Expats In Italy: IRPEF Deductibles and Detractables (Tax)

IRPEF Deductibles and Detractables (Tax)

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There are really two types of deductible: "Deduzioni", which are deducted from gross income to give a gross taxable income, and "Detrazioni" which are subtracted from the calculated tax. To avoid confusion from here on, we will use the word "deductible" in the Italian sense of "deduzione", and we will coin a new word in English: "detractable" to mean "detrazione". You might think it would be preferable to have one Euro of "detrazione" rather than one Euro of "deduzione". And this is true иC but to get one Euro of detrazione, you would have to have 5,26 Euros of real expenses, because you are only allowed to subtract 19% of your "detractable" expenses. The specific deduzioni and detrazioni can be seen in the following tables, as well as the special case of expenses for family members, which changes from deduzione to detrazione in 2005.

EXPENSE	NECESSARY CONDITIONS TO APPLY THE TAX DETRAZIONE	LIMIT ON WHICH TO APPLY THE 19%	MOST YOU CAN DETRACT
Donations an amateur sports organization.	Donations to an amateur sporting organization, as long as the donation is made via bank or postal transfer.	А 1.500	285,00
Donations to aid and assistance organizations	Freely made donations to organizations of mutual aid and assistance that guarantee members subisidies in case of sickness, handicap, or old age as well as aid to the familie of deceased members	А 1.291,14	245,32
Donations to an "ONLUS"	Donations made to an ONLUS (organizzazioni non lucrative di utilitид sociale = non profit organization of social utility)	А 2.065,83	392,51
Donations to political parties	Freely given donations to political parties and movements between 51,65А and 103.291,38А that have been made with a postal or banc transfer.	100% as long as within legal limits for political contributions	19.625,36
Expenses and donations for the entertainment sector.	Expenses and donations made to non-profit organizations that operate in the entertainment sector.	up to 2% of total taxable income	dependsбн
Expenses and donations for the entertainment sector.	Donationa made to the funds or the operation of the Societид Biennale di Venezia	30% of your taxable income	dependsбн
Expenses for studies	Expenses for secondary, university, postgraduate studies, also at private or foreign institutions, but within the limits of the taxes and contributions for equivalent statal institutions in Italy.	100% (equivalent to state taxes)	dependsбн
Expenses for the maintenance of cultural property	Obligatory expenses for the maintenance of property subject to a specific requirements (if you purchase historical property you may be subject to this). If not obligatory, you need a certification from the Ministry of Culture which certifies the need for the expense.	100%	dependsбн
Expenses or donations to support cultural and artistic activity	Donations made to the State or public entities, foundations, and associations legally recognized for their cultural activity.	100%	dependsбн
Funeral Expenses	Funeral expenses for the death of the spouse, parents, siblings, father or mother in-law, sone- or daughter-in laws; The limit is valid for each death, to be split amongst all the persons that incurred funeral expenses.	А 1.549,37	294,38
Insurance: Life or Invalidity of more than 5%	Insurance premiums for life insurance or hanicpa insurance for permanent handicap for hanicap greater than 5%, or insurance for becoming non-self-sufficient as long as the insurance company does not have the possibility of retracting. This for amounts not greater than 1.291,14А	А 1.291,14	245,32
Interest for agricultural loans and mortgages	Available since 1990 for a maximum value equal to the "income" (reddito) of the declared land	Equal to the income (reddito) of the property	dependsбн
Interest on morgage for purchase of 2nd residence (pre-1993).	Interest for mortgage taken out prior to 1993 for real estate NOT utilized as main residence. The limit can be used sa a detractable for each title holder of the mortgage.	Up to 2.065,83А per title holder of the mortgage	392,51
Interest on morgage for purchase of main residence (pre-1993).	As above, but for mortgages taken out before 1993 and for which the main residence was occupied by Dec.8, 1993. Here, the amount detractable can be applied for each title holder of the mortgage.	Up to 3.615,20А for each title holder	686,89
Interest on morgage for purchase of main residence.	Interest for residential mortgage made from 1993 on, for the purchase of the taxpayer's main residence, residence which must be occupied within 6 months of the purchase. This detrazione can be taken up until the year in which the residence is inhabited by the taxpayer, unless he or she move out due toa chenge in jobs. This detrazione has to be split between all the title holders of the mortgage.	Up to 3.615,20А	686,89
Interest on mortgage taken out to build main residence.	Interest on mortgages taken out since 1998 for the construction of the main residence. (Law Nr. 449 from 1997)	2.582,28А in total	490,63
Interest on mortgages taken out in 1997 for recovery or maintenance	Interest on mortgages taken out in 1997 for work and material for normal and extraordinary recovery and maintenance on the residence. (According to Law Nr. 669 from 1996)	2.582,28А in total	490,63
Interpretation for deaf / dumb persons	Expenses for interpretation services provided by persons to deaf / dumb persons by recognized professional interpreters, according to the la nr. 381 from 26.May 1970.	100%	dependsбн
Means for movement	Expenses for any means necessary to accompany, help walk, move, or lift persons that have a handicap, artificial limbs, charis and wheelchairs, modifications to elevators to hold wheel chairs, or the construction of ramps to eliminate architectural barriers both inside and outside of the home. As means of movement, the Fisco also recognizes seeing-eye dogs for up to one million.	100%	dependsбн
Medical expenses	Surgical expenses, specialist fees, dental and other prothesis, eyeglasses, expenses for pharmaceuticals and medical analyses, general medical expenses, expenses that are not directly deductible from gross income incurred for taxpayer or one of his/her dependents.	Amount in excess of 139,11 Euro	dependsбн
Vehicles that have been adapted for handicapped persons	Motorized vehicles and automobiles : you can take a detrazione of 18.075,99 euro every four years.	Up to 18.075,99А	3.434,44
Veterinary expenses	Documented (invoice) veterinary expenses up to 387,34 for the portion of expenses that exceeds 139,11 euro. This detrazione applies to expenses for animals that are legally held for personal company and sporting activity.	Amount in excess of 139,11 Euro	dependsбн

