Italy

Taxable period

The tax year for individuals in Italy is the calendar year.

Tax returns

In order to declare income, the taxpayer can file Modello Redditi PF or Modello 730 (Mod. 730, a simplified income tax return) on the basis of specific tax rules.

Mod. 730

In Italy, the Mod. 730 is a simplified income tax return. It can be filed only for specific incomes (i.e. incomes subject to ordinary taxation) and the taxpayer must meet the following conditions:

• Individual is an Italian tax resident in the year of filing of the Mod. 730 and in the previous one.
• Individual has a withholding agent in Italy in the period of the filing of the Italian income tax return.
• Individual has no VAT number.

The main advantage of this tax return is that the taxpayer is not required to prepare any calculation; the balance resulting from the tax return is directly withheld or refunded (if the result is a credit) to the employee in the Italian pay slip. Married couples can file the Modello 730 jointly.

This tax return has to be submitted to the Italian tax authorities by 30 September via electronic filing.

Modello Redditi PF

In case Mod. 730 is not applicable, the taxpayer has to file the Italian tax return called Modello Redditi PF. This tax return has to be submitted to the Italian tax authorities by 15 October via electronic filing. Married couples cannot file the Modello Redditi PF jointly.

WHT and Mod. CU issued by the employer

On employment income, the employer, as tax agent, applies for the monthly withholding tax on the basis of the tax rates applicable to the annual employment income.

The employer is required to issue within 16 March of the next year an annual employment certification, so called Model CU, certifying the amounts of the taxable income of the employee and the withholding taxes applied during the fiscal year.

In case the foreign individual has an employment relationship with an Italian company, the Italian employer, as withholding agent, is required to act as above.

In case foreign individuals have no employment relationship with an Italian company, they are required to declare the income in the Italian tax return (through the so called ‘self-assessment method’).

Payment of tax

In principle, the income taxes are paid through the individual’s tax return using the so-called 'self-assessment' method as follows:

• Two advance payments (30 June and 30 November of the current year).
• One final tax balance (30 June of the following year).

The amounts due are as follows:

• First advance payment = (100% of the income tax balance of the previous year) x 40%.
• Second advance payment = (100% of the income tax balance of the previous year) x 60%.
• Balance = Actual income tax - Advance payments.

Starting from 1 July 2024, the payment forms, which include credits used to offset the tax liability, need to be electronically filed through the online web services of the Italian tax authorities (i.e. it is no longer possible to make such payments through the online banking services).

Tax audit process

The tax authorities have the power, during the period up to 31 December of the fifth year following the year in which the tax return has been filed, to audit the taxpayer's return. The taxpayer has the option to appeal within 30/60 days from the notification date of the notice of assessment.

In case of an omitted tax return, the tax authorities can assess during the period up to 31 December of the seventh year following the year when the tax return should have been filed.

If the taxpayer has appealed, then a judgement will be issued by the tax commission. It is possible to appeal against this judgement again by means of a petition filed within 60 days from the date of the notification of the tax commission's notice of judgement. The case is reviewed by the tax commissions. It is possible to appeal against this second judgement only on a point of law.

The tax authority in Italy is the Ministero dell’Economia e delle Finanze.

Topics of focus for tax authorities

At the moment, the main areas of focus for the Italian tax authority are:

• Assessment of the foreign tax credits.
• Assessment of the tax residence for Italian citizens who moved their tax residence abroad (see the Residence section for more information).