The IRAP quandary
6 viewsIRAP is a funny little Italian tax which is applied to businesses. This regional tax (IR = Imposta Regionale) should, in theory, only be applied to businesses with a structure. ‘Structure’ in this sense seems to mean a business which has employees. I know of self-employed people who do not pay this tax because they have no employees, although the legality of not paying has not yet been fully proven in the Italian courts despite their having been a few cases on this matter.
Someone I know has recently opted to not pay this tax and acted upon the advice of a tax specialist who does not pay it. My tax accountant, on the other hand, is taking a cautious approach to the payment of this tax and does not think it is a good idea to stop paying it because no definitive decison has yet been reached. Apparently, the Italian tax authorities do not really know if this tax can be legitimately applied to one-person businesses. Yes, it’s all a bit confusing.
Me? I’m umming and aahing over the matter, which is why I’m posting this. What I don’t want to do is to stop paying and then find myself with a retrospective tax bill, plus interest, then again, I’m not too happy about paying a tax which many think I should not be liable for. Difficult situation. Then again, this is Italy, and it could take years before any firm decision is reached, and even if it is, any change in legislation may not be retrospective. Yes, I’m in a quandary.
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I asked a lovely Italian accountant friend of mine, he’s a very good accountant who knows his stuff.
His reply to your question was to suggest that you always pay. It’s safer that way despite the tax not being fair.
Thanks for asking your Italian accountant friend, Di. It sounds as though he errs on the side of safety, which is always wise. As I understand it, my own Italian accountant is looking into this matter more closely, and, hopefully, she’ll let me know what she reckons.
For the moment though, I shall continue to pay.
Cheers,
Alex
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