EXPENSE	DESCRIPTION OF TAX DEDUCTIBLE EXPENSE	DEDUCTIBLE
Obligatory health and retirement insurance contributions	Social security "previdential" (Italian) contributions made by merchants and artigiani; contributions to professional "casse"; social security portion paid by collaboratori coordinati e continuativi (COCOCO)	100%
Contributions to supplementary pension funds (fondi pensioni integrative)	Contributions made by independent workers (lavoratori autonomi) and entrepreneurs	12% of income with a maximum of А 5.164,57
Contributions and donations to religious institutions	Following Institutions: Centrale sostentamento Clero Cattolico - Unione Ital. Chiese Avventiste - Assemblee di Dio in Italia - Tavola Valdese - Unione Cristiana Evangelica Battista d'Italia - Chiesa Evangelica Luterana in Italia - Comunitид Ebraiche	up to А 1.032,91
Contributions to third world countries	Contributions to organizations recognized as appropriate by the Ministry of Foreign relations, based on the law 49/1987	2% of total income as an alternative to classifying these as "detractables" (ONLUS).
Contributions for domestic workers	Social security contributions for domestic workers and domestic or family assistance (i.e. colf, baby sitter and assistance to elderly persons)	up to А 1.549,37
Medical and assistance expenses for handicapped persons.	Medical expenses and nursing and rehabilitation assistance paid to personnel with a professional qualification that is dedicated to the asssistance of the person, or for occupational therapy.	100% except "detracable" expenses
Regular payments to spouse	Payments established in court by a judge for the legal and effective separation, divorce or anullment of a marriage. Excluded are the payments for the support of children.	100%
Rendite, vitalizi e assegni periodici e alimentari	corrisposti per testamento o donazione o per provvedimento del giudice	100%
Canoni, livelli e censi	gravanti sugli immobili inclusi nel reddito complessivo	100%
Indemnization for loss of rent seniority	Payment to renter for the ending of rental contract for non-residential use	100%
Returned sums	To the payer and that make up part of income in prior years.	100%
Expenses for adoption process	Only for the adoption of foreign children	50%
Main residence	Annual deduction for the main residence and related items (in proportion to the percentage of ownership)	Entire "rendita catastale"
Expenses for "micro-asili" and "nidi" (micro-nurseries) at the place of work.	Expenses covered by parents and managed by the town, employer, and social cooperatives	up to А 2.000

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