I hope you had a good Easter and didn’t eat too much. I took a break with the family to go and visit some friends in a Hotel on Lago di Garda during the Easter period. We had a great time even though it rained every day that we were there. That being said I got to see a few nice towns and learn a few new things.
Tax deductions in Italy
By Gareth Horsfall
This article is published on: 8th April 2024
We stayed just outside Bardolino, but also visited briefly Lasize. Lasize, I discovered, was the first comune in Italy. Apparently the King of Lasize in 983 a.c decided to concede the management of the town to the local civil authority, an interesting fact, I thought. We also visited Sirmione, which I know of because of the vials of sulphuric water which we used to put in a nebulizer for my son when he was a baby to clear his airways during the period of the winter cold.
Lastly, we visited a place called the Vittoriale degli Italiani, just outside the town of Salò. (https://www.vittoriale.it/). Salò was the last fascist town in the whole of Italy and the Vittoriale appears to be a tribute to that fact. It was, also, the home of the poet and soldier Gabriele D’Annunzio and a tribute to his heroism during World War I.
I can say that I am not a big fan of fascism, but it was very interesting to visit and certainly an unexpected and eye opening trip down Italy’s recent past. All of this whilst I started the book ‘The General and his Labyrinth’ by Gabriel Garcia Marquez, about Simòn Bolivar and reflections on the end of his life after the liberation of South America from the Spanish.(I think I may need another holiday after all these cultural learnings!)
Anyway, talking of fascism, it leads me nicely onto the subject of today’s E.zine: Tax and tax deductions!
I am not sure if tax authorities can be considered as fascist but certainly they fit the description in many ways:
‘An ideology and movement, centralized autocracy, militarism, forcible suppression of opposition, belief in a natural social hierarchy’
Joking aside, they do tend to operate with an iron fist and as I have mentioned on many occasions it is imperative that incomes and assets etc are declared properly and within the right time. That being said, in Italy we do get the possibility to utilise the system of detracting and deductions from income which can sometimes help to reduce our overall tax burden each year.
In this E-zine I will summarise the main ones (please be mindful of the fact that there are specific details related to each category and so I would recommend you check the link to the CAF at the bottom of the email if you are interested in any specific area).
Also please note that if you are on a forfettario tax regime in Italy, ie. 100K flat tax, 7% pensionato or partita IVA forfettario etc, then it will NOT be possible to deduct any of these expenses from your income!
But without further ado, here is the list of deductions which you might be interested in:
Medical expenses of any type: (generic, specialists, surgical, pharmacy, etc) can deduct at 19% of the total annual cost which exceeds the excess/deductible of €129,11. You need to add all your expenses together and deduct the €129,11, 19% of the final amount can be used against tax; if the cumulative amounts do not exceed the €129,11 then no deduction is allowed.
In the expenses calculation you may also include those which have been reimbursed by insurances (personal or corporate).
If your annual expenses exceed €15493,71 it is possible to spread the deduction over 4 years in equal parts.
(The deduction system, without limit of the amount over €129,11 would apply for anyone with special assistance needs e.g. car accident victim).
(Expenses of family members who are ‘a carico’ also qualify).
To use the deductions system, you must be in possession of the relevant documentation that certifies the expenditure i.e. invoice, receipt, quietanza etc. Your receipt should always show the nature of the medicine / treatment and include your codice fiscale.
***When you buy something at the farmacia with your tessera sanitaria, and it is a qualified medicine, then it is automatically registered with the Agenzia delle Entrate. This does not mean that you no longer need the ‘scontrini’. Your commercialista is required to ask for the evidence of purchase to match up with the payments received by the AdE***
Mortgage Interest relief:
For a mortgage on a ‘prima casa’, 19% of the annual mortgage interest and relevant charges, up to a maximum of €4000, can be used as a deduction. Prima casa is defined as the house where you or your family permanently reside. The individual using the detraction needs to be both the ‘intestatario del mutuo’ and owner of the property.
19% on the costs of the real estate agent when buying a prima casa (or rights linked to real estate such as ‘usofrutto’): for an expense of no more than €1000. i.e. max detraction €190, the expense must have been paid by the person requesting the detraction and confirmed as such in the contract of purchase.
Insurance premiums:
19% on the total costs of insurance policies ( Italian and overseas), as detailed below:
- Maximum total annual premium of €530 for life and accident, and non self-sufficiency type policies
- For insurance contracts covering death and permanent disability and long term care, the maximum premium total is €1291,14
- For insurance contracts covering individuals with serious disabilities, on risk of death, the maximum premium total is €750
Schooling (non university):
Nursery, primary or secondary school (private or public school) a maximum of €800 expenditure on which the 19% will be calculated i.e. max amount detraction €152 pa.
