Article 49 of the Vienna Convention on consular relations, adopted in Vienna on 24 April, 1963, provides for ageneral exemption from all dues and taxes (personal or real, national, regional or municipal) due by consular officers, consular employees and members of their families, who, although fiscally resident in Italy, do not have Italian citizenship. Such exemption is limited to income earned in the performance of their duties.
This relief is also extended to the members of the service staff with regard to the wages received for their services.
The mentioned exemption is confirmed by Article 4 of Presidential Decree 601/1973, according to which income arising from the execution of the functions performed by any Ambassador and Diplomatic officer of foreign Countries accredited to Italy is exempted from the individual income tax. Such exemption applies, reciprocally, also to consuls, consular officers and employees of diplomatic and consular missions of foreign Countries, who are not Italian citizens.
There is no tax exemption, instead, on income of Ambassadors and Diplomatic officers, consuls, consular officers and consular employees of diplomatic and consular missions of foreign Countries accredited to Italyarising from “private” investments and activities (such as immovable property, participations/shares, financial investments and other investments/activities not linked to their functions, etc.), who, therefore, shall comply with the tax obligations provided for by Italian law.
Moreover, there is no tax exemption provided for remunerations received by Italian employees of diplomatic and consular missions who shall also comply with the tax obligations imposed by Italian law.
In this respect, Article 20 of the Labor Law applicable to employees of Embassies, Consulates, Legations, Cultural Institutes and International Organizations states that diplomatic representations are not required to withhold taxes on wages paid to their Italian employees. However, in order to enable employees to pay their income tax (IRPEF), the Representative Offices shall issue the employees with appropriate certification, by no later than 31st January of each year, stating the remuneration received during the previous year, net of social security contributions.
The Italian Revenue Agency decided that diplomatic missions are not prohibited from levying withholding tax on their Italian employees’ remuneration. However, according to the current practice, withholding tax is not levied on emoluments.
Consequently, Italian employees of diplomatic missions shall declare, at the moment of filing their tax returns, the total amount of the salary received.
a) Ambassadors and Diplomatic officers, Consuls, Consular officers and Consular employees of Diplomatic and Consular missions of foreign Countries accredited to Italy, although non Italian citizens, with respect to income arising from “private” investments and activities, and
b) Italian employees of Embassies, Consulates, Legations, Cultural Institutes and International Organizations in Italy, with regard to income arising from every investment/activity
shall file their tax return by 30 September of each year and shall pay income tax according to the following deadlines: the payment of the tax balance due based on the income of the previous year and the first advance payment for the current year must be made by 16 June; the second advance payment for the current year must be paid by 30 November.