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KPMG is committed to providing long term support to our clients as they tackle challenges. Our insurance practice comprises multi-disciplinary teams, led by senior partners with extensive experience. Our global insight and guidance on the key changes to IFRS are now available. The online rates tool compares corporate, indirect, individual income, and social security rates. In Italy it is possible to submit two kinds of tax return models and Model Income: The model can be filed also by Italian tax residents who do not have an employment contract at the time of presentation.
The filing deadline is 23 July following the end of the tax year. The filing deadline is 31 October of the current year for the previous year. Anybody paid from a non Italian payroll or who holds non- Italian investments and bank accounts directly is likely to file this return. The balance of taxes due for the fiscal year are payable by 30 June of the subsequent year; however, the Italian Revenue can accept delayed payments within 30 days so by July 30 with a low surcharge 0.
It is also possible to pay in installments. Two advance payments for the current year also are due and they are based on the previous year's tax liability.
Spouses are taxed separately on their earned income. Furthermore, each spouse is generally taxed on half the income from community property and on half the income of minor children. Generally the additional regional tax is charged at progressive rates between 1. Generally, the additional municipal tax percentage ranges between 0 percent and 0. There is an advance payment for additional municipal income tax to be paid as a one-off payment together with the income tax balance due for the previous year in the amount of 30 percent of the tax due for the previous employee stock options corporate taxes and debt policy dubai.
For the purposes of taxation, how is an individual defined as a resident of Italy? An individual will be considered to be an Italian resident for tax purposes, subject to double taxation treaty provisions, if one of the following conditions is met. It is enough that only one of the three aforementioned conditions is met, even without continuity, for the greater part of the tax year, to qualify the individual as an Italian tax resident.
Is there, a de minimus number of days rule when it comes to residency start and end date? It is important to proceed with the cancellation from the register of the Italian Resident Population, the so-called "Anagrafe della Popolazione Residente" if the taxpayer has been previously enrolled in it. Do the immigration authorities in Italy provide information to the local taxation authorities regarding when a person enters or leaves Italy?
Will an employee stock options corporate taxes and debt policy dubai have a filing requirement in the host country after they leave the country and repatriate?
The assignee is responsible to file the Italian income tax return and pay the related income tax for the year of repatriation according to the normal rules and templates. If no, are the taxation authorities in Italy considering the adoption of this interpretation of economic employer in the future? Are there a de minimus number of days 2 before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days? There is no de minimus number of days before the local taxation authorities will apply the economic employer approach.
Income from employment consists of all compensation in-money or in-kind received during the calendar year deriving from an employment relationship even if paid by third parties. Below is a list of typical items of an expatriate compensation package that will be considered fully taxable, unless otherwise indicated:.
Providing that some conditions are met, some of the earlier compensation items can be exempted fully or partially from taxation. Are there any areas of income that are exempt from taxation in Italy? If so, please provide a general definition of these areas. Payments, which are not regarded as taxable compensation, include certain payments for social welfare, life, accident insurance, medical insurance and the reimbursement of business expenses upon presentation of the original receipts.
Mandatory social security contributions paid by the taxpayer are tax deductible from the taxable income. Voluntary social security and welfare contributions paid in accordance with legal requirements, even if paid abroad are tax-deductible up to the annual limit of EUR 5, Contributions of up to EUR3, The reimbursement of any business expenses incurred by the employee is not considered taxable compensation if the expenses are supported by the related original receipts.
Article 16 of the Legislative Decree n. It is applicable starting from the year in which the individuals became Italian Tax Resident and for the following 4 fiscal years total of 5. Paragraph 2 of article 16, extends the applicability of such tax relief to individuals who:. Italian Budget Law clarified that the Paragraph 2 applies to EU citizens only with regards to fiscal year and extends to citizens of non-EU having a double tax treaty or an information exchange agreement in force with Italy.
Individuals who are considered tax employee stock options corporate taxes and debt policy dubai in Italy and who are employed outside of Italy in a continuative and exclusive way staying out of Italy for more than days in a month period will be taxed on a conventional salary. The so-called conventional salary is an amount established each year by a proper decree of the Italian Ministry of Labor, Treasure and Finance, and usually utilized for paying Italian social security contributions when the Italian employee is seconded to a non-social security treaty country.
Italian employers have to operate the withholding of income taxes on the monthly conventional salary for their Italian employees working abroad. When the conventional salary is applicable, all the benefits employee stock options corporate taxes and debt policy dubai and related to the foreign employment activity are considered included in the conventional salary.
The double taxation can be avoided through the tax credit mechanism. Furthermore, these particular rules are not applicable for Italian employees who are seconded abroad and break Italian tax residency. Therefore, the foreign incomes are not relevant to the purposes of taxation in Italy both income and wealth tax.
