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Five essential things to know about filling out your Italian tax return

Italy's tax season begins in May, and the bureaucracy involved can be daunting. Here are some of the most important things to know about filing your tax return.

Five essential things to know about filling out your Italian tax return
Photo by Kelly Sikkema on Unsplash

Tax season is now underway in Italy as the window for filing your personal income tax return opened on May 11th, 2023.

The deadline for submitting your tax return this year is October 2nd – find a detailed list of Italy’s tax dates and deadlines here.

Filing a tax return is never the most enjoyable task, but dealing with a new country’s rules and language adds another layer of complexity. And of course, Italy’s tax rules aren’t simple to begin with, so it is always a good idea to seek professional advice and assistance.

Here are a few things you’ll need to know about the process before you get started.

Which form will you need?

In this article we’ll focus on the modello 730 (form 730), the newer and most commonly-used income tax return form, which most employees and retirees will need.

READ ALSO: The Italian tax calendar for 2023: Which taxes are due when?

But some people, including the self-employed, those with certain types of redditi diversi (sources of income other than employment or pension), and taxpayers who are not legally resident in Italy, might need to use the older form called the modello redditi persone fisiche instead.

It all depends on your personal circumstances, so if you’re unsure which form to use, speak to a tax professonal for advice.

The form 730 comes partially pre-filled with your personal details, which should make completing it somewhat more straightforward.

Tax season in Italy begins in mid-May.(Photo by ANDREAS SOLARO / AFP)

As tax expert Nicolò Bolla from Accounting Bolla explains on his website: “The 730 is a simplified form. It comes already filled in with your details courtesy of the Agenzia delle Entrate (Italian tax authority).

“So, when compared to the modello redditi, this form requires much less work on the part of the taxpayer. The details they provide can be changed, or not, which has its pros and cons.”

Where do you find this form?

You can download your personal 730 form from the Agenzia delle Entrate website.

You should find it already pre-compiled on a special section of the site HERE which you can log in to using your SPID (Sistema Pubblico dell’Identità Digitale) or CIE (electronic identity card) credentials.

The tax agency notes that “Italian citizens residing abroad who do not hold an Italian identification document may also use login credentials issued by the INPS (social security agency)”

READ ALSO: How to use your Italian ID card to access official services online

“You can view, edit and/or supplement your tax return within the service and then send it to the Agency.”

Unfortunately, while the Italian tax agency does have some information available online in English, the part of the website dealing with the 730 is only available in Italian, German, or Slovak.

How do you fill it out?

The form 730 can be filled out entirely online via the tax agency’s website.

According to the agency, the form should already contain “a number of automatically entered details, including deductions for health costs, university fees, insurance premiums, social security contributions, credit transfers for building renovation and energy renovation.”

As mentioned above, you may change the pre-filled details if necessary. But Bolla points out that there are some things to consider before you do:

“Changing a tax document does come with some risks, the primary one being that you become exposed to error which in turn means paying a penalty fee,” he says.

READ ALSO: The pros and cons of Italy’s five percent flat tax for freelancers

“The biggest benefit, perhaps, of not changing any information in the form is that you will not be subject to further tax checks, i.e. an audit.

“The 730 is considered changed if your alterations are related to the expenses that you have. When doing this it is recommended that you consult with an accountant to be sure of the conditions of a particular expense. It is always possible that you will have some tax deductible expenses that occur after the form is compiled by the revenue agency which will need to be added to the form.”

Once you or your accountant have filled in remaining details and made any necessary changes, or not, to the pre-filled sections, you can file your 730 online via the tax agency’s portal.

The deadline for submitting the completed form is October 2nd.

If instead you’re using the modello redditi PF the deadline for submitting this electronically is November 30th.

How and when do you pay your income tax bill?

Once you’ve submitted the tax return, the first instalment of the amount payable is due by June 30th.

Payment is made using form F24. Italy’s tax office (Agenzia delle Entrate) offers guidance on how to fill out and submit the form.

The deadline for the second instalment of income tax is November 30th.

Should you ask an accountant for help?

All that famous red tape, plus the language barrier and a long list of tax-related acronyms, can make filing taxes in Italy a daunting proposition for foreign nationals. But you may be wondering whether hiring a commercialista (accountant) is worthwhile or necessary.

While the tax agency has tried to simplify the process, and even provides some Italian tax information in English, many Italians themselves Italians turn to their local tax assistance centre (Centro Assistenza Fiscale, or CAF) or hire a tax professional to take care of the process.

Getting professional advice is particularly important if you’re making changes to the pre-filled sections of the 730 or if you need to use the modello redditi PF.

See more information on the Italian tax agency’s website.

Please note that The Local cannot provide advice on tax issues. For help with filing taxes in Italy, contact your local tax assistance centre (Centro Assistenza Fiscale, or CAF) or consult an accountant (commercialista) or other qualified tax professional.

