Italy Has EU's Highest Tax Compliance Cost

by Ulrika Lomas, Tax-News.com, Brussels

13 March 2015

A medium-sized Italian company spends on average EUR7,559 (USD8,010) every year to complete administrative requirements under the country's bureaucratic tax code, according to data provided by the ImpresaLavoro research center.

ImpresaLavoro calls the cost suffered in maintaining tax compliance "an amount that is without equal in the rest of Europe, and represents a real additional hidden tax that Italian companies are forced to bear."

The World Bank, in its report on Doing Business, has noted that Italian businesses have to put in 269 hours to prepare and compile the necessary documents and returns regarding employees' taxes, value-added tax, and taxes on business profits. Meanwhile, Eurostat has estimated that the cost of that time is EUR28.1 per hour.

ImpresaLavoro therefore has declared Italy the winner in the "non-prestigious" classification of having the EU's most burdensome tax regime, beating Germany, in second place, by EUR736 (218 tax-compliance hours at a cost of EUR31.1 per hour, or EUR3 more).

Even though France has a tax code as complex as Italy's, it takes a French company only 137 hours to comply with their taxes each year, at a total cost of EUR4,699. That cost in the United Kingdom was found to be EUR2,299.

"When we analyze the total tax burden on Italian companies," said ImpresaLavoro President Massimo Blasoni, "very often we forget that actual taxes do not represent the total weight that businesses have to endure. Bureaucracy is not only a noose that blocks business development and private investment, but is also a cost."

"In that respect, it becomes ever more necessary to act rapidly to simplify our tax system. That would be a reform that could be realized at zero cost."

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