Income Tax Assessment: 5 Tips to Do It Correctly While Living Abroad

While living in another country, you may miss your family or friend.

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While living in another country, you may miss your family or friend. But there is one thing that you cannot miss if you wish- filling your taxes.

In Italy, the main income tax in which the country depends on is “imposta sui redditi delle persone fisiche” more popularly known as IRPEF. The income tax is divided into three tiers and depends on the time you spend in Italy, from where your revenues come, and of course income. If you are a foreigner in the lands of Italy, and living for only 183 days or less, then you are liable for income tax from only the income earned by you in Italy.

This article talks about income tax assessment in Italy and below are 5 tips that need to be kept in mind how you are liable to pay taxes in a foreign country.

National, Regional, and Municipal Taxes

National Income tax:

The income tax that is generated through the national income tax s considered as the main tax in Italy. The tax ranges from around 23% to 43% of the taxable income earned by you. Income taxes in Italy is progressive.

Regional Income tax: 

Apart from the national income tax, another tax in Italy ranges from 0.9% to 1.4% depending on your taxable income and is known as regional tax.

Municipal Income Tax:

Depending upon the municipality where you are residing, the income tax rate in Italy varies from around 0.1% to 0.8% and is known as the Municipal tax.

What Can Be Considered as Income Generated in Italy

As it had been mentioned in the article before, you will be liable to pay taxes in Italy based only on your income earned in the country if you live for less than 6 months. The sources of income in Italy are:

  1. Income from business through a resident company of Italy.
  2. Pension sourced from the government of Italy.
  3. The source of income is an Italian trademark or a patent and you being paid the government of Italian state or the residents of Italy.
  4. Income through a contract of Italian employment or any freelancer’s activity.
  5. Italian capital gains as well as financial income.

Is Pension Taxed in Italy?

If Italy is a foreign land for you but you are still a resident of the country, then in most cases your pension is free from taxation. However, if you have acquired or thinking about acquiring citizenship in Italy then you might have to pay taxes through the money earned in pension.

Time for You to Pay taxes to The Government

Most of the taxes in Italy, including the IRPEF tax, have been fixed on the 30th of June. Taxes can also be paid in July with an extra surcharge of 0.4%.

Paying Taxes as an Employee in Italy:

Being an employee in Italy, and having no other source of income, you do not have to worry about paying tax to the government at the end of June. This is because of the mere fact that income tax is deducted from your payslip at the of every month.

Are There Any Breaks?

Like several other taxes in Italy, different breaks and items are tax-deductible that can be claimed against IRPEF.

  1. If your income is less 8K per year even after being a regular employee, there is no need to pay IRPEF.
  2. If you are younger or 75 years old, and your earning is 7500 € per year, no need to pay IRPEF.
  3. If you are 75 or older, and your earning is 7750 € per year, no need to pay IRPEF.


Apart from these having dependents in the family will reduce the payable tax.

Once you have figured out your fiscal positions, it becomes easier to calculate payable tax. Furthermore, calculating the deductions is important to understand the bilateral agreement of your home country with Italy.

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