Based on Italian tax regulations, non-resident taxpayers – for income tax purposes – are resident in the Italian municipality in which their income is earned (or, if they work in several municipalities, in the municipality in which the highest income is earned).

• Personal income tax (IRPEF);
• Regional tax in addition to personal income tax;
• Local tax in addition to personal income tax;
• Tax on the transfer of ownership of property;
• Local property tax (ICI).

In respect of payment of any of the above taxes, non-residents who have earned income taxable in Italy must comply with the following tax obligations:

• They must submit an annual personal income tax return (except exempt individuals);
• They must pay the respective tax amounts (outstanding balance for the previous year and prepayments for the current year).
  In addition, if they own property, in addition to personal income tax they must also pay:
• Local property tax, and, if the property is not rented out, tax on solid urban waste. Unlike the personal income tax return, the local property tax return is not submitted each year but only in the event of any changes.
  
  In the event of inheritance:
• The appropriate declaration must still be submitted in respect of property and property duties.

Property taxes: Property (land and buildings) located in Italy is considered to generate income even if it is not let out. It is also subject to various taxes:

• Personal income tax (IRPEF);
  
• Regional tax in addition to personal income tax;
  
• Local tax in addition to personal income tax;
  
• Local property tax (ICI).
  

In the event of transfer (under a 'contract inter vivos' (contratto tra vivi)), property is also subject to the following transfer taxes:

• VAT
• Registration tax
• Mortgage tax
• Land registry tax.

Alternatively, if a property is let out, the rental contract, drawn up privately and independently of the annual rent, should be registered within 30 days from the date on the document at any registry office.

If it is drawn up with the aid of a public official, it must be registered by said official at the appropriate registry office (or tax authority or institute).

Registration tax is equivalent to 2% of the annual amount agreed.

1. Employment, employment by a company, self-employment;
2. Pensions and similar benefits;
3. Property (land and buildings) located in Italy.

Other types of income not featuring in this document (e.g. corporate income) are also taxable.

In particular, in terms of income from employment and similar work, the following income is taxable (and must therefore be included on the tax return):

• Income of an individual resident in a foreign country with which no dual-taxation agreement has been concluded;
• Income of an individual resident in a foreign country with which a dual-taxation agreement has been concluded that provides for taxation of such income both in Italy and the foreign country in question;
• Income of an individual resident in a foreign country with which a dual-taxation agreement has been concluded that provides for taxation of such income in Italy only.

Information can be found below on the taxation procedure regarding wages and pensions earned in some foreign countries.

For information on wages and pensions in countries other than those listed, or earned/received in other countries, please consult the respective individual agreements (these are available on the website of the National Tax Office at http://www.agenziaentrate.it.)

Wages: For wages paid by a private employer, almost all agreements
(e.g. Belgium, France, Germany, Great Britain, Spain) stipulate taxation only in the working individual's country of residence under the following conditions:

• Where the worker resident abroad has worked in Italy for less than 183 days;
• Where remuneration is paid by an employer who is resident abroad;
• where charges are not borne by an established organisation or permanent site owned by the employer in Italy.

In such cases, wages are not declared to the Italian state.

Pensions paid to individuals who are not resident in Italy, bodies resident in Italy, and fixed organisations in Italy are also taxable in Italy.

There are agreements in place with some countries that prevent dual taxation of income; under these agreements, pensions paid to non-residents are taxed differently depending on whether they are state or private pensions.

State pensions are those paid by the Italian state or by one of its political or administrative arms or by a local body. As a general rule, such pensions are only taxable in Italy.

Private pensions are those paid by Italian social security bodies, organisations or institutions responsible for paying pensions (e.g. the National Institute for Social Security or INPS). As a general rule, such pensions are only taxable in the beneficiary’s country of residence.

For information on the procedure for pensions received by taxpayers resident in other countries, please refer to the individual agreements.

By way of example, details of some of the agreements currently in force regarding taxation of pensions paid by public and private bodies located in Italy to taxpayers resident abroad are given below:

1. United Kingdom, Spain: Italian state pensions are normally taxed only in Italy, except in cases where the taxpayer is a national of the foreign country in which he resides. Private pensions received by residents in these countries are not taxable in Italy.
2. Belgium, Germany: Italian state pensions are normally taxed only in Italy, except in cases where the taxpayer is a national of the foreign state in which he resides and is not an Italian national. Private pensions received by residents in these countries are not taxable in Italy.
3. France: Italian state pensions are normally taxed only in Italy, except in cases where the taxpayer is a French national and not an Italian national. Private Italian pensions are generally taxed only in France, but pensions that are considered under the current dual taxation agreement between Italy and France as pensions paid on the basis of 'social security' are taxable in both countries.

Income derived from coordinated and ongoing collaborative work (redditi da collaborazioni coordinati e continuattivi) is considered to have been earned in Italy if it is paid by the Italian state, by individuals resident in Italy or by fixed organisations, located in Italy and owned by non-resident individuals.

However, if the non-resident individual is remunerated by a national entity, the tax is payable in Italy regardless of whether the services are actually performed in Italy or abroad.

A 30% tax deduction is withheld from such income, except in cases where there is an agreement preventing dual-taxation that stipulates otherwise.

