Italy

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

Corporate tax (IRES - Imposta sul Reddito delle Societa) was set at 33% rate on January 1st 2004. Companies are also liable to the IRAP (regional tax on productive activities) at a rate of 4.25%.

   
Tax rate on long-term capital gains Capital gains are subject to general corporate taxation rules : IRES and IRAP.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies Dividends paid to non-resident companies:
Withholding tax of 27%. Non-resident companies may obtain a refund equal to the amount of the tax paid abroad on dividends but up to 4/9 of the tax withheld.

Dividends paid to residents companies:
Withholding tax of 0%
   
Tax rate on branches Branches are subject to general corporate taxation rules.




Income tax

Fiscal year The fiscal year begins on January 1st and ends on December 31st of the same year.
   
Income tax rate The income tax rate (IRPEF) is progressive up to 39%:

In euros Rate
0 - 26,000 23%
26,001 - 33,500 33%
33,501 - 100,000 39%

In addition, a solidarity contribution of 4% applies when the income exceeds 100,000 EUR, yielding an effective tax rate of 43%.
A regional tax (between 0.9% and 1.4%) is also assessed on incomes.
The inheritance taxes have been abolished in 2001.
   



VAT rates

Standard rates 20%
   
Reduced rates 10% and 4%
The 10% rate applies to some foodstuffs, live animals, certain fuel supplies, catering, some transport and some housing. The 4% rate applies to certain foodstuffs, agricultural inputs, medical supplies, and books and newspapers. Some exemptions also exist.



Other important taxes


Name of tax
Rate
Municipal tax on property  
0.4% to 0.7%  


 

Accounting

Introduction
Italian accounting rules are essentially based on the civil code and strongly influenced by the tax system.


Obligations and publications
The annual report, the audit report, the financial statements and a copy of the report of the general assembly must be deposited in the trade register 30 days after the general assembly. The deposit must be also indicated in the official bulletin of the companies of capital ( BURSAL); the associations must also publish their accounts.

Certification and auditing
The Civil code obliges the companies of capital, with a capital superior to 200 million liras, to appoint a committee of audit from three to five members which publishes its audit through an annual report included in the financial statements.
The law does not impose a particular model of presentation concerning the annual report.

Professionals and representative organizations
The Law recognizes the existence of two professional bodies: the Dottori Commercialisti and the Ragioneri.



Useful links
the Italian Ministry of Finances
Invest in Italy

Last modified in January 2007
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