though it used to be called - and many people still refer to it as - the 740
(pronounced SetteeQuaranta). In theory, Italy (like the USA, but unlike
the UK) taxes you - if you are tax-resident in Italy - on your worldwide income.
ICI (The Imposta Comunale sugli Immobili) is an annual property
tax paid in June and December.
IRAP (Imposta Regionale sulle Attività Produttive.)This is a
relatively new tax (introduced 1998) which replaced ILOR, ICIAP, TSS and a variety
of other minor taxes. It has to be paid by businesses on a sort of gross profit
figure and includes health contributions for both the employer and employees.
IRPEF (Imposta sul Reddito delle Persone Fisiche.) The IRPEF
is a direct and progressive tax on personal income derived from any source (salary,
income from property, dividends, etc.). This tax is paid by means of deductions
from one's paycheck, or if one is self-employed, with a tax return (dichiarazione
dei redditi, now called the Modello Unico). Taxes usually have to
be paid by the end of May and returns filed by the end of June, but deadlines
often vary year to year.
Here are the rates applicable on taxable income for 2000:
- 18.5% for the amount up to 10,000€
- 25.5% for the amount between 10,000€ and 15,000€
- 33.5% for the amount between 15,000€ and 30,000€
- 39.5% for the amount between 30,000€ and 67,000€
- 45.5% for thr amount over 67,000€
Local income taxes can add up to 1% to these rates.
IRPEG An abbreviation for corporate income tax.
IVA (Imposta sul Valore Aggiunto or Value Added Tax), an indirect
tax charged on most products and services. IVA usually amounts to 20% and creates
no complication for the consumer, as it is already included in the price of
retail goods.
Social security charges are around 10% of income.
For more information, visit: www.informer.it
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