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Legal Professions in Italy. Tax Law Profiles

Francesco Farri 

The article describes the essential elements of the tax regime applied to professionals of the legal area in Italy, focusing in particular on the personal income tax (IRPEF), IRAP, and the social security system. Some considerations will also be made about the -anti-money-laundering and privacy compliance system imposed by the European Union. The conclusion is that, for the survival of the sector, the tax and instrumental obligations imposed on professionals must be mitigated.

Le professioni legali in Italia. Profili fiscali

L’articolo ripercorre i tratti essenziali del regime fiscale dei professionisti del settore legale in Italia, concentrandosi in particolare sull’IRPEF, sull’IRAP e sul social security system. Alcune considerazioni saranno svolte altresì con riferimento agli obblighi in materia di antiriciclaggio e privacy imposti dall’Unione Europea. La conclusione è quella per cui, per la sopravvivenza del comparto, gli obblighi fiscali e strumentali imposti ai professionisti devono essere attenuati.

1. Introduction

Illustrating the tax system of the legal professions in Italy requires an examination of both the question of the tax measures as such and that of the social security system and of other obligations imposed on legal professionals in Italy.

In fact, though strictly speaking those kinds of obligations are not taxes, they are still payments or obligations which are mandatory. As such, they should be examined together with the taxes under the profile of compulsoriness, even though they are something else under the profile of their content and function. In fact, art. 23 of the Italian Constitution establishes that no personal or property performance may be imposed except on the basis of statutory law: this is the essential profile that in the Italian taxation system, combines social security and other obligations, such as those that will be examined in the following par. 4.

Article 23 of the Constitution dictates, on the subject, what is defined as a “relative” reserve [1]: it requires that the essential elements of the imposed performances be defined by acts having the force of statutory law while allowing that some elements of detail be also fixed from different sources [2]. Conversely, other constitutional provisions set defined limits and requirements for some specific types of imposed performances. For example, it is commonly believed that the application framework of the principle of contributory capacity pursuant to art. 53 of the Constitution is limited to taxes as such [3]: from that derives, in particular, that the legislator is authorized to impose economic performances without a synallagmatic connection with a counter-performance (i.e., taxes) only where the economic event to which the performance is connected can be considered as suitable to provide the economic means necessary to reasonably cope with the requested payment [4]. Instead, art. 38 of the Constitution is dedicated to the social security system and establishes that workers have the right to have adequately organized and insured means for their life needs in the event of injury, illness, disability and old age, involuntary unemployment: without prejudice to the fact that private assistance remains a free choice, it is established that the satisfaction of the aforementioned social rights be provided by bodies and institutes arranged or integrated by the State, and it is precisely for the financing of these latter that the social security system has been set up by means of mandatory generalized social security contributions.

Thus defined the scope of the investigation under the object profile, it deserves to be circumscribed, under the subjective profile, on the issues which impact self-employed professionals, or, in other words, attorneys at law and notaries. Though very often the concept of “legal professions” is conceived as including other profiles, such as legal counsels employed both in private companies and in public offices (state lawyers, magistrates, public administration counsels), these latest figures, in reality, are well within the scope of employment work for what concerns tax purposes and, as such, do not show appreciable differences with respect to this category. This does not mean, of course, that in some respects the discipline of rights and obligations of the employees of the legal sector cannot be different from that of the majority of employees: just think, in particular, of the treatment reserved to State attorneys and magistrates, to which the categories of the so-called non-privatized public employment still apply today [5]. However, these differences relate to aspects other than those that are strictly fiscal and, as such, cannot be investigated at this time.

 

2. The taxation system on professionals

Under the tax law profile, the activities performed by self-employed professionals in legal matters, constitute performance of services that generate income from self-employment work. The consequence of that is that their services are relevant for VAT and that, as such, they need to obtain their own tax registration number and comply with the normal requirements applicable to the VAT system. Under the income standpoint, the consequence of ..


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