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EXPLAINED: How Italy’s inheritance tax works

Figuring out who Italy’s inheritance tax applies to and how can be challenging, especially in the case of foreign nationals living or owning assets in the country.

EXPLAINED: How Italy’s inheritance tax works

The death of a loved one is a time of grief and remembrance for family members. But it’s also when bureaucratic matters regarding the deceased’s estate must be addressed. 

Though rates are largely more favourable than in other European countries (taxation ranges from 4 to 8 percent), Italy does have an inheritance tax, or imposta di successione, which applies to the deceased’s assets, both movable (bank accounts, funds, stocks, goods, etc.) and immovable (e.g., property and land).

In some countries taxes are subtracted from the estate before it is distributed to the heirs, but in Italy the responsibility to pay taxes on the inherited estate falls on the recipients.

And figuring out whether or not Italian inheritance tax applies to a foreign national’s estate and, if so, in what measure, can be challenging.

Scenario A: I’ve received an inheritance from someone that was living in Italy

The first thing to verify in this case is whether or not the deceased was an Italian tax resident

Under Italian law, you’re considered a tax resident in Italy if, for at least 183 days a year, you:

  • Are registered with Italy’s national population registry office (known as Anagrafe) or
  • Have your place of residence or habitual residence in Italy

READ ALSO: Five essential things to know about filling out your Italian tax return

If the deceased was a tax resident in Italy, then the Italian inheritance tax applies to their worldwide assets, that is any assets located in Italy plus assets located anywhere else in the world.

Italy, house

Italy’s inheritance tax applies to all of the deceased’s estate, including both movable and immovable assets. Photo by GABRIEL BOUYS / AFP

Scenario B: I’ve received an inheritance from someone that wasn’t an Italian tax resident but had assets in the country

If the deceased had assets in Italy but was a tax resident of a country other than Italy, then the Italian inheritance tax only applies to the assets located in Italy.

However, assets located elsewhere will likely be subject to the inheritance taxes of whichever country they’re in.

Scenario C: I’m an Italian tax resident and have received an inheritance from someone that lived outside of Italy and had no assets there

Under Italian law, the residency status of the heirs has no bearing on whether or not a deceased’s estate will be subject to Italy’s inheritance tax. 

Effectively, the Italian imposta di successione only applies to the estates of people who were Italian tax residents or had assets in Italy. 

Double taxation 

In cases where the deceased owned assets in multiple countries, including Italy, the same assets may sometimes be liable for double taxation. 

READ ALSO: Reader question: Do US nationals in Italy have to pay taxes twice?

To avoid double taxation, Italian inheritance law states that taxes that have already been paid to a foreign state can be deducted from the amount that must be paid in Italy as long as they relate to the same assets.

Additionally, Italy has over the years signed bilateral agreements aimed at eliminating double inheritance taxation with a number of countries, including the United Kingdom, the United States of America, and France.

Accountant, Italy

Italy has bilateral agreements preventing double inheritance taxation with a number of countries, including UK and US. Photo by MARIO LAPORTA / AFP

How much will I have to pay?

Barring some exceptions, under Italian law heirs have 12 months from the death of the deceased party, to submit a Succession Declaration (or Dichiarazione di Successione) including their own personal information and details about the deceased’s assets with Italy’s Revenue Agency.

Based on this declaration, Italian authorities will then calculate the taxes due on the estate. 

READ ALSO: What is an Italian commercialista and do you really need one?

Italian law provides different tax rates based on who’s receiving the inheritance – and there are some cases in which no tax is due at all:

  • If the heirs are the spouse, children, or other relatives in a direct line (father, mother, grandchildren), each recipient enjoys a one-million-euro allowance under which no tax is due; a 4-percent tax is due on the part exceeding one million.
  • If the heirs are brothers or sisters, each recipient has a 100,000-euro allowance under which no tax is due; a 6-percent tax is due on the part exceeding 100,000 euros.
  • If the heirs are relatives up to the fourth degree of kinship, the inheritance received is taxed at 6 percent and there is no tax allowance.
  • For all other heirs, the inheritance received is taxed at 8 percent and there is no tax allowance.

Inheritance tax must be paid within 60 days of the date on which the tax assessment is served but payment in instalments can be arranged if the amount exceeds 1,000 euros. Payment may be made at a bank, post office or Revenue Agency office using form F24.

Other taxes

On top of the above-mentioned inheritance tax, the beneficiaries of real estate located in Italy are required to pay two imposte indirette (or indirect taxes): a tassa ipotecaria (mortgage tax) and a tassa catastale (cadastral tax) amounting to 2 percent and 1 percent respectively of the cadastral value of the inherited property.

This means that a total 3-percent tax burden applies to inherited real estate.

That said, the cadastral value of a property is generally much lower than its real market value.