As from 1 January 2001, the payment received by workers performing coordinated and ongoing work is incorporated into the income earned from employment.

In addition to highlighting certain typical examples of coordinated and ongoing collaborative relationships such as, for example, mayors, administrators and so forth, the new measure also defines other characteristics of 'collaborative relationships' such as the absence of an employer-employee relationship (which, if it existed, would mean that the income would be classed as income from employment) and the absence of an administrative structure (in contrast, this is a requirement for qualifying the income of a firm).

Income earned from work in the liberal professions or other independent work performed in Italy by an individual resident in a country which has no dual-taxation agreement with Italy is considered taxable in Italy.

In the case, too, of residents in countries with which there is a dual taxation agreement in force, such income is generally taxable in Italy if the work is usually performed at a fixed site – for example, a doctor's surgery, an architect's office or a lawyer's office – and only the share of income generated at this site is taxable.

However, in cases where an individual is a resident of a country which has concluded a dual taxation agreement with Italy, and works in Italy in a liberal profession without a fixed location, the Italian authorities do not generally tax the income he earns there.

Income earned from work in liberal professions which is taxable in Italy and which is received by residents abroad is taxable in the following way:

• If the remuneration is paid by clients that are withholding agents (sostituti d’imposta), a (definitive) 30% deduction is withheld;
• If the remuneration is paid by clients who are not withholding agents, it must be declared on the income tax return to be submitted to the Italian tax authorities.

How to apply for a tax code: Under law no. 212 (2000) on taxpayer status, every effort should be made to help taxpayers resident abroad obtain a tax code, submit an income tax return, and pay tax.

In order to put such provisions into practice, decree no. 281 of 17 May 2001 was issued and published in the Official Gazette no. 161 dated 13 July 2001, and circular no. 74/E dated 1 August 2001 was issued by the tax authorities setting out the process for allocating a tax code to non-residents (to enable them to submit a tax return and pay taxes via the Internet, see Chapter III, paragraph 3.11).

To apply for a tax code, non-residents must visit the appropriate consulate in the country concerned. A small plastic card detailing the tax code will be delivered via diplomatic pouch to the appropriate consulate, which will then deliver it to the individual.

If an address in Italy is given, the card will be sent to that address instead. Nevertheless, if an address in Italy is given, the card may still be delivered to the consulate in the country concerned to be forwarded to the individual if expressly requested.

Consulates which have a data link to the INPS and which are authorised to use the 'tax codes' function to access the information system of the central tax records held by the tax authorities, may allocate a tax code directly.

Consulates which, despite having a data link with the INPS, are not authorised to issue tax codes, may request them by faxing the National Tax Office (Direzione Centrale Sistemi e Processi – Ufficio Archivio Anagrafico, sicurezza e basi dati on +39 06 5016741) stating the names and tax codes of the relevant officials.

Steps are currently under way to set up a process whereby allconsulates will be able to issue tax codes over the Internet.

Income tax returns: As from 2001, the special Unico NR form for non-residents no longer exists but included in the form Unico Persone Fisiche (physical persons) is a special Guide to completing declarations for non-residents.

Non-residents in Italy whose only income is from property and/or employment, or from a pension must use the basic Unico Persone Fisiche form, which can be downloaded from the Tax Authority’s website.

All non-exempt taxpayers should complete the basic form for the declaration, which contains the following:

• The title page with information identifying the individual submitting the declaration and basic instructions;
• A second page with personal information and information pertaining to the declaration (type of declaration, details of any other individual signing the declaration, donation to charity, signature)
• Income boxes labelled 'R' (RA, RB, RC, RN, RP, RV, RX).
  If the individual is resident abroad, the tax code issued by the tax authority of the country of residence should be indicated, or, if no tax code has been issued, a similar identifying code (for example, social security code, general identification code, etc.). If the foreign country of residence is structured into geographical subdivisions, the federal state, county, district, etc. should be indicated on the appropriate line; where there are further territorial subdivisions, only the largest need be indicated (e.g. if a country is divided into federal states, which in turn are subdivided into counties, write only the name of the federal state).

Individuals with the following income need not submit a tax return:

• Earned income only or a pension paid by a single withholding agent required to withhold tax at source;
• Earned income or similar paid by multiple Italian employers whose total amount does not exceed 12,000,000 lira (€6,197.48) if the deductions for employment are due for the entire year;
• Earned income paid by multiple withholding agents if the most recent of these is requested to take account of income paid under previous contracts and if they have carried out the adjustments in respect of income from land and buildings, the total amount of which does not exceed 360,000 lire (€185.92).

A tax declaration is not required if the gross tax on the total income, minus the deductions for employment and other deductions, does not exceed 20,000 lire (€10.33).

Payments due pursuant to a tax return, including those pertaining to the tax prepayments, must generally be settled by 31 May of each year. Taxpayers who are resident abroad may make payments at any bank in the country in which they are resident in the form of a transfer in euro to a national bank based in Italy (Credito Italiano, Banca Nazionale del Lavoro, Banca di Roma, etc.).

The transfer should include details of the taxpayer, their tax code, details of their residence abroad, their address in Italy, description of payment and the year to which it refers. Payments may not be made by cheque. Payment over the Internet is permitted.

Useful website: http://www.agenziaentrate.it