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Reference

Tax
Glossary.

Key Italian tax and accounting terms explained clearly in English — a practical reference for professionals and businesses.

A

Acconto (Advance tax payment)
A prepayment of the current year's tax liability, calculated as a percentage of the previous year's tax. Paid in two instalments: the first (around 40%) by 30 June and the second (60%) by 30 November.
Aliquota (Tax rate)
The percentage applied to the taxable base to calculate the tax due. Can be flat (e.g. standard VAT at 22%) or progressive (as in IRPEF: 23%, 35%, 43%).
ATECO code
An alphanumeric code identifying the economic activity of a business or professional, based on the Italian ISTAT classification. Determines the deemed profit coefficient under the flat-rate scheme and the applicable INPS social security category.
Avviso bonario (Tax notice)
A preliminary notice from the Revenue Agency signalling a discrepancy found in automated checks. It is not a tax bill — it is an invitation to regularise before formal assessment, with reduced penalties. Deadlines for response are typically 30 days.

B

Bilancio d'esercizio (Annual financial statements)
Mandatory financial report for corporations (Srl, SpA), consisting of the Balance Sheet and Income Statement. Must be approved by shareholders and filed with the Company Register within 30 days of approval.

C

Cartella esattoriale (Tax enforcement notice)
A formal demand for payment issued by the Collection Agency (Agenzia delle Entrate-Riscossione) for unpaid taxes, penalties or contributions. It carries enforcement power: failure to pay or appeal within 60 days can lead to wage garnishment or asset seizure.
Cedolino paga (Payslip)
Monthly document showing an employee's gross salary, INPS social security deductions and IRPEF income tax withholding. The net amount is what the employee actually receives.
Codice fiscale (Tax identification number)
A 16-character alphanumeric code uniquely identifying every individual in Italy for tax and administrative purposes. Different from the Partita IVA: the codice fiscale identifies the person, the Partita IVA identifies the business activity.
Commercialista (Chartered accountant / tax consultant)
In Italy, a commercialista (formally 'Dottore Commercialista ed Esperto Contabile') is a qualified professional providing accounting, tax compliance, financial advisory and auditing services. They represent clients before the Revenue Agency and other authorities.
Compensazione fiscale (Tax offset)
The use of a tax credit (e.g. VAT credit, IRPEF credit) to offset other tax liabilities via the F24 form, without requesting a cash refund. Amounts exceeding €5,000 per year require a certificate of conformity (visto di conformità) from a qualified professional.
CU (Certificazione Unica — Income and Tax Certificate)
A certificate issued by employers or paying entities by 31 March each year, detailing income paid and taxes withheld during the previous year. Equivalent to a UK P60 or US W-2. Required to file the annual income tax return.

D

Deduzione (Tax deduction from gross income)
An expense subtracted from total gross income before calculating the tax. Reduces the taxable base. Examples: pension contributions, alimony payments, contributions for domestic workers. Not to be confused with a detrazione (tax credit).
Detrazione (Tax credit)
An amount subtracted directly from the gross tax already calculated. Reduces the tax bill, not the taxable income. The most common is the 19% tax credit for medical expenses. Not to be confused with a deduzione (deduction from income).

F

Modello F24 (Unified tax payment form)
Italy's standard form for paying almost all taxes and contributions: IRPEF, VAT, IRES, IRAP, INPS, IMU and many others. Completed with specific tax codes and paid via online banking. The accountant prepares it; the client pays it.
Fattura elettronica (Electronic invoice)
An invoice in XML format transmitted via the Revenue Agency's SDI interchange system. Mandatory for all Italian VAT holders since 1 January 2019. Paper invoices between VAT-registered entities are no longer valid.
Regime forfettario (Flat-rate scheme)
A simplified tax regime for self-employed individuals with annual revenue under €85,000. It applies a substitute tax of 15% (5% for the first 5 years) on a deemed income calculated using fixed coefficients per activity category. No VAT on invoices and reduced accounting obligations.

G

Gestione Separata INPS (Separate INPS fund)
The INPS social security fund for freelancers, collaborators and professionals without their own pension fund. The contribution rate for those not enrolled in any other fund is approximately 26% of net income. Contributes to the future state pension calculation.

I

IMU (Municipal Property Tax)
Italy's local property tax applied by each municipality to owners of second homes, garages, land and business properties. Primary residences are exempt (except luxury categories). Paid in two instalments: June and December.
INPS (National Social Security Institute)
Italy's public social security institution, managing state pensions, unemployment benefits (NASpI), maternity/paternity leave, and many other welfare provisions. All workers contribute monthly to build their pension entitlement.
IRAP (Regional Tax on Productive Activities)
A regional tax on the net value of production (essentially a payroll + profit tax). Paid by businesses and some self-employed professionals. Base rate is 3.9%. Self-employed individuals with very simple structures may be exempt.
IRES (Corporate Income Tax)
Italy's corporate income tax, applying a 24% flat rate to the taxable income of corporations (Srl, SpA, foundations, entities). The equivalent of IRPEF for companies. Paid via F24 in advance instalments and a final balance.
IRPEF (Personal Income Tax)
Italy's main direct tax on individuals' total income, applying progressive rates: 23% up to €28,000, 35% from €28,001 to €50,000, 43% above €50,000 (2025 three-bracket reform). Applies to employment, self-employment, business, property, capital income and others.
IVA — Imposta sul Valore Aggiunto (VAT)
Italy's value-added tax on the supply of goods and services. Standard rate is 22%; reduced rates of 10% and 4% apply to specific categories. VAT holders collect it from customers and periodically remit the net amount to the tax authority.

L

LIPE (Periodic VAT Communication)
A quarterly report of VAT data (output tax, input tax, balance) submitted electronically to the Revenue Agency. Due by the second month after the end of each quarter. Replaced the former spesometro for periodic VAT reporting.

M

Modello Redditi PF (Income tax return for self-employed)
The annual income tax return for VAT holders, self-employed individuals, partners in partnerships and anyone with income not reportable on the 730. Deadline: late November. Includes both IRPEF and annual VAT declaration components.

P

Partita IVA (VAT number / business tax ID)
An 11-digit code identifying a business entity or self-employed individual for VAT and tax purposes. Mandatory for anyone carrying out habitual, independent economic activity in Italy. Opened free of charge with the Revenue Agency.

R

Ravvedimento operoso (Voluntary regularisation)
A mechanism allowing taxpayers to correct errors, omissions or late payments by paying a reduced penalty. The sooner you act, the lower the penalty (ranging from 1/10 to 1/5 of the standard rate depending on the delay). Always preferable to waiting for a tax audit.
Ritenuta d'acconto (Withholding tax on self-employed income)
A 20% tax withheld by clients on payments to self-employed professionals, remitted directly to the Revenue Agency as an advance on the professional's IRPEF. The professional recovers it when filing the annual tax return. Documented in the CU.

S

SDI — Sistema di Interscambio (Invoice interchange system)
The Revenue Agency's IT system that receives, validates and routes electronic invoices between parties. Every electronic invoice must pass through the SDI before being considered legally issued. Assigns a unique receipt number to each valid invoice.

T

TFR (Severance / End-of-service pay)
A mandatory indemnity fund accrued by employers for each employee at roughly one month's gross annual salary per year (gross salary ÷ 13.5). Paid out when employment ends. Employees can choose to direct it to a pension fund instead of keeping it with the employer.

7

Modello 730 (Simplified income tax return)
The simplified annual income tax return for employees, pensioners and certain collaborators. Cannot be used by VAT holders. Allows recovery of deductible expenses (medical costs, mortgage interest, education fees) through a payslip refund in July.

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