Topic 3 Key players in the taxation system

The taxation system consists of all the taxes provided for by law. All individuals who carry out a job from which they earn money are obliged to pay taxes, which will be calculated according to their income.

Definition: “Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national”.

Various bodies administer the Italian system, and the taxes differ according to the activity type.

All Individuals who have an employment contract pay IRPEF and other local taxes, according to the place where they reside.

Concerning business activity, societies and Individual companies pay different kinds of taxes:

IRPEF (Imposta sui Redditi delle Persone Fisiche) is the Italian individual income tax. It is payable by natural persons, regardless of whether or not they reside in Italy, for different types of income such as one from real estate, employed or self-employed work, business income and capital income

IRES (Imposta sui Redditi delle Società) is the Italian tax on corporate income.

Moreover, both individual companies and societies pay:

  • IRAP (Imposta Regionale sulle Attività Produttive) is a local tax on productive activities realized within a regional territory.
  • Local Taxes. This is the revenue instrument that finances the services provided by local authorities such as waste management, driveway, occupation of public land, etc. The taxes are paid to the Ufficio Tributi of the Municipality.
  • Income Revenue Authority (Agenzia delle Entrate): It collects tax revenues, provides services to taxpayers and monitors potential tax evasion.
  • National Institute for Social Security (INPS – Istituto nazionale della previdenza sociale) is the entity of the Italian public retirement system. Most of the activities carried out by INPS are: social security administration and management, Management of services supporting income (such as the payment for sick or maternity leave), Welfare and Inspection.
  • Accountant: a professional dealing with economic or commercial relations from a financial point of view.
  • Fiscal Assistance Centre (CAF– Centri di Assistenza Fiscale) assists citizens in the matter of tax compliance. These services are provided for free or for a small fee.
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