Employers have significant responsibilities when it comes to social security contributions. These include contributions towards pensions (Old Age, Invalidity, Survivors), healthcare, family allowances, unemployment insurance, and work-related injury insurance. The rates for each social security category vary, and contributions are typically paid on a monthly basis.

Payroll Tax

In San Marino, there isn't a traditional payroll tax system where employers withhold income tax from employees' salaries. Instead, income tax for individuals is calculated on an annual basis. However, employers are required to withhold a 13% tax for certain foreign workers who do not have a residency permit in San Marino.

Additional Employer Contributions

Employers also have additional contribution responsibilities. These include contributions to the Employee Severance Fund (TFR), which provides a financial cushion for employees at the end of their employment. The rate for this varies based on the sector and the size of the company. Employers are also required to make a small contribution to a general training fund, known as FondISS.

In San Marino, the employee tax system is primarily based on social security contributions rather than traditional income tax deductions.

Social Security Contributions

Employees in San Marino contribute a portion of their salary towards social security. The employee contribution rate is currently at 8.3%, which is withheld directly by the employer.

It's important to note that there is no separate payroll tax in San Marino. The social security contributions mentioned above serve as the primary tax deduction for employees.

Additional Considerations

Social security contributions in San Marino fund various social programs like pensions, unemployment benefits, and healthcare. These contribution rates are subject to change, so it's advisable to consult with a qualified tax professional for the latest information.

San Marino employs a unique tax system on imports known as the "Imposta Generale sulla Prestazione dei Servizi" (IGPS), often referred to as the monophase tax. This tax is applied once on the import of goods and services into San Marino, serving a similar purpose to VAT in neighboring countries.

IGPS Rates

The standard IGPS rate is 17%. However, reduced rates exist for specific goods and services.

Exemptions

Certain services may be exempt from IGPS, including Financial Services, Healthcare, and Education.

Filing Procedures

Businesses may need to register for IGPS with the Tax Office if their activities involve the import of goods and services. The filing frequency varies based on the nature and revenue of the business. For tax forms, payment instructions, and deadlines, it's advisable to contact the Tax Office.

San Marino provides a variety of tax incentives to attract new businesses and stimulate economic growth. These incentives can significantly lessen your tax burden, making San Marino an appealing location for both startups and established companies.

Reduced Corporate Tax Rate for New Businesses

This incentive is a reduced tax rate. To qualify, a company must be newly established with shareholders who haven't conducted a similar business in San Marino in the previous year. The company must hire a minimum of one full-time employee within 6 months and an additional employee within 24 months of obtaining the business license.

The benefits include a lower corporate tax rate of 8.5% on profits for the first 7 years of operation. This is a significant reduction from the standard rate of 17%. The company also gets an exemption from business license fees for the first 4 years of operation.

To apply, contact the San Marino Chamber of Commerce (CCISM) for details and guidance on the application process. They can provide information on the required documentation and procedures.

Tax Credit for Companies Hiring New Employees

This incentive is a tax credit. To qualify, an existing company must hire at least one additional employee. At least 50% of the employees must be San Marino residents.

The amount of tax credit depends on the company's size and whether the hired employee is considered disadvantaged. Companies with an average of 5 or more employees get 5% of corporate tax per new hire. Companies with less than 5 employees get 10% of corporate tax per new hire. An additional 5% credit applies if the new hire is disadvantaged. The total tax credit cannot exceed 25% or 40% of the company's total tax liability.

Specific details on the application process for the tax credit are not readily available online. It's recommended to consult with a San Marino tax advisor for guidance on claiming this incentive.

Additional Considerations

While these are the main tax incentives offered by San Marino, there are other benefits to explore. These include tax deductions for capital goods or real estate investments and a special tax regime for highly innovative startups with a progressive tax rate starting from 0%.