Taxation in Italy.

Three alternative criteria under Art. 2 of the TUIR (Testo Unico delle Imposte sui Redditi). Meeting any one of them for the greater part of the year is sufficient:

• Registration with the resident registry (anagrafe) of an Italian municipality.
• Domicile in Italy (in the Civil Code sense: the place where the principal seat of one's affairs and interests is established).
• Residence in Italy (in the Civil Code sense: place of habitual residence).

There is a presumption of residence for anyone who has relocated their residence to tax havens after having been an Italian resident. The presumption admits proof to the contrary.

Following the reform of Legislative Decree 209/2023 (in force since 2024), requirements are stricter:

• Not having been a tax resident in Italy during the 3 prior tax periods (5 if the employer belongs to the same group).
• Commitment to maintain tax residence in Italy for at least 4 years.
• Activity must be carried out mainly in Italy (more than 50% of the time).
• The worker must have "high qualifications" or "high professional requirements" under specific definitions.
• Maximum covered income cap: €600,000 per year.

Benefit: 50% reduction of the IRPEF taxable base, extendable to 60% with minor children. Duration: 5 years.

The Regime forfettario is a simplified substitute regime for self-employed professionals and small business owners with annual turnover up to €85,000. It replaces IRPEF, regional/municipal surcharges and IRAP with a single substitute tax.

Rate: 15% on taxable income (calculated by applying a profitability coefficient based on activity). For new activities, 5% during the first 5 years.

It suits: freelancers in sectors with high profitability and low operating costs, self-employed professionals who don't need to deduct significant expenses, and new activities in their early years.

It is not suitable if the activity requires large deductible investments, or if you mainly work with businesses that can deduct VAT (the forfettario does not invoice VAT).

The Italian Flat Tax (Art. 24-bis of the TUIR) allows individuals who relocate their tax residence to Italy to pay a fixed substitute tax on all their foreign-source income.

Amount: €200,000 per year (increased from €100,000 by the 2024 reform). Italian-source income is taxed under the general rules.

Requirements: not having been a tax resident in Italy for 9 of the 10 prior tax periods. Duration: 15 years (non-extendable).

Designed for high income and net worth. Suitable when annual foreign-source income would generate more than €200,000 of tax under the ordinary regime.

The Italian Patent Box (in its current version, following the 2021 reform) allows a "super-deduction" of 110% on research and development costs linked to qualified intangibles.

Eligible intangibles: copyright-protected software, registered industrial patents, registered designs and models, technical know-how (with conditions).

Application: deduction against the IRES and IRAP taxable base. Specific documentation is required to substantiate the R&D costs and their link to the intangibles.

The regime is stricter following the reform but offers significant tax benefits for technology companies with genuine development activity in Italy.

Yes. All Italian operations are handled in native Italian: meetings, documentation, client correspondence, communications with the Agenzia delle Entrate, contract drafting. Operations coordinated from Milan ensure local service with Italian criteria and language.

Italian operations are coordinated from Milan through an established professional network. We do not maintain our own office with direct staff in Italy: our two own offices are in Spain (Toledo and Madrid). For the client, the result is indistinguishable: local service in native Italian, knowledge of regional specificities and centralised coordination from Avenor.

Stabile Organizzazione is the Italian equivalent of the "permanent establishment" concept under the OECD Model. A foreign company has a Stabile Organizzazione in Italy when it operates through a fixed place of business or a dependent agent.

Consequence: the foreign company must pay tax in Italy on profits attributable to the Stabile Organizzazione. This requires tax registration, an Italian return and local accounting compliance.

The concept is applied fairly aggressively by the Agenzia delle Entrate, particularly in digital and cross-border commercial operations. Structuring the Italian presence correctly is key to avoiding unintended Stabile Organizzazione exposure.