Tax time in Italy

Tax time in Italy – when our commercialisti wake up from their winter ‘letargo’ (aka – well-earned down) and start asking us to send our financial information for tax payment, if you haven’t done it already of course.

On top of the information regarding our taxable assets and income there is the list of allowable deductions /detractions to assist in lowering your tax bill.

In this article, I review that list for fiscal tax year 2022.

SPESE FAMIGLIARI – family expenses. These attract a detraction of 19% of the value of the expense.

• The abbonamento (pass) for local, regional and inter-regional public transport, up to a maximum of €250 for the cost of the pass
• A maximum expense of €530 or €1219.14 for life insurance, polizze infortuni (accident) or permanent disability policies
• All costs for deceased family members, i.e. funeral
• €632 per child for kindergarten cost (public or private)
• The costs of infant, (scuola d’infanzia), junior (primarie) and secondary (secondaria) schools. Also University, Conservatorio and AFAM (Instituto Alta Forma Artistica, Musicale e Coreutica)
• Costs for students diagnosed with DSA (disturbo specifico dell’apprendimento) – a category of ADHD
• A maximum of €210 for the costs of sport for children until 18 years old
• A maximum of €2633 for the costs of rent for students who are living away from their home/region, including abroad

SPESE PER LE CASE –

• A 19% detraction on mortgage interest, where it has been used for the purchase or construction of the ‘Prima Casa’

SPESE MEDICHE – medical expenses. These all attract a 19% detraction:

• When spending more than €129.11 for pharmaceuticals, ticket, hospital costs, specialist services and surgery costs. Tests, thermal cures (when prescribed), medical equipment, glasses and/ or contact lenses that meet the CE standard
• Vets costs from €129.11 to €500
• Costs to assist with maintaining personal independence e.g. the purchase of a vehicle necessary to get to and from hospital. (Limited to a maximum spend of €2100 for those on incomes lower than €40000pa)
• A maximum spend of €750 for the cost of life insurance where the benefit is for someone with a serious disability
• Other general medical expenses attract the 19% detraction on the cost, which can then be detracted from your or your family income, where they are being supported you (a carico)

LIBERE DONAZIONI – the full cost of donations to:

• Cultural and artistic
• Cooperative entities in the cultural /artistic sector
• Scholastic institutions of every
• Funds donated to the Italian state

BONUS EDILIZIE – restructuring and renovation costs

For the tax year 2022, the following detractions are available:

• 60% on the full expenses of repair to the outside of your property – specific criteria apply! BONUS FACCIATA
• 50% on the cost of restructuring with a max spend of €90000 or 80% of the total cost where it was used to restructure for seismic risks. BONUS SISMA
• 65% of the cost for interventions for energy savings measures around the
• 50% of the cost of furniture and big household appliances (where they meet certain criteria) BONUS MOBILI
• 36% on a max spend of €5000 for landscape work in the garden (reimbursed over 5 years) BONUS VERDE
• 50% for ordinary maintenance
• 75% for interventions for energy saving measures for condomini (apartment blocks)
• 110% SUPERBONUS for specific work

(** the superbonus has been suspended by the Meloni government because they found a hole of €38 billion in the public finances due to fraudulent activity related to the Superbonus. It is unknown when and if any applications made in 2022 will be reimbursed).

• From 2023 the 110% SUPERBONUS falls to 90% (but is likely to be fraught with the same issues as the 110% bonus, in my opinion)
• 50% of the cost of installing an electric car recharging

Where you have an income up to €120,000 pa the expenses, as described in this article, will be fully allowed. Where you income is over €120,000pa then the detractions will be reduced according to a formula based on your total income.

And that’s it. Everything that you can detract from your income in 2022 to try and reduce your tax bill in Italy. If that doesn’t make a difference, then you may need to have a look at your overall finances to try and plan in different ways.

It should also be noted that the Meloni government is currently debating how they can simplify this whole system by reducing the tax bands from four to three in the coming year, and then hopefully moving to a two tax band system. If they manage to pass this, then they will likely reduce/remove this system of detractions/deductions by lowering the bottom rate of tax, or maybe introducing a starting rate tax allowance for everyone (unlikely). However, they are in first stage negotiations and it may be some time before things come to pass.