San MarinoTax Obligations Detailed

In San Marino, employers navigate various tax obligations and contributions related to social security, specific foreign worker withholdings, and other levies.

Employer Obligations

• Social Security Contributions: Employers contribute to various social security programs covering pensions (old age, invalidity, and survivors), healthcare, family allowances, unemployment insurance, and work-related injury insurance. These contributions are typically made monthly, and the rates vary for each category. As of 2025, the combined employer social security contribution is 27.4%. Additionally, employers contribute 8.4% to the Social Security Institute (ISS).
• Employee Severance Fund (TFR): Employers contribute to the TFR, which provides a lump sum payment to employees upon termination of employment. The contribution rate for TFR varies based on the sector and company size.
• FondISS (Training Fund): Employers make a small contribution to FondISS, a general training fund.
• Withholding Tax for Foreign Workers: A 13% tax is withheld from the salaries of certain foreign workers without San Marino residency permits. This withholding does not apply to all foreign workers, and the specific criteria should be confirmed with a tax professional.

Employee Deductions

• Social Security Contributions: Employees contribute 8.3% of their salary towards social security. This contribution is withheld by the employer.
• Income Tax: San Marino does not operate a traditional payroll tax system. Instead, individual income tax is calculated annually based on a progressive scale, ranging from 9% for incomes under €10,000 to 35% for incomes exceeding €80,000. Employees do not have income tax deducted directly from their salaries.

Corporate Taxes

• General Income Tax (IGR): Companies in San Marino are subject to a 17% corporate income tax on net revenues. Newly established companies might be eligible for a reduced rate of 8.5% for the first five years of activity under certain conditions, like hiring at least one employee within the first six months and a second within 24. An additional 5% withholding tax applies to revenues distributed to individuals, which can be deductible in some situations, depending on relevant double taxation treaties, such as the one with Italy.
• Tax Filing and Deadlines: Corporate tax returns and indirect tax declarations are due by June 30th of the following year. Financial statements and budgets must be approved by the annual general meeting of shareholders by May 31st.

Additional Information

• Minimum Wage: San Marino does not have a statutory minimum wage.
• Payroll Cycle: The typical payroll cycle in San Marino is monthly. Salaries are typically paid by the last working day of the month.

Please note that this information is current as of February 5, 2025, and might change due to legislative updates. It is crucial to consult with a tax advisor for the latest regulations and personalized guidance.

In San Marino, both employers and employees have specific tax obligations and deductions governed by the national legislation.

Employer Tax Obligations and Deductions

• Corporate Income Tax (CIT): The standard CIT rate is 17%. New companies may qualify for a reduced rate of 8.5% for the first five years under certain conditions, such as hiring a minimum number of employees within specified timeframes.
• Social Security Contributions: Employers contribute a percentage of employee salaries towards social security, covering areas like pensions, healthcare, and family benefits. These rates may vary based on the employee’s job function.
• Payroll Tax: Employers withhold income tax and social security contributions from employee salaries each month.
• Tax Credits: Incentives like tax credits are available for employers who invest in employee training programs, research and development, or hire employees from disadvantaged groups.

Employee Tax Obligations and Deductions

• Income Tax (IGR): Individual income tax in San Marino is progressive, with rates ranging from 9% to 35% based on income brackets. The tax rates and brackets as of today are as follows:
  • Up to €10,000: 9%
  • €10,001 - €18,000: 13%
  • €18,001 - €28,000: 17%
  • €28,001 - €38,000: 21%
  • €38,001 - €50,000: 25%
  • €50,001 - €65,000: 28%
  • €65,001 - €80,000: 31%
  • Over €80,000: 35%
• Social Security Contributions: Employees also contribute a portion of their salary towards social security.
• Fondiss: Employees contribute 2% of their salary to Fondiss, a supplementary pension fund.
• Trade Union Contributions: A small percentage of an employee's income is deducted for trade union fees.

General Tax Information

• Tax Year: The tax year in San Marino aligns with the calendar year, starting January 1st and ending December 31st.
• Tax Returns: Tax returns are typically due annually, with the specific due dates specified by the tax authority's guidance.
• Tax Incentives: San Marino offers various tax incentives to attract businesses and investments, including tax exemptions for startups and reduced tax rates for certain industries. Additional incentives exist for businesses hiring employees, investing in specific projects, or conducting research and development. Always verify current regulations with the relevant authorities for the most up-to-date information.

Note: This information is current as of February 5, 2025, and may be subject to change. Consulting with a tax advisor is recommended for personalized guidance.

