Italy's taxes

[M&C]

We're planning and gathering info with view to making a move to Italy at some point in the future. It's probably been covered before but what are the income tax and other taxes like over there? I have seen reports that Italy is one of the highest taxed countries in the world. Is there a URL that will give me a clear indication and blow-by-blow breakdown?

[English teacher]

Taxation is immensely complicated. What you pay depends on your personal situation: whether or not you will be working (and if so, for a company or as a freelancer) or whether you will be living on other means. If you intend to take up residence in Italy, you will need to pay taxes on your worldwide income here, rather than in the UK, for example.

Calculate that on top of your income tax, you will also need to pay up to 18% INPS (a sort of pension contribution), and perhaps other taxes, such as regional tax and wealth tax. Like in the UK, you can also deduct various things from your taxable income, such as insurance, health costs and so on. If you work for yourself, you can get a partita IVA (VAT number) and pay reduced rates of tax if you earn under a certain amount. Just as a comparison, when I worked for a company, roughly 30% of my gross income went in tax and INPS. (My boss, who earned considerably more than me, paid about 40%.) As a freelancer, I pay around 35% in tax and INPS.

You need to fill out a tax return every year, and unless you work for a company that does this automatically for you, I'd advise you to pay an accountant to do the paperwork.