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Taxation

The corporate profits tax rate in San Marino is 8.5%. Capital gains are also subject to an 8.5% tax, and interest from bank deposits is subject to an 11% tax. Several benefits apply to new businesses, which can strongly reduce the amount of taxes to be paid.

The personal income tax (IGR, Italian: Imposta Generale sui Redditi) was introduced in 1984 and it was heavily reformed in 2013 with the goal of increasing fiscal revenue. The nominal tax rate ranges from 9% for an annual revenue below €10,000 to 35% for revenues above €80,000.

In 1972, a value-added tax (VAT) system was introduced in Italy, and an equivalent tax was introduced also in San Marino, in accordance with the 1939 friendship treaty. However, this tax is not a standard value-added tax, but rather it is an import tax, thus, it is levied only on imported goods and raw resources. For this reason it is locally best known as single stage tax (Italian: imposta monofase), as it is only applied one time during importation, while VAT is applied at every exchange. Furthermore, while VAT also applies to services, the import tax only applies on physical goods. Another important difference is that while VAT is computed on the final price paid by the consumer, the import tax is levied on the importation cost paid by the company, which is generally much lower.

Under the European Union customs agreement, San Marino import tax is considered equivalent to the European VAT system. A separate tax on services, with a rate of 3%, has been introduced in 2011. The introduction of a true VAT system, not dissimilar from the European one, is under development.

Because San Marino's tax rate is lower than surrounding Italy's, many businesses choose to be based in San Marino to avoid the higher rates. San Marino boasts a corporate rate 14.5% lower than Italy (23%) and 12.5% lower than the EU average (21.3%). This has made San Marino the tax haven of choice for many wealthy Italians and businesses.