San Marino uses a single-stage import tax system instead of a traditional VAT/GST.

Import Tax

San Marino levies a single-stage tax, often referred to as import tax, on goods and related services imported into the country. The standard rate for this tax is currently 17%. Certain goods may be subject to different rates, such as raw materials potentially qualifying for reduced rates, while some goods and services may be exempt altogether.

Registration

All businesses operating in San Marino, regardless of size or revenue, must register as "economic operators."

Invoicing

Businesses are required to issue invoices for all transactions. While electronic invoicing is not mandatory for domestic transactions, it is required for transactions between Italian businesses and San Marino businesses as of July 1, 2022. These e-invoices must be submitted via the Italian SDI platform.

Filing and Payment

Import tax is paid after submitting purchase invoices to the Tax Authority following the importation of goods. Payment is due upon receiving a payment notice from the Tax Authority. The deadline for filing the annual import tax return is June 30th of the following year. Service tax, a separate tax on certain services, is paid twice a year, in January and July, for invoices or payments received in the prior six-month period. The annual service tax declaration is due with the annual income tax return, typically on June 30th.

Exempt Goods and Services

Certain goods and services are exempt from import tax. While specifics can vary and may require consultation with local experts, examples include raw materials used in manufacturing, and some financial services. Additionally, services provided by the state and government entities are generally exempt from San Marino's service tax.

Other Relevant Taxes

In addition to the import tax, businesses in San Marino are subject to other taxes, including corporate income tax (currently 17%), a general income tax for individuals with progressive rates, withholding tax on dividends for individual shareholders (5%), and social security contributions.

Tax Incentives

San Marino offers various tax incentives, notably for startups. These incentives include tax exemptions and deductions for investments in qualifying startups.

San Marino offers various tax incentives for businesses and individuals.

Corporate Tax Incentives

• New Businesses: New companies benefit from a 50% reduction in the standard 17% corporate income tax for the first five years, resulting in an effective tax rate of 8.5%. They also receive a four-year exemption from tax license fees if they hire their first employee within six months and a second within 24 months. Additional tax credits are available for employee training, technological innovation, and business development programs.
• Startups (High-Tech and Innovative): These startups enjoy a full income tax exemption for the initial three years. Following this period, they pay 4% for the next four years and 8% for the five years after that.
• Maritime Companies: New maritime companies receive an 80% reduction on the standard 17% income tax for ten years, effectively lowering the rate to 3.4%.
• Capital Gains Exemption: Companies holding qualifying shares for at least 12 months and reporting them as financial fixed assets since acquisition are exempt from capital gains tax.
• Loss Offset: Businesses can offset up to 80% of their losses against taxable income for three years.
• Reinvestment Incentive: Profits reinvested in fixed assets and capital goods for technological upgrades, real estate improvements, energy efficiency, or environmental protection are exempt from taxation for five years.
• Share Capital Increase: Companies increasing their share capital benefit from a tax exemption equal to 10% of the added amount.
• Dividend Withholding: Dividends paid to legal entity shareholders are tax-free. Individual shareholders are subject to a 5% withholding tax. Incoming dividends to Sammarinese holding companies (holding shares for at least 12 months) from Double Tax Agreement countries are taxed on only 5% of the dividends received, after any applicable foreign withholding tax. Outgoing dividends from Sammarinese subsidiaries to foreign holding companies are not subject to withholding tax.
• Investment Funds: Investment funds are exempt from income tax on their profits. Fund management companies, however, are subject to a special 12% flat tax on earnings.

Individual Tax Incentives

• Progressive Tax Rates: Individuals are subject to progressive income tax rates, ranging from 9% for income under €10,000 to 35% for income exceeding €80,000.
• Retiree Residency: Foreign retirees in the private sector with an annual income of at least €50,000 (gross) or movable assets of at least €300,000 can qualify for a special tax regime with a 6% tax rate on their pension income. This rate is applicable for ten years and may be renewable. For retirees who have been executives or officials of an international body and have an annual income of at least €100,000, a reduced tax rate of 3% applies. (Note: These income requirements increased as of the 2025 tax year).

General Tax Information

• San Marino does not have a Value Added Tax (VAT) system. Instead, it uses a single-phase tax applied to imports.
• The country actively works toward harmonizing its tax laws with EU and international standards.

It is important to consult with a tax advisor for the most current information and personalized guidance. Tax laws and regulations can be complex and are subject to change. This information is current as of February 5, 2025, and may not reflect future updates or amendments.