Are you looking for help with the preparation of tax returns? Italian legislation provides for the annual filing of various tax returns. The tax returns include the direct taxes, such as the income tax return for corporations, partnerships and individuals, as well as those of the indirect taxes, such as the VAT return. The various tax returns are prepared in accordance with the Italian tax laws in force and transmitted telematically to the Italian tax office.

Below is a brief overview of the most important tax returns:

Corporate Income Tax Return – “Modello Redditi”

Income tax returns for corporations, partnerships and sole proprietorships must be filed annually.

·        Corporations (stock corporation or limited liability company)

Corporations are subject to the so-called Corporate Income Tax (IRES). The ordinary tax rate is currently 24% and is applied to the net total result.

·  Partnerships (limited partnership or general partnership) and sole proprietorships:

The profits of partnerships and sole proprietorships are allocated to each individual partners according to their shareholding and are subject to progressive income tax rates (23% – 43%) (so-called transparency taxation).

In principle, the calculation of net income for corporations, partnerships and sole proprietorships is based on the pre-tax profit under commercial law. This is adjusted by additions and deductions in order to determine the tax base.

The Income Tax Return is sent telematically to the tax office. The taxes payable are generally paid on 30th of June and 30th of November each year.

Regional Business Tax Return – “Modello IRAP”

In addition to the income tax return, companies that have an independent organization must also file a business tax return. The Regional Business Tax aims to tax the value added of a company and therefore the assessment basis differs from the Corporate Income Tax. For the determination of the business tax, the legal form and the chosen accounting system are basically decisive.

The Regional Business Tax is a proportional tax and is the responsibility of the regions and mainly affects the net added value of companies. The standard tax rate applied is currently 3.9%, although the tax rate can be increased or reduced by the respective region. In the Province of Bolzano and Trento the standard tax rate is 2.68%.

The Regional Business Tax Return must also be prepared annually and sent telematically to the tax office. In principle, the taxes must be paid on 30th of June and 30th of November each year.

Annual VAT return

The annual VAT return includes all VAT-relevant transactions booked by the enterprise during the previous year.

In the annual VAT Return, the VAT-taxable person determines the amount of input VAT collected during his business operations and the amount of deductible VAT. The sum of these two amounts results in either a VAT liability or a VAT credit. Any credit can be carried forward to the next year and then offset against other taxes or claimed for a refund. Already during the year, every VAT-taxable person must prepare periodic VAT settlements communication and transmit them to the tax office in telematic form.

The VAT liability is paid monthly or, under certain conditions, quarterly. The VAT return must be submitted to the tax office by 30th of April each year.

Reliability Indices – ISA

Since the 2018 tax year, the tax authority has introduced ISA indicators, which are expressed with a rating from 1 to 10. With a low score, the probability of control by the tax authority increases, while with a high score, the taxpayer obtains some reward benefits. The software elaborates a general reliability index, represented by an average of some specific indexes related to the company management, which depend on the activity or sector in which the company operates.

The reliability indices are part of the income tax return and must therefore be completed and submitted to the tax office with the tax return.

To fulfil these obligations correctly, we calculate your tax base and prepare the necessary tax returns. In addition, we inform our clients in a timely manner of tax debts that have arisen and that must be paid by the due date. If you need support in preparing your returns, please contact us at any time.