High fiscal pressure, labor costs and bureaucracy are holding back Italy’s economic competitiveness
One of the highest tax burdens in Europe
According to 2023–2024 data released by the Unimpresa Study Center, Italy remains among the EU countries with the highest tax burden on businesses. The total fiscal pressure stands at 42.7% of GDP, well above both the eurozone average (41.2%) and the EU average (40.1%).
Only France (46.2%), Belgium and a few other nations rank worse. Germany is at 40.1%, while Spain records the lowest burden among major partners at 38.3%. These figures highlight a major competitiveness gap for Italy’s economic system.
Corporate taxes still too high
When it comes to effective taxation on corporate profits, Italy stands at 27.8%, ranking among the highest in the Union, only behind Germany (29.8%) and Portugal.
Although forecasts for 2024 suggest a possible drop to 23.9%, this would still be above the EU average (20.7%) and eurozone average (21.2%). France has significantly lowered its rate in recent years, from 35% to 25%. Spain, meanwhile, is heading in the opposite direction, with a planned rise from 25% to 29%, potentially hurting its future competitiveness.
Bureaucratic burden: Italy’s hidden tax
Another major challenge for businesses in Italy is the bureaucratic complexity of the tax system. Italian companies spend 238 hours per year—about 30 working days—just to comply with fiscal requirements. This is the highest figure in Europe, matched only by Portugal.
In comparison, businesses in Germany spend 218 hours, those in Spain 143, and France just 139. All of these are below the EU average of 147 hours. This administrative burden weighs especially heavily on small and medium-sized enterprises (SMEs), which also face one of the highest labor tax wedges in the OECD.
Three key reforms to catch up with Europe
Unimpresa’s national advisor Marco Salustri comments:
“Italy is stuck in an old and inefficient tax model, while France, Germany and Spain are moving forward with structural reforms.”
To improve Italy’s tax competitiveness, Unimpresa proposes three essential reforms:
- A stable and structural reduction of the labor tax wedge
- A decrease in the effective corporate tax rate in line with EU averages
- Radical simplification of tax procedures and bureaucracy
Together, these reforms could make the business environment more attractive and stimulate economic growth. Additionally, tackling tax evasion—which accounted for €20.2 billion in 2022—could help fund these changes and reward compliant companies.
FAQ
1. What is the current tax burden in Italy?
42.7% of GDP, one of the highest in Europe.
2. What’s the EU average tax burden?
41.2% for the eurozone, 40.1% for the whole EU.
3. What is Italy’s effective corporate tax rate?
27.8%, possibly dropping to 23.9% in 2024.
4. Why is the labor tax wedge a problem?
Because it makes hiring expensive and discourages job creation.
5. How many hours do Italian businesses spend on taxes?
238 hours annually—the highest in the EU.
6. How do other countries compare?
Germany: 218 hours; Spain: 143; France: 139—all below the EU average.
7. What reforms are needed?
Cutting the labor tax wedge, lowering profit tax rates, and reducing bureaucracy.
8. Why is bureaucracy considered a hidden tax?
Because it takes time, money and resources away from business growth.
9. How can Italy finance these reforms?
By recovering lost revenue from tax evasion and fostering GDP growth.
10. What’s the risk if nothing is done?
Falling further behind in competitiveness and discouraging investment.
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