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Taxation (Other)

Italy - Taxation (Other)

Residents in Italy are required to pay certain general taxes such as property taxes, VAT or Value Added Tax, capital Gains tax and inheritance tax.

All dealings with government and public administration agencies require residents to have a tax identification number (codice fiscale), a unique 16-digit alphanumeric code. It is similar to the social security number in the US and the National Insurance Number in the UK.

Application for a codice fiscale can be made at the local office of The Italian Revenue Agency (Agenzia delle Entrate) of the Ministry of Economy and Finance. The documents required for the application include a valid passport or a stay permit. It is also possible to apply for the codice fiscale at an Italian embassy in an applicant’s country of origin.

Property Tax

Buyers of immovable property are required to pay a registration tax (imposta di registro), cadastral tax and land registry tax (imposte Ipotecarie e Catastali). These taxes vary depending on whether the residence is the primary or only residence of the individual. The registration tax is also different depending on whether the land is classified as building land or agricultural land.

In case the seller is from within the construction industry and has a VAT number, the buyer is also required to pay certain additional taxes on the purchase price stated in the purchase deed such as VAT at 10 percent or 4 percent if the property is the primary or sole residence, fixed registration tax, fixed land registry tax and fixed cadastral tax.

The buyer must pay the registration, cadastral and land registry taxes to the Notary Public at the time of signing the purchase deed. The Notary Public then pays it to the Inland Revenue when the contract is registered.

Italian residents and non-residents are also required to pay municipal tax on properties (Imposta Comunale sugli Immobili or ICI) upon buying immovable property in the country. This local tax is applicable to all property within Italy and is paid by the owner, the individual who has the right to use the owner’s property and the individual who has residence rights.

Capital gains tax

Capital gains refer to the profits made by an investor when a capital asset is sold for a price higher than its purchase price. Capital gains tax applies only when the asset is realized. It is not applicable to assets that are still held by an investor. Therefore even if an investor’s shares appreciate every year, he or she is not liable to pay capital gains tax until the shares are sold.

No tax is applicable on gains received from the sale of a person’s primary residence or from property owned for more than a period of five years.

Inheritance tax and gift tax
Inheritance and gift tax was reintroduced in Italy and the tax applies to all residents of Italy as well as those who have properties in Italy. Real estate properties either received through inheritance or as a gift are subject to cadastral tax and the mortgage tax varies accordingly. If the real estate property is the main residence of the individual, instead of the cadastral and mortgage tax, the individual is required to pay a specific fixed tax.

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Expat Health Insurance Partners

Bupa Global

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