Paying Taxes in Italy

1. What is the corporate tax in Italy?
Italian Tax Law requires companies and individual entrepreneurs to pay a 27% corporate tax, which is a State Tax called IRES in Italy. In addition there is another tax, called IRAP which is a regional tax of 3, 9% bringing the total taxation amount at 31, and 4%.
 

2. What is the VAT in Italy?
The standard VAT rate in Italy is 20% and it is charged on assets and services in Italy as well as on imports. However the VAT rate is reduced at 4% and 10% on basic products.
 

3. How can the VAT be refunded in Italy?
The VAT rate affects companies' business profits. However the VAT tax can be recovered in Italy, recovering expenses of the company. Reclaiming VAT refund requires the entrepreneur to forward a claim at the local Tax Authorities in Italy. The application should contain original invoices displaying Italian VAT, a copy of a recent certificate issued by the relevant Tax Authority and other identification documents. According to the Italian Tax Code, the Tax Authority should make the refund no later then 6 months from the day the application has been submitted.

4. What is the dividend tax in Italy?
The Italian Capital Gain Tax, or dividend tax is 12, 5%, however the dividend tax can be reduced depending on the percentage owned in the share capital of the company.

5. Are there any incentives for foreign investors in Italy?
Italy is one of the most advantageous countries for foreign investment, as the Italian government encourages it, by offering not only a welcoming climate without discrimination, but also significant incentives. The benefits are given in the form of rants, loans at reduced interest, state guarantees depending on the geographical location and the size of the investment company. Also, companies that have invested in Italy for over 5 years are eligible for a deduction of taxes. Italy also offers free trade zones, in Venice and Trieste, zones that offer an exemption from taxes on some imported materials, the possibility for the foreign company to bring foreign personnel, subject to the labor laws of the country of origin.

6. Why do I need a local accountant for my Italian business?
Doing business in Italy presumes a correct standing in front of authorities for a company. In order to ensure the accounts of the company are in order, and obey the regulations of the Italian law an accountant is needed. Though any accountant can be of help, a local accountant offers a better understanding of the financial environment of the respective country and has a lot more experience in working after the regulations of the state.

BridgeWest can offer detailed information how to start a company in Italy.