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

The new tax year began in January in Italy - here are the key dates and what you need to know about filing your taxes in 2022.

Know the taxes you need to pay in Italy and when in 2022
Know the taxes you need to pay in Italy and when in 2022. Image: moerschy / Pixabay

Who has to file tax returns in 2022?

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

That is, unless you 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.

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.

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

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

It’s also important to note changes contained in Italy’s Fiscal Decree for 2022, with the new tax plans included in its Budget Law for this year.

People sit at a table during a job interview

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

The main measures include reforms to the current tax system, with a view to economic recovery following the impacts of the pandemic.

Therefore, to give some breathing space, the authorities have extended some tax deadlines – on ones that had already expired.

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.

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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.

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

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’.

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.

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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.

The 110 percent ‘Irpef’ deduction, better known as the ‘superbonus‘, can be filed for work carried out to upgrade a property’s energy efficiency rating or to reduce seismic risk.

READ ALSO: How Italy’s building ‘superbonus’ has changed in 2022

This is a good way to offset income taxes while benefitting from government-funded renovation work. For those hoping to use this scheme, it has been extended throughout at least 2022 – and beyond for some categories of property.

Please note that The Local cannot advise on personal tax questions. For further guidance, contact your accountant (commercialista) or your local tax office (Agenzia delle Entrate).

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PROPERTY

Revealed: The most expensive places in Italy to buy a house in 2022

Many factors are at play when deciding where to purchase a home in Italy. To help you decide, here are the most expensive and sought-after locations in Italy, according to the latest data.

Revealed: The most expensive places in Italy to buy a house in 2022

Searching for the right property in Italy involves a balancing act of location, price, convenience and how much, if any, restoration work needs to be done.

Budget usually tops the list for house-hunters, narrowing down the number of potentials for making your move to or within Italy.

If the entire country is your blank slate, here are the areas in Italy that rank as the most expensive – and desired – according to data from property portal Idealista for the first quarter of 2022.

The report ranks the top 100 municipalities according to popularity, based on those listings generating the most leads (email contacts and shares) and those where the average final sale price is highest.

READ ALSO: How bargain homes made one Italian town €100 million in two years

Taking the top spot for the most expensive place to buy in Italy is Pietrasanta in Versilia, in the province of Lucca, which the researchers also state holds first place in the top 100 most expensive places to rent a house too.

This area includes the playground of the rich, Forte dei Marmi, where the average selling price of a house is over half a million euros (€541,351).

The table below shows the full ranking.

In second place is Alassio, in the province of Savona, where homebuyers will on average shell out €467,019 for a residential property (again, valid for the first quarter of 2022).

Venice comes in at third place, where the average asking price is €433,640.

READ ALSO: EXPLAINED: The hidden costs of buying a home in Italy

In the top 10 spots, the report noted that the most expensive properties are in tourist resorts, possibly driven by those wanting second homes in popular locations.

Such locations include Lerici, Riccione, Desenzano del Garda, Camaiore and Cervia, while the cities of Florence and Milan, where average sale prices exceed €350,000, have also made the top 10.

The study revealed that the final average price of a house for sale in Rome is €273,341.

Researchers also looked at popularity of locations, based on pressure of demand on supply across Italy.

Bologna topped the charts, making it the city with the highest number of contacts per advert (4.7) of houses for sale published on idealista. Cagliari followed in second with 3.8 contacts per advert and Milan (3.4 contacts per advert). Trieste, Naples, Rome, Salerno, Brescia, Verona and Lecce also made the top 10.

READ ALSO: 15 insider tips to make living in Bologna even better

Here’s a selection of the most popular places to buy in Italy based on the report data, narrowed down to the top 20.

See more in The Local’s Italian property section.

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