Guide for Ukrainians
The Italian tax system has several tiers that increase with your income.
Income tax in Italy is called IRPEF (Imposta sui redditi delle persone fisiche).
An entrepreneur who is a tax resident in Italy pays this tax on all income earned both in Italy and abroad. Non-resident individuals are only obligated to pay tax on money earned in Italy.
Overall, Italy’s tax system cannot be called simple. It’s progressive and has its nuances. For example, income tax is collected at three levels: national, regional, and municipal.
Income tax for individuals in Italy at the national level:
Income 0 – 15,000 euros – rate 23%
Income 15,001 – 28,000 euros – rate 25%
Income 28,001 – 55,000 euros – rate 35%
Income 55,001 and above – rate 43%
Regional income tax depends on the region of residence, and the tax rate varies from 1.23% to 3.33%.
Municipal tax also depends on the municipality of residence, and the tax rate ranges from 0% to 0.8%.
Social Security Contributions
The total social security rate is about 40% of the employee’s gross compensation, of which 30% is paid by the employer and 10% by the employee.
Value Added Tax (IVA)
- Main rate: 22%
Reduced rates: 10% on certain products (food, energy) and 4% on basic food and medical goods
Zero rate: for exports.
Spain
The Spanish tax system also uses a progressive scale that depends on your income level. And, like in Italy, there are three levels of taxation – national, regional, municipal. This means your tax will depend on many factors: your field of activity, your income level, how many family members you have, and where you live. However, you can use the following figures as a basic guide:
Personal Income Tax (IRPF)
Progressive scale: rates vary from 19% to 47%, depending on the autonomous community.
19%: on income up to 12,450 euros
24%: on income from 12,451 to 20,200 euros
30%: on income from 20,201 to 35,200 euros
37%: on income from 35,201 to 60,000 euros
47%: on income over 60,000 euros
The tax-free minimum is about 5,550.
Social Contributions
Total rate: about 36% of salary (employee – approximately 4.7%, employer – about 31.6%)
Coverage: pension, health insurance, unemployment insurance.
Value Added Tax (IVA)
Main rate: 21%
Reduced rates: 10% on certain products (food, tourist services) and 4% on basic food
Zero rate: for exports and certain services.
New Taxes in Spain: What Will Change?
This year and next, Spanish authorities are tackling daily rental housing. We’ve written a lot about this, so you know it’s a new trend worldwide – preserving housing for locals. Therefore, some changes are planned in the Spanish tax field:
VAT on tourist apartments is increasing to 21%, which should reduce the profitability of short-term rentals and encourage owners to switch to long-term contracts, especially in areas with tight housing markets.
Real estate investment companies will lose tax benefits that didn’t lead to an increase in affordable housing.
Other Tax Innovations
- The tax rate for income over 300,000 euros increases to 30%
- Luxury taxes are being introduced: yachts, private planes, luxury cars, and private medical insurance subsidies are being canceled.