Income Tax in San Marino
Corporate Income Tax
17% STANDARD CORPORATE INCOME TAX RATE (CIT)
General income tax reduced by 50% (8.5%) for the first five years of activity for newly created companies (Corporate Income Tax). The taxable income is also reduced, by 40% to 90% of net profit, up to an amount equal to the investments in capital goods Tax losses can be carried forward to offset a maximum 80% of the taxable income of the next three periods.
DEDUCTIBILITY OF COSTS (related to the business activity)
In % OF OPERATING REVENUE
· ADVERTISING COSTS, INCLUDING SPONSORSHIP COSTS UP TO 8%
· DATA PROCESSING, MARKET RESEARCH UP TO 10%
·ENTERTAINMENT EXPENSES UP TO 5%
The taxpayer can ask the Tax Office for the application of the limitations mentioned above, showing that the operations carried out correspond to an effective economic interest of the company and that they have actually been implemented.
Deduction of interest expenses
· Interest expenses on loans used to purchase capital assets are not tax deductible until the assets are used or are ready to be used.
· Interest expenses on loans from company members who are individuals are deductible on a cash basis.
CAPITAL GAINS FROM SALES OF INTERESTS
Do not constitute taxable income if:
· The equity interests are held continuously for a full 12 months before they are sold
· The equity interests are recorded as long-term investments in the first financial statements after their acquisition
Capital losses from sales of equity interests in resident or non-resident companies are non-deductible if the above two conditions are met.
· Dividends received from companies governed by the law of San Marino are not subject to CIT.
· Ninety-five per cent of dividends from foreign companies are not subject to CIT, provided that the interests have been held for at least 12 months, and are duly recorded in the accounts and in at least one set of financial statements. The holding period requirement can also be met after the dividends are distributed.
WITHOLDING TAX on outbound dividends, interest, royalties (Unless a double tax treaty (DTT) applies)
· Dividends distributed to resident and non-resident individuals are subject to the 5% withholding tax
· Profits distributed and paid to parties other than individuals are not subject to the 5% withholding tax, provided that the recipient declares to the company distributing the profits that it is not acting on behalf of an individual.
· Royalties are subject to 20% withholding tax when paid to non-resident individuals or entities.
WITHHOLDING TAX on interest (Unless a double tax treaty (DTT) applies)
· Interest paid on loans granted by foreign companies 13%
· Interest on current accounts and deposits 11%
· Interest and other financial income from “repo” transactions on securities of any type 5%
· Interest and other financial income from certificates of deposit
· 5% (if the term is less than eighteen months)
· 4% (If the term is longer than eighteen months)
Simplified Residency Application scheme for entrepreneur/managers/researchers
The Congress of State has the right to grant elective residency to the foreigner who is responsible for respecting the following commitments:
· Purchase of property worth € 500,000 or even roughly € 350,000 plus finishes for € 150,000
· First request fee of € 1,000
· One-time fee for the applicant of € 10,000
· One-time fee for each family member or resident applicant resident of € 20,000
· Non-interest-bearing deposit of € 600,000 for 10 years, for the purchase of Sammarinese government bonds
· First request fee of € 1,000
· One-time fee of € 20,000 for each family member or resident applicant resident
· 50 Maximum annual number of eligible elective residencies
RESIDENCY FOR ECONOMIC REASONS
· Recruitment from 1 to 3 of permanent workers according to the sector of activity
· Annual payment of the contribution fee for health and welfare services
· € 75,000 bank deposit subject to guarantee at the time of application
· € 75,000 bank deposit required to guarantee an additional € 75,000 within two years of obtaining the residency
· 50 Maximum number of eligible residencies per year
AUTOMATIC RESIDENCY FOR TECHNOLOGICALLY ADVANCED SECTORS
· Sector of the green economy
· Hospitality and tourism sector
· Entertainment and entertainment sector
· Business sector
· Arts and culture sector
· Traditional products with low environmental impact
· Health and pharmaceutical sector
· Sector of management, marketing, international relations, training and research
· Requirements to be met
· Recruitment of 5 full-time San Marino employees
· Purchase of a property worth € 300,000 or deposit of equal value as collateral, at the bank of
San Marino law