Taxation of Foreign Companies in Italy
Taxation of Foreign Companies in ItalyUpdated on Thursday 21st April 2016
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Foreign investors who intend to set up a company in Italy should know a few details about the taxation system in this country and the incentives they may benefit from if they run certain types of activities. The main types of taxes in Italy are direct and indirect and each of them includes a series of other taxes, such as tax on the income of the company, regional tax on productive activities and the municipal tax, VAT, registration tax etc.
The most important tax a company has to pay in Italy is the income tax, called IRES, at a rate of 27.50% calculated on the income obtained by the company. Foreign companies are required to pay this tax calculated on the income obtained in Italy.
Another important tax for companies is VAT, at a standard rate of 22%, but with variations for certain categories of goods and services. The minimum rate for VAT is 4% and there is a reduced rate of 10% for certain businesses stipulated by the law.
At the beginning of every business in Italy, the entrepreneurs must pay registration taxes for registering documents, buying a property, concluding certain contracts etc. The rates of the registration tax vary according to the type of transaction. Other taxes that must be paid by companies are: stamp duties, taxes for occupation of the public spaces, on advertising, excise duties etc.
Every year, until 30th September, the representative of a company must send an income tax return form filled with its taxable income, the income tax and the costs for the previous business year. The submission may be done via Internet and the form must be sent to Agenzia delle Entrate’s.
Foreign companies may benefit from tax incentives offered by the Italian authorities that encourage employment, the development of business in certain regions, such as the south of the country. Investors interested in details about these incentives can find more information at the Ministry for Economic Development.
If you are interested in details about taxation in Italy, you may contact our Italian lawyers who will also help you with registering a company, no matter the field of activity, such as transportation, rental, construction etc.