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Moving to Italy from Spain: Navigating the Tax Systems

As professionals consider relocating from Spain to Italy for work and for business ventures, understanding the nuances of the Italian tax system becomes paramount. In this comprehensive guide, we'll explore the key differences between the tax systems of Spain and Italy, shedding light on crucial aspects for business professionals.

Publication date 17/04/2024

A Comparative Guide to Spanish and Italian Taxation for Workers and for Business Professionals

Taxation Systems

In Spain, the tax system is based on residency, meaning that residents are taxed on their worldwide income, while non-residents are taxed only on income earned in Spain.

The Spanish tax system is progressive, with tax rates ranging from 19% to 47% for different income brackets. Deductions and credits are available for certain expenses, such as healthcare and education.

On the other hand, Italy also operates on a residency-based taxation system, similar to Spain. Residents are taxed on their worldwide income, while non-residents are taxed only on income earned in Italy.

Italy’s tax system is also progressive, with tax rates ranging from 23% to 43% for different income brackets. Deductions and credits are available for certain expenses, such as healthcare and education.

Social Contributions

In Spain, social security contributions are mandatory for both employees and employers and cover various benefits such as healthcare, unemployment, and pensions. The contribution rates vary depending on the type of employment and income level.

Similarly, in Italy, social contributions are mandatory for both employees and employers and cover various benefits such as healthcare, unemployment, and pensions. The contribution rates also vary depending on the type of employment and income level.

Business Taxes

 In Spain, businesses are subject to corporate income tax at the national level, with a standard rate of 25%. Additionally, there may be regional and municipal taxes applicable to businesses.

 Similarly, in Italy, businesses are subject to corporate income tax at the national level, with a standard rate of 24%. Additionally, there may be regional and municipal taxes applicable to businesses.

Value Added Tax (VAT):

In Spain, VAT, known as “Impuesto sobre el Valor Añadido” (IVA), is a consumption tax levied on the value added to goods and services. The standard VAT rate in Spain is 21%, with reduced rates of 10% and 4% applicable to certain goods and services.

In Italy, VAT, known as “Imposta sul Valore Aggiunto” (IVA), is also a consumption tax applied to goods and services. The standard VAT rate in Italy is 22%, with reduced rates of 10% and 4% for specific categories of goods and services.

Our services

Managing your relocation to Italy is often stressful. Moving2Italy wants to help you by offering a simple and effective online service. Thanks to our experts who will follow you step by step, you will be guaranteed to obtain all the tax benefits to which you are entitled.

Italian Tax Advisor Consultancy

Thirty-minute tailored consultation with a specialized Italian Tax Advisor

Fiscal relocation package for employed workers

Package designed for employed workers who are moving to Italy and wish to take advantage of the incentives.

Fiscal relocation package for self-employed workers

Package designed for self employed workers who are moving to Italy and wish to take advantage of the incentives.

VAT Number opening for self employed workers (ADE and INPS)

If you need to open a VAT position upon your relocation to Italy, this is the right solution for you. It doesn't include consultation on meeting the requirements to access the tax benefits.

VAT Number opening for individual company (ADE and INPS and CCIAA)

If in addition to managing your relocation to Italy, you need to open a sole proprietorship, this is the plan for you. Excludes consultation on meeting the requirements to access tax benefits.

Tax Ruling with Italian Revenue Agency

If you have a specific question that needs to be asked to the Italian Revenue Agency

Tax Incentives in Italy

Italy offers attractive tax incentives to foreigners relocating to the country for work-related reasons. These include tax relief measures for both employees and freelancers, with different regulations for those who moved before December 31, 2023, and after January 1, 2024.

Under the new taxation law effective from 2024, the tax relief percentage has been reduced from 70% to 50% of the taxable income. For individuals who relocated before the end of 2023, a 70% reduction in taxable income is still applicable. Additionally, there’s an opportunity for further tax relief if the worker chooses to transfer their tax residence to certain regions, where a 90% exemption can be obtained instead of the standard 70%.

Another notable incentive is the “Regime Forfettario” or flat-rate tax regime, which allows eligible individuals to pay a flat tax of 15% on their gross income for certain professional activities. This regime is particularly beneficial for self-employed professionals and freelancers.

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Relocation Considerations:

Professionals considering relocating from Spain to Italy should evaluate the tax implications of their move, including potential tax treaties between the two countries to avoid double taxation.

Italy offers special tax regimes, such as the “Regime Forfettario,” designed to simplify taxation for certain professionals, including freelancers and small businesses. However, eligibility criteria and benefits should be carefully assessed.

In conclusion, while both Spain and Italy share similarities in their tax systems, they also have distinct features and complexities. Business professionals contemplating a move from Spain to Italy should seek professional tax advice to navigate the intricacies and optimize their tax planning strategies effectively.

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