Withholding taxes are taxes paid not by the recipient of a payment but by the payer. The payer deducts the tax directly "at source" and pays it over to the State. Withholding taxes are governed by Presidential Decree (DPR) No. 600/1973 and apply to wages, fees, commissions, dividends and investment income.
Anyone who deducts tax at source becomes a withholding agent (sostituto d'imposta). These are primarily companies, freelancers, institutions and public authorities – but not private individuals.
The withholding agent has three obligations:
Example: A freelancer invoices €1,000 in fees. The company withholds 20% (€ 200), transfers €800 to the freelancer and pays €200 to the State.
Italian law distinguishes between two forms:
| Type of payment | Rate | Form |
|---|---|---|
| Wages and salaries | IRPEF bands (23% / 33% / 43%) plus regional and municipal surtax | Payment on account |
| Fees paid to freelancers (except under the flat-rate regime) | 20% | Payment on account |
| Commissions paid to commercial agents | 23% on either 20% or 50% of the commission | Payment on account |
| Dividends paid to private individuals | 26% | Final withholding |
| Interest and investment income (in most cases) | 26% | Final withholding |
| Remuneration paid to non-resident self-employed persons for work carried out in Italy | 30% | Final withholding |
For cross-border payments, double taxation agreements may reduce the rate or assign the right to tax entirely to the state of residence. This generally requires the foreign recipient to provide a certificate of residence.
The amounts withheld are paid electronically using form F24, generally by the 16th day of the following month. If the 16th falls on a Saturday, Sunday or public holiday, the deadline moves to the next working day.
Alongside the payment itself, there are two annual reporting obligations:
Where withholding tax is paid late or not at all, administrative penalties and interest on arrears may be imposed; larger sums may also carry criminal implications. Through voluntary correction (ravvedimento operoso), failures can be put right retrospectively at a reduced penalty.