Generally, interest income is taxable. There are, however, very different taxation rules for financial instruments, according to the source of the interest. In particular, interest income from government bonds is subject to a final withholding tax of Interest income and income from other securities issued by banks or companies listed on the stock exchange, are subject to employee stock options corporate taxes and debt policy dubai final withholding tax of 26 percent.
Interest on bank and postal current accounts and interest on bank and postal deposits are subject to a final withholding tax of 26 percent. Interest on foreign bank accounts can be subject to a 26 percent substitute tax via the income tax return. In addition to income taxes, a Wealth tax is also charged on financial assets held abroad by individual tax resident in Italy including current accounts.
The rate of Wealth tax is 0,20 percent of the value employee stock options corporate taxes and debt policy dubai the financial assets. If the annual average in a bank account is less than EUR 5, the wealth tax is not charged.
In addition to the Wealth Tax, all foreign investments not held through an Italian intermediary are subject to reporting for fiscal monitoring purposes Form RW of the tax return.
Anyway, in particular case, the monitoring rule does not apply regarding to deposits and bank accounts held abroad whose total maximum value, reached employee stock options corporate taxes and debt policy dubai the fiscal year, does not exceed 15, EUR. There is de minimus value for reporting other types of financial investments. Capital gains realized on real property in Italy are usually taxable whether or not the owner is resident in Italy.
The sale of the first habitual dwelling is not taxed as capital gain if the building has been used as habitual dwelling for the greater part of the possession period. A capital gain realized on the sale of real estate purchased for more than five years is not taxable. The capital gain realized on real properties out of Italy are taxable in Italy on the basis of the earlier-mentioned rules if the owner is considered an Italian tax resident.
Distributions derived from the foreign investment funds - set up in accordance to EU regulations - are subject to a flat tax at a 26 percent rate. Alternatively, the foreign investment funds - not recognized accordingly to EU regulations - are subjected to Italian progressive taxation. A Wealth Tax is charged on Real Estate held abroad by an Italian tax resident whether rented out or not.
Foreign real estate is subject to IVIE. Employee stock options corporate taxes and debt policy dubai of the tax year, if the property in question is used as the principal residence, then IVIE is no longer due.
If it is not used as the principal residence, the tax due amounts to 0. Where foreign wealth taxes are also applied then a Foreign Tax Credit may be available in Italy. In addition to the payment of Wealth Taxes, a tax resident of Italy is also required to declare the value of Real Estate held abroad Italy under the fiscal monitoring rules Form RW of the tax return.
Care should be taken that certain personal use items held abroad by an Italian tax resident are subject to reporting employee stock options corporate taxes and debt policy dubai Italy under the fiscal monitoring rules Form RW of the tax return. These would include, inter alia, works of art, yachts, luxury vehicles, precious metals and jewelry. While wealth taxes are not currently charged on these items, violating the fiscal monitoring returns may lead to severe sanctions.
Are there additional capital gains tax CGT issues in Italy? If so, please discuss? The tax is levied on the spread between the selling price and the purchase cost, which may be increased by any additional legal and administrative expenses.
Capital losses can be carried forward for five years and used to offset capital gains of the same nature. There is a new system of deductions from the gross tax payable, depending on different types of income, such as employment, employee stock options corporate taxes and debt policy dubai, or pension income.
These deductions are reduced progressively until, at income levels of over EUR 55, they no longer apply. The basic deduction for a spouse employee stock options corporate taxes and debt policy dubai income of less than EUR 2, These deductions are also available to non-residents; however, they will need to be able to prove the family relationship by means of a local family relationship certificate.
According to special rules, the following additional deductions from aggregate income are allowable. A tax relief of up to a maximum of 19 percent of the following deducible expenses is allowed only to resident taxpayers.
In general, an Italian employer is required to apply monthly withholdings tax and if the employment income is the sole taxable income, the income taxes applied can be considered exhaustive and the taxpayer has no further compliance obligations. In the event that an individual will not be resident in Italy for the current tax year, it is possible to apply for a reduction of the advance payment, which however has to be equal to the percent of the actual tax payable for the historic year.
If the advance payments made are lower, penalties and interest will be due. Furthermore, in the event that any tax is due, the following penalties for delayed payments are applicable. Calculated on a daily basis, starting from the date the tax should have been paid to the date the tax is paid.
Calculated on a daily basis starting from the date the tax should employee stock options corporate taxes and debt policy dubai been paid to the date the tax is paid. This is valid only if the taxpayer files for a tax amnesty prior to the assessment. In some circumstances, criminal sanctions may also be applied. For example, monthly, annually, both, and so on. The prepayments are due twice as described earlier.
The withholding payment made by the Italian employer is made on a monthly basis. Is there any Relief for Foreign Taxes in Italy?