Taxes and duties - A simpler and less burdensome fiscal system

Following recent developments and the implementation of the tax reform approved in 2003, Italy´s fiscal system has undergone profound changes, while only a few years ago, it appeared to hinder Italy´s economy, curbing entrepreneurial activity and economic development. Italy was for instance the first country in Europe to abolish inheritance tax, easing the transfer of property and economic activities from one generation to the next.

Tax obligations have been simplified for small businesses and professional services and new tools have been introduced which seek to reduce litigation between taxpayers and the Tax Authorities. The voluntary tax conciliation (agreement with the relevant authorities should higher tax be determined in case of an assessment), the conciliazione giudiziale - judicial conciliation (an agreement made before a judge prior to commencement of the actual taxation proceedings), the self-protection (which enables the Tax Authorities to simply rectify its mistakes), and the introduction of the sector studies (models of estimated profits for the different economic activities) have all greatly contributed to the overall simplification of the tax assessments of smaller enterprises (up to EUR 5,164,569) .

Once the 2003 fiscal reform is fully implemented, the system will become even more simple (only five taxes will be included in a single Tax Code) and less burdensome with IRE (the new personal income tax), based on only two rates (23% for incomes up to EUR 100,000 per annum and 33% above this threshold), as well as an exempt lowest tax bracket and a system of deductions aiming to ensure that the system is based on progressive taxation.