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How much tax are you actually supposed to pay in Italy?
Thread poster: Oliver Lawrence
Oliver Lawrence
Oliver Lawrence  Identity Verified
Italy
Local time: 22:45
Italian to English
+ ...
TOPIC STARTER
Formalities for purchases from other EU countries? Jun 16, 2011

sailingshoes wrote:

Another thing to be sure to do is to fulfil the formalities for puchases from other EU countires before buying (for example, software from another EU state). If you don't, you will have to pay a mandatory fine... plus of course more to your accountant for the added work of sorting out the mess.


So if I buy a piece of software from a website of a company whose head office is in different EU country or buy a work-related book from a shop in another EU country, then I have to go through some kind of formal procedure in order to avoid paying a fine?! That's got me worried, please can you give more details?


 
sailingshoes
sailingshoes
Local time: 22:45
Spanish to English
There's no big worry Jun 16, 2011

Sorry for throwing that in without checking first.

This might not be a problem if you're not in the Regime dei Minimi (which doesn't require you to charge/pay VAT, and therefore requires a payment on account of VAT not charged on intra-EU dealings for those in posession of VAT numbers!).

In any case the fine is only a percentage of the cost. It's just a pain.

I can check with my accountant.


 
Giles Watson
Giles Watson  Identity Verified
Italy
Local time: 22:45
Italian to English
In memoriam
Intrastat Jun 16, 2011

Hi Oliver,

You may have to present an Intrastat declaration if you issue or pay invoices involving non-domestic clients or suppliers. If you want more info, this is the page to start from:

http://www.agenziadogane.it/wps/wcm/connect/Internet/ed/Servizi/Intrastat/

There are extra formalities if your client/supplier is based i
... See more
Hi Oliver,

You may have to present an Intrastat declaration if you issue or pay invoices involving non-domestic clients or suppliers. If you want more info, this is the page to start from:

http://www.agenziadogane.it/wps/wcm/connect/Internet/ed/Servizi/Intrastat/

There are extra formalities if your client/supplier is based in a "black list" country (one of which, ironically enough, is Luxembourg!).

I initially thought I might do this myself. The people at my local tax office are very helpful and the procedures aren't actually all that complicated but the software you have to use is a bit dodgy and the various codes aren't always obvious. In the end, I just got my accountant to bundle the declaration in with the rest of the stuff he looks after for me.

[Edited at 2011-06-16 14:22 GMT]
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Eileen Cartoon
Eileen Cartoon  Identity Verified
Local time: 22:45
Italian to English
You can generate more expenses Jun 16, 2011

sailingshoes wrote:

This is important because I have very low expenses (my accountant can't believe I can't generate any more!). Those for example who live in rented accommodation/office space and have rent and other condominium expenses can deduct a lot more. Also, much to amazement of my Italian neighbours, I don't drive, so no motor costs!


[Modificato alle 2011-06-14 12:01 GMT]


Actually, since I work out of my house, but it is actually in my husband'sname, my accountant has him write out a bill saying that I have paid X for gas, Y for telephone and such... for my office space. this then becomes a deductable. Maybe you can add something like this in, too. After all it is legit, I do spend more on electricity, heating, and such because of the office


 
Oliver Lawrence
Oliver Lawrence  Identity Verified
Italy
Local time: 22:45
Italian to English
+ ...
TOPIC STARTER
That's OK, then Jun 16, 2011

Giles Watson wrote:

You may have to present an Intrastat declaration if you issue or pay invoices involving non-domestic clients or suppliers. In the end, I just got my accountant to bundle the declaration in with the rest of the stuff he looks after for me.


My accountant does that for me too. Thanks, Giles.


 
Nicholas Stedman
Nicholas Stedman  Identity Verified
Italy
Local time: 22:45
French to English
INPS Jun 17, 2011

I hope the experts are still following this thread as I need some enlightenment about INPS. The title of the thread is "how much tax etc...." and as far as I have been able to understand INPS is for retirement pensions only and not a tax.

My question is therefore does this enormous contribution of 29 % of your gross income go just towards your own personal retirement pension or is in funnelled off for other things or redistributed to others as suggested by one of the contributors
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I hope the experts are still following this thread as I need some enlightenment about INPS. The title of the thread is "how much tax etc...." and as far as I have been able to understand INPS is for retirement pensions only and not a tax.

My question is therefore does this enormous contribution of 29 % of your gross income go just towards your own personal retirement pension or is in funnelled off for other things or redistributed to others as suggested by one of the contributors to this discussion.. ?
In fact the whole question of whether Italy is a high or low tax country seems to be hinged around the INPS as if the Italian government is just obliging you to save for your own future it can't be called a tax at all. Apparently you can even recover these contributions if you leave Italy.

Again some real figures are needed about what you get back for your INPS payments

[Edited at 2011-06-17 09:44 GMT]
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Giles Watson
Giles Watson  Identity Verified
Italy
Local time: 22:45
Italian to English
In memoriam
Taxes and insurance contributions Jun 17, 2011

NR_Stedman wrote:

I hope the experts are still following this thread as I need some enlightenment about INPS. The title of the thread is "how much tax etc...." and as far as I have been able to understand INPS is for retirement pensions only and not a tax.

My question is therefore does this enormous contribution of 29 % of your gross income go just towards your own personal retirement pension or is in funnelled off for other things or redistributed to others as suggested by one of the contributors to this discussion.. ?
In fact the whole question of whether Italy is a high or low tax country seems to be hinged around the INPS as if the Italian government is just obliging you to save for your own future it can't be called a tax at all. Apparently you can even recover these contributions if you leave Italy.

