Tax laws Italy
Italy's 2025 Budget Law introduces several significant changes to its tax system, affecting both individuals and corporations. Here's an overview of the key updates:
Personal Income Tax (IRPEF):
Tax Deductions: For taxpayers with incomes between €75,000 and €100,000, the maximum allowable tax deduction is now €14,000. For those earning between €100,000 and €120,000, the deduction cap is €8,000. Certain expenses, such as health-related costs and mortgage interest on primary residences (contracted before December 31, 2024), remain fully deductible.
Family Deductions: Deductions for dependent family members have been revised. Specifically, deductions are no longer available for children over 30 years old (unless disabled) and for dependent parents or grandparents not residing with the taxpayer. Additionally, non-EU citizens with family members abroad are no longer eligible for these deductions.
Corporate Income Tax (IRES):
Reduced Tax Rate: A reduced corporate income tax rate of 20% (down from the standard 24%) is available for companies that reinvest profits into qualifying fixed assets and meet specific conditions. This incentive applies for the fiscal year 2025 only.
Labor Cost Deductions: An additional deduction for labor costs, initially introduced in the 2024 Budget Law, has been extended through fiscal years 2025 to 2027.
Stock-Option Plans: Deductions for expenses related to stock-option plans are now permitted at the time of actual allocation to beneficiaries, applicable from fiscal year 2025 onward.
Digital Services Tax (DST):
- Expansion of Scope: The 2025 Budget Law expands the DST by removing certain revenue thresholds, thereby broadening its applicability to more companies. This tax targets revenues from digital services provided within Italy, aiming to address concerns about multinational tax avoidance.
Inheritance Tax:
- Calculation Updates: Recent updates have been made to the calculation of inheritance tax, including new exemptions and considerations for tax planning. These changes are particularly relevant for residents and property owners in Italy.
Government's Fiscal Strategy:
In light of Italy's substantial public debt, the government has implemented budget cuts and targeted taxes to reduce the deficit. Measures include levies on banks and insurers, aiming to generate approximately €3.5 billion to improve public services, particularly in the health sector, and to support vulnerable citizens.
For detailed and personalized information, it is advisable to consult official Italian tax authorities or seek professional tax advice.
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