Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.
Yes we tax in Italy
New tax reform: VAT tax rates would be increased from 22% to 25% from 1st January 2018 and to 25.9% from 1 January 2019; and the reduced rate will be increased from 10% to 13% from 1st January 2018.
New tax treaties:
- Tax treaty between Italy and Romania is ratified by Italy.
- New exchanges of letter in the protocol of the tax treaty between Italy and Luxembourg.
Local tax advisors
No specific information on the local tax advisors.
The definition of Permanent Establishment follows the wording of article 5 of the OECD Model:
- Dependent agent who habitually concludes contracts in the name of a non-resident company (except is the activity is limited to purchase of goods);
- Building site, construction, assembly or installation and any related supervisory activity, for a period of 3 months.
Resident companies are taxed on their worldwide income. However, non-resident companies are only taxed on their revenues derived from Italy sources.
Entities are considered to be resident for tax purposes in Italy if their place of management & control is in Italy.
However, the place of residence is subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 24%.
Non-taxable income includes the following:
- Dividends (qualified dividends are 95% exonerated)
- Certain capital gains (long term capital gains are 95% exonerated)
- Profits from certain permanent establishment abroad
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the thin-capitalization threshold
Carry forward : Yes indefinitely, but some restrictions may apply
Carry back: No
Companies should submit the tax return annually.
Annual tax returns are established by the company on a self-assessment system.
Companies shall pay 2 advance payments on 30 June and 30 November of the current taxable year; and the balance must be paid before 30 June of the following year (in the case where fiscal year coincides with calendar year).
Whithholding Taxes (payment to foreign companies)
The local tax rates in Italy are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 26%.
The general rate of WHT on interest is 26%.
The general rate of WHT on Royalties is 30%.
Note: the effective tax rate is 22.5% because the WHT applies only on 75% of the gross amount of the payment.
The general rate of WHT on management fees is 0%.
The general rate of WHT on technical services is 0%.
Capital gains are taxed as general income under the regular CIT.
Note: in certain cases capital gains are not taxable (i.e. disposal of the shares booked as long-term investment and held for a period of at least 12 months, are 95% exempt of capital gains).
Standard VAT tax rate is 22% (increased to 25% from 1 January 2018)
Reduced tax rates are:
- 10% (increased to 13% from 1 January 2018)
Zero-rated supplies include, subject to certain conditions:
- exports of goods;
- intra-Community supplies of goods;
Exempt supplies include, subject to certain conditions:
- Certain financial services
- Insurance services
- Medical services
Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.
EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.
Certain non-resident companies (which are not required to register and incur Italian VAT in the course of their business activities in Italy) may apply for a refund.
No other specific information of VAT in Italy.
The general statute of limitation is 4 years starting at the end of the year in which the tax return had to be filed.
The statute of limitation is extended to 5 years if no tax return was filed.
There is no foreign exchange control in Italy. Income and capital can be freely repatriated.
There are thin capitalization rules in Italy. The interests derived from loans between related parties may not be deductible in case where interest exceeds some ratios.
Do not hesitate to share your experience in Italy with us in the comments below. Any comments are welcome !