If you have decided to set up a business in Italy or in any other country, it is wise to calculate your expenses at first in order to find out if your business is profitable. The considerable amount of business start-up costs consists of taxes.
The main taxes for doing business in Italy are: VAT, INPS (social security contributions), IRPEF (income tax for personal income), IRES (income tax for corporate income) and IRAP (corporate revenues tax). The values of these taxes may vary from time to time, so it is wise to check if there was any change in the financial legislation to be sure that you calculate right you costs related to taxes.
Direct and indirect taxation
There two forms of taxation in Italy – direct and indirect related to the type of firm and the income production activities. The main direct taxes are IRPEF, IRES and IRAP. Apart from these taxes, there is a municipal tax (IMU) for the buildings and lands which are properties of limited liability companies and other types of firm that own a property which is used for their daily activities.
The direct taxes are calculated on the income of different type of company and the direct taxes are to be paid when you sell different things or services. The main indirect taxes are VAT (between 4% and 22%) and registration tax for registering different kind of documents like contracts, land registry tax paid after land transactions and mortgage tax after sales or other movements of property.
Also during your business activities in Italy, you may have to pay other type of taxes like stamp and excise duties, tax on advertising, on occupation of public spaces etc.
At the end of every tax year you should submit online an income tax return form which presents the company income for taxation as well as amount of tax and the expenses.