Anyone based in Italy more than 183 days a year must pay taxes on the entirety of his or her worldwide income here in Italy. Non-residents are taxed only on income derived from Italy. Researchers and lecturers are not subject to taxes, and can stay here for up to two years when invited to come to Italy or within the framework of an official cultural exchange programme; this applies also to students, apprentices and trainees as long as their legal residence is still outside of Italy.
The most important direct tax for natural persons and partnerships is the income tax, or IRPEF (imposta sul reddito delle persone fisiche). It is designed progressively, and the rate of taxation is applied according to the following levels of yearly income:
|Up to € 15,000||23%|
|Over € 15,000 to € 28,000||27%|
|Over € 28,000 to € 55,000||38%|
|Over € 55,000 to € 75,000||41%|
|Over € 75,000||43%|
The cost of maintaining dependent family members, medical expenses, and a variety of other expenses can be deducted from income tax. When these possibilities are utilised, the first € 8,000 in income is virtually tax-free. Italian law prohibits reducing taxable income by attributing it to a spouse. Regions and municipalities have the option of levying a surcharge on the IRPEF, at a maximum rate of 2%. In South Tyrol, the IRPEF surcharge is 0.9%. Anyone with an income under € 12,000 or an income under € 25,000 if there are children living at home, is exempt. Some municipalities charge an additional surcharge of between 0.10% and 0.40%.
Corporate enterprises, cooperatives, and commercially active statutory corporations must pay a tax on profit called the IRES (imposta sul reddito delle società), which is currently levied at 27.5%. In addition, each Italian region levies a tax on the value addition performed: the IRAP (imposta regionale sulle attività produttive). In South Tyrol, the IRAP is quite nominal: 2.98 %. The Italian state has levied its value-added tax (VAT), which is a consumption tax, at a rate of 21% since September 2011.