Verified Facts
The tax rates in Vatican City are relatively low, with a corporate tax rate of 0% for most entities, and a range of personal income tax rates from 3% to 23%, making it a unique and attractive location for individuals and businesses.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Vatican City has a territorial taxation system, where only income earned within the city-state is subject to tax. However, this applies mainly to employees of the Holy See and certain Vatican City-based entities. For most individuals, including expats, the taxation system is based on residency, where individuals who reside in Vatican City for more than 183 days in a calendar year are considered tax residents. Tax residency rules are based on the individual's physical presence in the city-state, and not on their citizenship or nationality.
The tax system in Vatican City is relatively simple, with a focus on indirect taxation, such as value-added tax (VAT) and customs duties. The city-state has a limited number of tax treaties, with only one treaty in place with Italy, which can lead to double taxation issues for individuals and businesses with connections to other countries. However, the Vatican City tax authorities may provide relief from double taxation in certain cases, based on the specific circumstances of the individual or business.
Personal Income Tax
| Income Bracket (EUR) | Tax Rate |
|---|---|
| 0 - 10,000 | 3% |
| 10,001 - 20,000 | 5% |
| 20,001 - 30,000 | 10% |
| 30,001 - 50,000 | 15% |
| 50,001 and above | 23% |
| Personal income tax rates in Vatican City are relatively low, and deductions and allowances are limited. Taxpayers are required to file a tax return annually, and must report all income earned within the city-state. Deductions are available for certain expenses, such as charitable donations and medical expenses, but these are subject to strict rules and limitations. Taxpayers must also comply with filing requirements, which include submitting a tax return and supporting documentation to the Vatican City tax authorities. |
Corporate & Business Tax
- The corporate tax rate in Vatican City is 0% for most entities, including companies and partnerships.
- Small business incentives are available, including exemptions from certain taxes and fees.
- There are no free zones in Vatican City, but certain entities may be eligible for special tax treatment.
- Registration requirements are strict, and businesses must register with the Vatican City tax authorities and obtain a tax identification number.
- Businesses must also comply with accounting and record-keeping requirements, which include maintaining accurate financial records and submitting annual financial statements.
VAT / Sales Tax
- The standard VAT rate in Vatican City is 22%, but a reduced rate of 4% applies to certain goods and services, such as food and pharmaceuticals.
- Exemptions from VAT are available for certain entities, including charitable organizations and certain government agencies.
- Tourist refund schemes are available for non-resident visitors, who can claim a refund of VAT paid on certain purchases.
- VAT registration is required for businesses that exceed a certain threshold of annual turnover.
For Expats & Foreign Workers
- Tax residency rules are based on physical presence in Vatican City, and expats who reside in the city-state for more than 183 days in a calendar year are considered tax residents.
- Double taxation treaties are limited, but the Vatican City tax authorities may provide relief from double taxation in certain cases.
- Social security contributions are required for employees, and expats may be eligible for certain benefits, such as health insurance.
- Remittance rules apply to expats who receive income from outside Vatican City, and may be subject to tax withholding.
- Expats must comply with filing requirements, which include submitting a tax return and supporting documentation to the Vatican City tax authorities.
- Expats may also be eligible for certain tax credits, which can reduce their tax liability.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to tax in Vatican City, and is included in the individual's taxable income.
- Cryptocurrency is not specifically regulated in Vatican City, but may be subject to tax as a form of investment income.
- Capital gains tax is included in the individual's taxable income, and is subject to the same tax rates as other income.
- Tax withholding may apply to certain types of investment income, such as dividends and interest, and expats may be eligible for certain tax credits to reduce their tax liability.