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EXPLAINED: The rules and deadlines for filing Italian taxes in 2022

As the first deadline approaches for some, here's a reminder of the key dates and what you need to know about filing your Italian taxes this year.

Know the taxes you need to pay in Italy and when in 2022
Austria has been sending out climate bonus payments to millions of people (including some deceased). Image: moerschy / Pixabay

Who has to file a tax return in Italy in 2022?

Whether you are a resident or non-resident in Italy, you’ll need to file taxes in Italy.

That is unless you either receive employment income from a single employer in Italy, make an income taxed at source (such as money gained from dividends), earn an income of €8,000 or less from employment, or receive a retirement income of €7,500 or less. In these cases, you are not required to fill out a tax return.

For everyone who does need to file taxes, the rules differ slightly depending on your circumstances.

Those who are resident in Italy – which includes people who live in Italy more than 183 days per year, making it their primary residence – are taxed on worldwide income.

READ ALSO: What’s the difference between Italian residency and citizenship?

This is true regardless of where the income is generated from and you must take your earnings from everywhere into account. Therefore, if your primary residence is in Italy and you make money from the US, Canada or the UK for instance, you must pay taxes on that income to Italy.

Your citizenship doesn’t change this requirement.

Non-residents on the other hand, such as those who have a second home in Italy, only pay taxes on income made in Italy.

If you are a second-home owner in Italy however there are taxes you need to pay on the property. See here for details.

When are the deadlines for filing this year?

The final deadline for filing taxes is November 30th 2022, but there are other instalments to be aware of, depending on your personal circumstances.

Some tax deadlines were extended under reforms made under Italy’s Fiscal Decree for 2022, with a view to aiiding economic recovery following the impacts of the pandemic.

Originally, the deadline for paying tax bills from September 1st to December 31st 2021 was November 30th 2021. An extension was initially retrospectively granted for 60 days, but has now been further extended to up to 180 days.

People sit at a table during a job interview

The new tax deadlines you need to know for 2022. Photo: Nick Morrison on Unsplash

Looking ahead, the Italian tax year is the same as the calendar year, running from January 1st to December 31st. For the 2022 tax season, the tax return regards income and expenses incurred during 2021.

You must file your tax form online via the dedicated website of Italy’s tax office (Agenzia delle Entrate). An accountant can do this for you if you’d prefer a professional to take care of it.

You’ll need some form of electronic ID credentials such as your SPID or CIE.

For a calendar of all the tax deadlines by month, see Italy’s tax office schedule here.

Which Italian tax form should I use?

There are two different tax forms – one is known as the 730 and the other is the ‘Redditi PF‘ (revenue) and which one you use depends on the type of income.

Everyone can file taxes using the latter within the final 30th November deadline.

The more simplified 730 form can only be used by those employed by a company (and therefore not self-employed) – it’s generally processed faster but has an earlier deadline of 30th September.

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Employees and retirees who have income from work, a pension and other sources may submit form 730. Spouses may submit form 730 jointly, according to Italy’s tax office guidelines.

Anyone else and taxpayers who are not resident in Italy for tax purposes during the tax year and/or during the year of filing of the tax return must submit the Redditi PF form.

This tax form is split into sections, based on the type of income earned, including a part to declare foreign assets, which would incur a type of tax called ‘wealth tax’.

Do your research when looking for work

Remember to check you’re using the correct forms and submit by the relevant deadline. Photo: Van Tay Media on Unsplash

If you have any assets or income that can’t be included in the shorter 730 form, you must complete the Redditi to adhere to Italy’s income reporting requirements.

For more advice on these forms, Italy’s Inland Revenue has published instructions in English here.

What taxes can I expect to pay?

You’ll need to pay three main types of taxes on income in Italy. Everyone is subject to personal income tax called ‘Irpef’, which starts at 23 percent of earnings for the lowest income bracket and rises cumulatively to 43 percent as a wage increases.

Italy recently approved a drop to its income tax bands from five to four and reduced tax rates for those on lower incomes.

Now, you’ll pay 23 percent tax on earnings up to €15,000 (as before), while for salaries of between €15,000 and €28,0000, taxes will be reduced from 27 percent to 25 percent.

