Italian taxation for non-residents

Corporate Income Tax - Ires

Relevant Tax Rate

The tax rate of corporate income tax (IRES) is 24%.

Who is liable to pay IRES:

The following must pay the tax:

• joint-stock companies, limited liability companies, cooperatives and mutual insurance companies, European companies (Regulation (EC) No 2157/2001) and European cooperative societies (Regulation (EC) No 1435/2003) resident in Italy;
• public and private entities resident in Italy, including consortia, trusts, collective savings investment undertakings and non-commercial entities (non-profit organisations);
• companies and bodies of all kinds, including trusts, not resident in Italy, for income generated in Italy only.

The following shall be considered to be resident for tax purposes in Italy:

• companies and entities having their registered office or effective place of management or principal place of business in Italy for most of the tax period
• collective savings investment undertakings established in Italy
• unless proven otherwise, trusts and similar institutions set up in countries or territories other than those that allow an adequate exchange of information (IT) with Italy, if at least one of the settlors and at least one of the beneficiaries of the trust are tax residents in Italy;
• unless proven otherwise, trusts set up in countries or territories other than those that allow an adequate exchange of information (IT) when, after they are set up, an entity resident in Italy makes an allocation to the trust which amounts to the transfer of ownership of immovable property or the creation or transfer of rights in rem in immovable property, including through shares, and restrictions on the use thereof.

Tax return for capital companies and commercial entities

The tax return for corporations and commercial and similar entities must be submitted using the "Redditi SC - Società di capitali, enti commerciale ed equiparati" form (Income from corporations, commercial and similar entities).

Regional production tax – Irap

Italian and non-resident companies are subject to corporate income tax (IRES) and the regional tax on productive activities (IRAP) only on Italian-source income.

The regional tax on productive activities (IRAP) is a local tax on productive activities carried out within a region. The standard rate is 3.9%, but higher IRAP rates apply, for example, to banks and financial institutions (4.65%) and insurance companies (5.90%).

Vat in Italy

VAT (Value Added Tax) is a consumption tax that applies to supplies of goods and services made in Italy by entrepreneurs, professionals, or artists, and to imports made by anyone. In some cases, intra-Community acquisitions are also subject to VAT.

In Italy, the standard VAT rate is 22%, with reduced rates for various supplies of goods and services, such as 4% for listed food, beverage, and agricultural products, or 10% for electricity supplies for listed uses and listed pharmaceuticals. Specific supplies of goods and services specifically listed in Presidential Decree No. 633/72 are exempt from VAT, such as education, insurance services, specific financial services, and the supply and rental of specific real estate.

VAT registration

VAT registration is mandatory in Italy for those carrying out the following activities:

• business or agricultural activity
• or an artistic or professional activity on a regular basis.

Registration requires the acquisition of a VAT number; this is an 11-digit code that must be included on every invoice or other commercial document issued or received in connection with the business.

Non-resident persons

Non-resident persons intending to start a business, art or profession must fulfill their VAT obligations in Italy if they also perform activities for end consumers or non-commercial entities that are not VAT-registered. At the same time, they will be able to exercise their rights arising from the tax, such as the right to deduct VAT on purchases and to receive a refund.

Foreign operators are not required to register for VAT in Italy if their customers in Italy are exclusively other VAT entities established in Italy. For example, registration is not necessary if an entity not established in Italy sells goods to other traders only and not to end consumers. In this case, all VAT obligations will be borne by the Italian operator.

How to register for VAT

Non-resident entities that need to register for VAT in Italy can choose one of the following options:

• appoint a tax representative established in Italy and with Italian VAT number
• register directly for VAT in Italy, i.e. obtain an Italian VAT number.

This second option is only available to entities residing in other EU countries or in a third country with which reciprocal agreements are in place.

In either case, the foreign operator remains a non-resident entity for VAT purposes.

Finally, any non-resident entity may set up a fixed establishment in Italy. The fixed establishment must register for VAT as a resident entity.

How to obtain a VAT identification number

To obtain a VAT identification number it is necessary to complete and submit a Declaration of start, change of data or termination of activity (hereinafter, the 'Declaration of commencement of activity'). The Italian Revenue Agency (Agenzia delle Entrate) will then issue a VAT number.

The exact form to be used and the submission procedure vary according to the type of entity.

Resident entities

Natural persons carrying out business activities (sole traders) must use Form AA9/12, while companies must submit Form AA7/10.

In order to submit their declaration of starting business, all the entities that must be registered with the Register of Companies or with the Economic and Administrative Data Repertory (Rea) must submit the completed form (AA9/12 or AA7/10) online or in digital format through the Comunicazione Unica d’impresa. The reporting procedure fulfils, via a single declaration, all the procedures for starting a business required by the various competent authorities (Revenue Agency, Chambers of Commerce, INPS – Social Security Agency, INAIL – Workers’ Compensation Authority).

The persons who pursue an art or profession must use Form AA9/12 (which is also valid for sole traders).

Non-resident entities with a permanent establishment in Italy

Non-resident entities having a permanent establishment in Italy must submit their declaration of commencement of activity using the same forms and the same submission methods as resident entities.

Non-resident entities without a permanent establishment in Italy

Entities established in another EU Member State

If the non-resident entities do not have a permanent establishment in Italy but carry out a business, art or profession in another EU Member State, they can register directly for VAT in Italy.

All non-resident entities (established in a non-EU country or in another EU Member State)

All non-resident entities – whether established in a non-EU country or in another EU Member State – may appoint a tax representative for VAT purposes.

The rules for completing and submitting the forms are the same as for resident entities. This option is an alternative to direct VAT registration.

How to change VAT details

If any of the details provided in the declaration of start of activity changes during the life of the business, it is necessary to fill in a new form and submit it to any Revenue Agency office within 30 days from the date of the change in the activity, in the same manner as for the first declaration.

Registration for One Stop Shop (OSS) and Import One Stop Shop (IOSS)

The One Stop Shop (OSS) and the Import One Stop Shop (IOSS) are optional VAT schemes that, for certain transactions, allow taxable persons to electronically fulfill their VAT obligations due in multiple EU countries in a single Member State.

The schemes apply only to supplies of goods and services to final consumers in the EU.

The OSS and IOSS schemes may be adopted for electronics, telecommunications, and broadcasting services, already covered by the optional Mini One Stop Shop (MOSS) scheme, for all other services provided in other Member States, for intra-EU distance sales of goods, for supplies of goods departing and arriving in the territory of the same Member State facilitated by an electronic interface (established in the EU or outside the EU), and for distance sales of goods imported from third territories or third countries.

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