Q Question: What are the taxes applicable to Italian Lawyer fees?
A Answer: Italian Lawyers’ invoices are subject to 4% pension tax. The total fees + 4% pension tax is subject to VAT. The VAT rate for legal services is 22%. Therefore total tax incurred by the client is 26.88%. For example, for a legal fee of EUR 1,000, the client pays EUR 1,268.80.
Under certain circumstances, invoices issued by Italian Lawyers are not subject to Italian VAT. There are two key circumstances when this might occur.
When Italian Lawyers start their career or when their total professional income does not exceed a certain threshold, they can opt for some beneficial tax exemptions. Under some of these tax exemptions, invoices are not subject to VAT until the provided requirements are met (age and/or threshold).
Likewise, Italian VAT does not apply to Italian legal services when invoiced to (i) non EU subjects or (ii) EU VAT subjects who are non Italian residents and have no Italian tax representation.
As an exception to the above mentioned no-VAT rule for non EU residents, Italian legal services are generally subject to VAT for most Italian real estate dealings.
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