For salaries between €28,0000 and €50,000, the applicable tax rate will be 35 percent.

The 41 percent tax band for earnings between €55,000 and €75,000 will be abolished altogether, with all income over €50,000 now set to be taxed at the top rate of 43 percent.

READ ALSO: Working remotely from Italy: What are the rules for foreigners?

There are also regional taxes which vary from under 1 percent to over 3 percent and you’ll also need to pay municipal income tax rates, which varies according to where your fiscal residence is.

And don’t forget social security contributions or ‘INPS’ – for this year, employees with low incomes up to €35,000 per year (or up to €2,692 gross per month) will get a 0.8 percent discount for the pay periods from January 1st to December 31st 2022.

Self-employed workers face higher social security contributions than employees (who pay around 9 percent and the rest is paid by the employer), at around 25 – 29 percent of gross income.

However, if you are eligible for Italy’s flat tax rate or ‘regime forfettario’ for new freelancers, you could pay much lower income tax rates of between five and 15 percent. Find out more about this here.

What happens if I miss the deadline?

The best approach to Italian tax deadlines is not to miss them, as there are fines and sanctions in place for those who do.

You may be required to pay between €250 to over €1000 for not filing taxes on time. If you end up in a tax liability, you could be issued with a further fine ranging from 120 percent to 240 percent of each tax liability.

Do your sums to avoid fines. Photo by Towfiqu barbhuiya on Unsplash

There are further penalties if you have foreign assets and were late with your tax return. You will face a fine of between 3 and 15 percent of the asset value – double it if your asset is held in a black-listed country or jurisdiction, such as the Cayman islands, Oman or the Seychelles.

Tax breaks for new residents to Italy

If you move to Italy and make it your primary residence, you could be eligible for some considerable tax breaks.

There’s a discount on taxes for new residents for a period of up to five years and to be eligible, you need to be either employed or self-employed in Italy and not have had residence in Italy in the previous two years.

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The potential savings are substantial as you can take advantage of a 70 percent tax exemption on your income. Therefore, only 30 percent of what you earn is taxable.

And it’s even more attractive if you move to the south of Italy, with the exemption increased to 90 percent. 

When do self-employed workers pay their taxes?

Self-employed workers are subject to the same income tax brackets as the employed, but they can pay their taxes slightly differently.

Compared to those employed by a company who pay income tax at source, the self-employed can pay their taxes in June or spread them out over six months in instalments.

READ ALSO:

June 30th is the first deadline for paying their income tax and November 30th is the second and final one.

If you pay VAT (IVA), you’ll need to pay the VAT balance for the year 2021 by March 16th 2022.

What about income earned from outside Italy?

It’s best to check any double taxation treaties in place between Italy and the country you’re generating income from.

Regardless of where income is generated, however, you can deduct any extra tax paid abroad from the limits set in Italy.

If the tax paid is higher in the other country, you don’t have to pay anything in Italy. If it’s the contrary, you’ll have to pay the difference in accordance with Italy’s tax rates.

Even if the balance shows you don’t have to pay any extra taxes to Italy, you still have to file a tax return and disclose your foreign income.

Are there any tax deductible items I can claim for?

Italy has a raft of tax incentives on offer that you can claim to offset against your income tax.

From health expenses, kindergarten fees and various building and renovation bonuses, there is a multitude of ways to deduct from your tax bill.

As well as everyday expenses, the Italian government is currently offering dozens of tax incentives in the form of ‘bonuses’, some which can be claimed as a reduction in your tax bill, or as a discount at the time of purchase. See a list of the current tax bonuses available here.

The most famous of these is no doubt 110 percent ‘Irpef’ deduction better known as the ‘superbonus‘, which can be filed for work carried out to upgrade a property’s energy efficiency rating or to reduce seismic risk.

For further information and guidance, contact your accountant (commercialista) or your local Italian tax office (Agenzia delle Entrate).

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For members

PROPERTY

EXPLAINED: Will the latest change solve problems with Italy’s superbonus?

