TAX SYSTEM IN ITALY Submitted by: Shradha Churi FM/11/016 HOW INCOME IS TAXED?

The IRE is a personal tax with progressive income tax brackets which is calculated on the total worldwide income of anyone who is resident in Italy and on the income produced in Italy of persons who are not resident in Italy. WHO IS A RESIDENT FOR TAX PURPOSES? From a tax point of view a person is considered resident in Italy if for the majority of the year (that is for a period of 183 days or more even if they are not consecutive) they: o Are registered as resident at the Municipal Registry o Have their domicile in Italy o Have their residence in Italy DEDUCTIONS Tax allowances include the so-called "no-tax area", (a deduction of between 3,000 and 7,500 to avoid taxing those on low incomes). ASSESMENT YEAR AND FILING OF TAX RETURNS The tax period is the calendar year (1 January to 31 December). The deadline for submission of the tax return is 31 October of the following year, and the deadline for payment of the taxes, as calculated by your accountant, is 20 June the year after that. TYPES OF TAXES Direct taxes Individual income tax (IRPEF): applied to revenues of individuals;

 Corporate income tax (IRES): applied to revenues of business corporations; Italian regional tax on productive activities (IRAP): applied to sole proprietorships, partnerships and business corporations. Indirect taxes Value added tax (VAT): at a standard rate of 20%, or 4% and 10%. Registration tax: applied at the time of registration of documents for specific Inheritance Tax: Inheritance Tax is applied to transfers of assets or rights as a result of death. It is levied on the value of the individual shares assigned to each heir at a rate varying between 4% and 8%.