Again some real figures are needed about what you get back for your INPS payments

[Edited at 2011-06-17 09:44 GMT]


Figures are hard to come by, not least because the system has only been going since 1995.

There is, however, a ruling by the court of cassation discussed here, which states that the "gestione separata" contributions are not legally pension contributions at all. The supreme court views them as an extra tax on self-employed earnings whose purpose is to generate cash (so that INPS can pay other people's pensions) and to discourage the abuse of self-employment (ie passing off as self-employed consultants individuals who are actually company employees).

How much of the gestione separata tax we will see in the form of a state pension is still very much a matter for political debate. I wish they'd hurry up, though, as I'm not getting any younger!


 
Nicholas Stedman
Nicholas Stedman  Identity Verified
Italy
Local time: 22:45
French to English
A nasty ruling indeed! Jun 17, 2011

Thanks Giles for your clear answer
and this ruling does seem to be rather nasty suggesting that you must "deter" people from being self-employed! It justifies some of the negative comments in the fora recently.


 
sailingshoes
sailingshoes
Local time: 22:45
Spanish to English
More on INPS Jun 21, 2011

Let me first say that I don't want anyone to take anything I say for granted. I'm already guilty of causing palpitations with previous posts, so this is just conversation based on my limitd knowledge!

INPS tax/not tax is really just subjective. It's a mandatory flat levy on income, theoretically in exchange for a state service (pensions). That sounds like income tax, whatever the purpose of the levy is. My wife's cousin works in the INPS offices and she always tries to sell it to me
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Let me first say that I don't want anyone to take anything I say for granted. I'm already guilty of causing palpitations with previous posts, so this is just conversation based on my limitd knowledge!

INPS tax/not tax is really just subjective. It's a mandatory flat levy on income, theoretically in exchange for a state service (pensions). That sounds like income tax, whatever the purpose of the levy is. My wife's cousin works in the INPS offices and she always tries to sell it to me as my 'tesoretto' (little treasure), but for anyone like myself entering the system in their 40s, the treasure looks a little tarnished.

If I'm not wrong, say I earn 30 K a year for the next 20 years and retire at 68, I will pay c. 7 K a year in INPS. That's a total of EUR140 000. Life expectancy in Italy for males is 78, so on average anyone in my position will live a decade after 68. As far as I know, the INPS will pay me 450 a month minimum pension. That's 5400 a year for 10 years, or EUR 54 000. Before tax, and remember pesnions are taxed harder in Italy than anywhere else in Europe.

Were I to take out a 20 year mortgage for 7K a year I could buy a studio apartment in my local town. Rent back to me would not exceed EUR 300 amonth, but even EUR250 accumulated over 20 years would amount to EUR 60 000. And I could sell my apartment at the end of that time. If I died it would remain with my heirs, unlike INPS.

I just see INPS as a racket. If I don't pay it the wiseguys at Equitalia (nicely named strongarm operation set up for the Italian revenue service) will kick me and my family out of our house. So I shell out and try and look happy.

I hope I'm wrong on all of this!
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sailingshoes
sailingshoes
Local time: 22:45
Spanish to English
Poor Italy Jun 21, 2011

The real problem is that the system in Italy can't be changed because, with the high public debt, the aging population, youth unemployment and stagnant GDP, the room for manouevre is just too limited (see the current public debate about re-arranging the tax system, which would of course mainly benefit the better off).

My accountant's view is the 30 K cutoff level (not adjusted in 5 years) for the 'regime dei minimi' is so low because the Revenue just assume most self-employed people
... See more
The real problem is that the system in Italy can't be changed because, with the high public debt, the aging population, youth unemployment and stagnant GDP, the room for manouevre is just too limited (see the current public debate about re-arranging the tax system, which would of course mainly benefit the better off).

My accountant's view is the 30 K cutoff level (not adjusted in 5 years) for the 'regime dei minimi' is so low because the Revenue just assume most self-employed people aren't declaring a portion (or most) of their earnings. I declare 100%, fool that I am. I went into the RdM because I calculated that if I earned 50 K I would actually come away with an extra c. 4 K net after tax. Since I have schoolage kids, the 40% additional time worked would demand extra childcare, soon wiping out any advantage.

The problem is that this is a disincentive to work. I'm treading water just now because I've earned way too much in the first 5 months of the year. Also I'm mainly selling my services abroad (because Italian agencies can't pay me properly since they are hit with even higher rates of tax than their workers), so my forced low productivity hits GDP, balance of payments, and of course tax revenue.

Another problem is competitivity. Since I pay 40% of all my income (before expenses) in tax, how can I compete with translators who as self employed workers pay 15-30% tax in other countries? How can GDP grow with agencies that can't compete employing workers who can't compete (and who, on the off chance that they are successful in secure large orders, will have to turn them down anyway because its 'costs to much to work'!)?




[Modificato alle 2011-06-21 13:30 GMT]
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lumierre
lumierre
Local time: 22:45
Member (2013)
German to English
+ ...
base imponibile IRPEF Jan 24, 2021

I intend to change my residency to Italy and benefit from the impatriati regime, whereas there is a reduction of 70% on the revenue that constitute the base imponibile for the income tax (IRPEF).
1. I would like to know from experiences from similar impatriates, how this worked for them?
2. I would like to know if the base imponibile = revenues - expenses (business expenses), and what kind of expenses are generally accepted without difficulties by tax authorities?


 
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How much tax are you actually supposed to pay in Italy?







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