Private university education costs:
| Nord | Centro | Sud e Isole | |
| Area Medica | €3,900 | €3,100 | €2,900 |
| Area Sanitaria | €3,900 | €2,900 | €2,700 |
| Area Umanistico-Sociale | €3,700 | €2,900 | €2,600 |
| Area Tecnico-Scientifica | €3,200 | €2,800 | €2,500 |
There are other conditions, such as how close the family home is to the university which the student is attending, so it’s worth checking out the rules. The above table gives a rough idea of the kind of amounts that can be deducted depending on where the university is located in Italy.
Funeral expenses:
19% of maximum annual expenditure €1550 i.e. (maximum detraction of €294.50).
The invoice needs to be in the name of the person making the payment and paid via traceable means (not cash). Equally the name on the invoice must have a direct family relationship to the deceased.
Sporting activities for children aged between 5 and 18 years old:
19% on a maximum spend of €210pa i.e.€40 detraction .
Veterinary bills:
19% on annual expenditure between €129,11 and €387,84 i.e €49 – 19% of €258pa.
The deduction is for the person listed on the fattura and does not have to be the owner of the animal, therefore, for a couple it makes sense that you both pay at least once if you have significant veterinary bills for the year.
Cost of rent (based on income):
a maximum of €300 if your income is below €15493,71 and €150 if your income is between €15493,71 and €30987,41.
There are differences for those who are renting from an organisation rather than private individual, under 35’s, people who transfer their residence to another comune more than 100kms from their current home and also students who study at a university away from comune of residence. Check details with your commercialista if you think they might apply to you.
Costs of public transport:
as of the 1st Jan 2018 it is possible to detract 19% of the costs of an ‘abbonamento’ for local, regional and interregional public transport, up to a maximum spend of €250. This limit also applies to the family, if there are more than 1 ‘abbonamenti’ but cumulatively no more than €250 in total.
Bonus for construction work on your home:
I won’t go into detail here as the terms seems to change regularly. However, you can obtain details by doing a google search or speaking with a geometra /architetto etc…
Bonus ristrutturazione: 50% on a maximum spend of €96000 deductible from income over 10 years.
Bonus risparmio energetico: 65% deductible from income over 10 years depending on the type of work you are doing
Sismabonus: 50% on maximum spend of €96000 deductible over 5 years if you live in seismic area
Superbonus: see link below for details:
- Bonus mobili e elettrodomestici: 50% on a maximum spend of €5000, deductible from income over 10 years (only available until 31st Dec 2024)
- Bonus Verde: 50% on maximum spend deductible over 10 years (only available until 31st Dec 2024)
- Bonus barriere architettoniche: 75% the maximum depends on the type of work being performed (only available until 31st Dec 2025)
If you think you might be eligible for any of the bonuses named above, please check the details and do sufficient research or take professional advice before starting work to ensure that you are eligible for the deductions.
Pension deduction:
you can deduct from total income the contributions you make to a personal pension plan (previdenza complementare), in any calendar year, up to a maximum of €5164.57.
These are the main ones which apply to most people, if you want the full list then you can refer to the CAF website (from where I took the details) as it provides a good resource. The link is HERE
It would appear as though my timing was off slightly regarding my last E-zine, specifically in relation to the payment of the €2000 voluntary contribution to the Italian healthcare system. Two people contacted me to say that the UK Embassy website updated their website about 12 hours before my E-zine was released which I had not yet seen. The text was as follows:
As is often the case with communications of this sort it often throws up more questions than answers and so I will wait for further clarification on the issue, but at the very least, I think it can be assumed that any Brit registered in Italy before 1st January 2021 will not be paying any more than they were before for access to the health service in Italy.
Don’t forget the Rome Business Lunch!
April 12th at 13.00
Ristorante Amedeo – nr Roma Termini
⬅️ Click on the logo below for full details.
The lunch is open to anyone, and is more about connecting people than just ‘touting for business’. People from all walks of life come along, from UN retirees, yoga teachers, online networkers, lawyers, real estate agents, English teachers, and people who just want to connect and make friends. So, if you are in Rome and would like to come along then please do so. Just please give us a few advance days notice so we can book you a place.
If you have any questions about any of these issues and how they apply to you and your financial situation, or if you think that you might be paying more tax than need to then do get in touch and I will be happy to see if I can help you with your plans.
I can be contacted on email: gareth.horsfall@spectrum-ifa.com or on cell: +39 333 6492356
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