With lines of credit blocked and renovation work delayed, Italy’s political parties have agreed on further changes to the ‘superbonus 110’. Will this be enough to resolve issues for homeowners?

EXPLAINED: Will the latest change solve problems with Italy’s superbonus?

After weeks of intense back-and-forth, parties have finally agreed on the latest amendment to Italy’s famed building superbonus, the government’s financial incentive offering a rebate of up to 110 percent of the cost of works increasing a property’s energy efficiency or reducing its seismic vulnerability.

The scheme has proven incredibly popular over the two years since its introduction back in May 2020. But access has often been hindered by technical issues, with a number of authoritative political figures, not least outgoing premier Mario Draghi, criticising the bonus for its structural complexity. 

READ ALSO: Italy’s building superbonus: How will it change after the election?

A major issue concerns the credit transfer system, with many banks across the country recently refusing to buy or lend credit, and billions of euros’ worth of fraudulent claims – causing many financial operations, and therefore building work, to be frozen altogether.

These setbacks have left many homeowners concerned about whether they’ll be able to finish their renovation projects in time and even caused some to abandon their plans

Furthermore, as many as 40,000 construction businesses are said to be currently at risk of bankruptcy due to credit transfer blockages. 

Worker standing on scaffolding in Spain.

The latest government measure seeks to reopen lines of credit and save as many as 40,000 businesses from bankruptcy. Photo by Pau BARRENA / AFP

The latest amendment, part of the government’s new cost-of-living-crisis aid package (the decreto aiuti bis), is intended to unclog existing lines of credit and save businesses from folding.

The change was approved by the Italian Senate on Tuesday, with the go-ahead from the Lower House now being the last remaining step before the changes are made into law – deputies are expected to greenlight the amendment on Thursday.

READ ALSO: Italy’s building superbonus: What’s the problem with credit transfers?

So what does the latest amendment entail and, more importantly, how is it expected to affect homeowners using the bonus?

The building scheme’s latest amendment is set to remove joint and several liability (‘responsabilità in solido’ in Italian) for all parties involved in the credit transfer chain, retaining the provision only for cases of “wilful misconduct or gross negligence”.

In other words, should cases of insolvency occur, the parties involved in the transfer of credit will no longer be collectively liable to pay the amount owed unless fraud or serious neglect can be proved. 

Naturally, the measure’s primary objective is to allow for easier circulation of credit in order to restart financial operations. 

It isn’t yet clear however whether the amendment will ultimately save those businesses whose credit had been previously blocked and allow homeowners to complete construction works by the given deadlines. 

Construction worker wiping sweat off his brow.

As things stand, 30 percent of renovation works on single-family homes must be completed by September 30th, 2022. Photo by Valentine CHAPUIS / AFP

On this note, it is worth mentioning that there was no provision made under the amendment to extend timeframes for claiming the bonus.

As things stand, those renovating single-family homes still need to complete 30 percent of renovation works by September 30th and must achieve 100-percent completion by December 31st in order to benefit from the funds.

READ ALSO: Nine things we’ve learned about claiming Italy’s building ‘superbonus’

Those renovating certain other types of buildings, or those in areas with higher seismic risk, have until 2025 to claim.

Looming deadlines notwithstanding, both the Italian Banking Association (Associazione Bancaria Italiana, ABI) and the National Constructors Association (Associazione Nazionale Costruttori Edili, ANCE) have expressed cautious satisfaction over the latest amendment, with the former praising the measure as a “step forward”.

Five Star Movement leader Giuseppe Conte, who was responsible for introducing the bonus while prime minister in 2020, commended the amendment, saying that a solution had finally been found for the “businesses, workers and families who had been forgotten by all”. 

Others aren’t sure however that the latest update will solve the issues for good. 

Notably, the president of the National Council of Surveyors (CNG), Maurizio Savincelli, said the amendment would not fully resolve the credit transfer blockage as “banks will likely wait for new measures, including memos from the Italian Revenue Agency” before they reopen lines of credit.

Please note that The Local cannot advise on individual cases. For more information on claiming Italy’s building bonuses, homeowners are advised to consult a qualified Italian building surveyor or financial advisor.

See more in our Italian property section.

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