On August 14, 2023, the publication of the delegated law on tax reform in the Official Gazette was officially announced. The Meloni government will now have 24 months to implement the executive decrees necessary to implement the provisions of the law. But what exactly does this law contain? And what will be the main changes we should expect compared to the past? Below are the highlights of the reform
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The 2023 tax reform envisages, as a final objective, the arrival of a single-rate taxation system, although the final form has yet to be discussed.
To achieve this goal, implementing decrees will have to reduce the number of brackets in personal income tax (IRPEF) from four to three. This goal is likely to be achieved as early as next year. Currently, the tax system operates according to the following progression:
— Taxable income up to 15,000 euros: 23% rate
— Taxable income over 15,000 euros and up to 28,000 euros: rate of 27%
— Taxable income over 28,000 euros and up to 55,000 euros: rate of 38%
— Taxable income over 55,000 euros and up to 75,000 euros
: 41% rate
Another fundamental point for the government concerns the introduction of a single no tax area for all income categories (employees, the self-employed and retired). The objective is to ensure greater horizontal fairness. Currently, the no tax area varies according to the source of income:
— Employee work: income limit of 8,174 euros
— Pension: income limit of 8,500 euros
— Self-employment: income limit of 5,500 euros
These are just a few of the highlights of the 2023 tax reform. It will be interesting to see how the Meloni government will implement these changes in the coming years and how they will influence the tax life of Italians.
Table of Contents:
Deductions and deductions
The 2023 tax reform will be aimed at simplifying deductions and deductions for employees, keeping the most relevant ones. Expenses incurred for dependent children, housing, health and social security will continue to be deducted or deducted, while a tax advantage will probably be introduced to encourage young people under 30 years of age to enter the labor market.
An innovation could concern the introduction of the family quotient, which determines the tax to be paid based on personal income, the number of members of the family unit and their economic situation. The family quotient would replace the ISEE in accessing various bonuses and benefits. Soon, a subsidized replacement tax for overtime and the additional salary for the thirteenth month will certainly be implemented, with the aim of stimulating consumption and promoting economic growth. The reduced taxation for the thirteenth month could be applied as early as the end of 2023.
Flat Tax as an intelligent and creative solution
The Flat Tax topic is undoubtedly controversial and does not have a unanimous consensus within the majority of the government. While the League advocates a single rate for everyone, Fratelli d’Italia, at the head of the coalition, insists on implementing an incremental Flat Tax. This system would be based on the application of the single rate only for incomes greater than those obtained in previous tax years. Difficulties remain in extending this measure to employees in the short term, but for the self-employed, implementation could be immediate
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Currently, self-employed workers who have chosen the flat rate regime continue to pay a 15% Flat Tax up to an income of 65,000 euros, or 5% if they have not had a VAT number in the last three years and the opening of the latter does not represent a continuation of the activity carried out previously. However, the government is considering the possibility of introducing a two-year preventive agreement, which would allow the taxpayer to agree with the IRS on the payment of taxes, regardless of the real earnings obtained
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The 2023 tax reform therefore aims to introduce Flat Tax as an intelligent and fair solution to simplify the Italian tax system. This measure, if implemented with professionalism and prudence, could bring significant benefits for both employees and the self-employed, thus encouraging the country’s economic development
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Innovations in the VAT category
As part of the 2023 tax reform, the aim is to carry out a detailed review of the VAT category, in order to align with the regulatory standards of the European Union. In particular, measures are being considered to completely exempt value added tax on goods of primary importance such as bread and pasta. At the same time, targeted changes to the deduction mechanisms are being studied, in order to simplify access to this form of
tax relief.
Our goal is to propose a harmonized tax framework, in line with European directives, that allows taxpayers to manage their taxes effectively and efficiently. The specific details of this reform will be announced later, once the necessary evaluations and consultations with the actors involved have been completed. Combating tax evasion effectively
Tax
evasion is a topic that has often sparked fiery discussions between the various parliamentary forces. Despite efforts to limit evaders’ escape routes, it still seems like an illusion to make everyone pay their taxes. On the one hand, it is proposed to make everyone pay taxes to reduce the overall amount, while on the other hand, it wants to reduce taxes to make sure that everyone pays them. In summary, there is obvious disagreement as to what is the cause and what is the effect
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The government is now trying to establish a new relationship with taxpayers, trying to combat tax evasion before it even occurs. Measures such as tax breaks and concessions will be introduced to remedy irregularities in tax returns through voluntary compliance tools. In other words, an attempt will be made to direct taxpayers towards the regularization of their tax situation before the Revenue Agency issues
a payment folder.
Foreclosures
The possibility of automatic foreclosure of debtors’ current accounts in the event of debts to the Revenue Agency decreases. In essence, the procedure for seizing financial reports will no longer be automated but will focus on simplification and rationalization.
The delegated law on tax reform provides that instead of the automated procedure, “rationalization, computerization and simplification of the procedure for the foreclosure of financial relationships are introduced, also through the introduction of mechanisms of application cooperation right from the phase of the third party’s extrajudicial declaration, according to article 75-bis of the Decree of the President of the Republic of 29 September 1973, n. 602”, without neglecting the forms of protection provided for in favor of the debtor.
