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TRAVEL NEWS

What does Italy’s new flight price cap mean for passengers?

Airlines reacted angrily this week to news that the Italian government plans to cap the cost of flights, particularly to the islands of Sicily and Sardinia - but can they really do this and what impact will it have on prices?

Airline strike in Italy
Photo by Alberto PIZZOLI / AFP

Italy’s government approved a decree on Monday which, among other things, aims to clamp down on the use of algorithms to set flight prices which ministers say are unfairly high.

The move came after accusations that airlines’ use of algorithms was behind the particularly high cost of flights connecting the mainland to the islands of Sicily and Sardinia during peak travel periods.

READ ALSO: Costly flights, few trains: What’s travel like between Sicily and mainland Italy?

With few realistic alternatives to flying, ministers say inflated costs have left Italians who are originally from Sicily and Sardinia but live elsewhere out of pocket when visiting relatives in their home cities.

Italy’s business minister, Adolfo Urso, on Monday hailed the law as “the end of the algorithms used by carriers to determine the price of tickets”.

But critics of the new decree say it won’t make any real difference, while others suggest the decree is likely to be watered down before – or if – it ever becomes law.

The decree text says that airlines’ use of so-called dynamic pricing systems must not result in ticket prices that are “200 percent higher than the average flight fare”

The rule applies on “domestic routes connecting with the islands” and “during periods of peak demand linked to seasonality, or in conjunction with a national state of emergency”, the decree text states.

In addition, it bars airlines from using web profiling tools to determine that it should charge some customers higher prices than others, saying this is “considered an unfair commercial practice”.

Airlines reacted furiously to the decree’s approval this week, with Ryanair CEO Eddie Wilson on Wednesday calling it “ridiculous” and “illegal”.

He said in an interview with news agency Ansa that the attempt to regulate airlines’ use of algorithms went against EU free market laws and must be scrapped.

“If it isn’t, there will be an impact on Ryanair’s ability to operate in Italy,” he warned.

Wilson also said that an accusation by Sicily’s regional governor, Renato Schifani, that Ryanair was involved in a ”price cartel” with other airlines was “nothing but rubbish”.

Wilson had earlier on Wednesday met with business minister Urso, who told Ansa he was “willing to meet other companies to see whether the measure can be improved during its conversion into law in parliament.”

Italy’s parliament now has two months to convert the decree into law, during which time it can undergo significant changes.

But the head of Italy’s national consumers’ union, Massimiliano Dona, on Wednesday told media the decree “wouldn’t make any difference”, adding that the government was just blowing “smoke in the eyes of citizens”.

If it became law, he said, the price cap would only apply in the case of “exceptionally expensive” tickets, and it could also become “an incentive to raise prices“.

Italy’s competition watchdog last year launched an investigation into claims that airlines had deliberately raised fares on routes linking mainland Italy with Sicily during the Christmas holidays.

The investigation involved Ryanair, Wizzair, easyJet and ITA Airways, the state-owned successor of former flag carrier Alitalia.

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For members

TAXES

How much should you pay your Italian accountant to do your taxes?

Italian taxes are notoriously difficult to navigate and even trickier to deal with yourself, meaning you may want to turn to a 'commercialista' for help. But how much should you pay for their services?

How much should you pay your Italian accountant to do your taxes?

If you ask someone in Italy who a commercialista is, you may get several different answers: accountant, consultant, financial advisor or administrator.

In fact, they can be all of these at once as, along with the patronati, they’re residents’ first port of call when dealing with the complex bureaucratic processes surrounding almost anything official in the country.

Commercialisti are also the people who can file and submit your yearly tax returns for you. 

If you live in Italy or generate income in the country, you’ll likely need to file your taxes once a year during the so-called dichiarazione dei redditi (‘income declaration’). 

Unlike in other European countries, where it’s fairly easy for taxpayers to file tax returns independently, doing this can be very tricky in Italy, not least because of the complicated language being used

And mistakes can cost you dearly as the Italian taxman could charge you hundreds or even thousands of euros if you submit late, forget some details or enter the wrong information.

That’s why many around Italy choose to hire a commercialista. But how much should you pay for their services?

Overview

Commercialista fees can vary greatly depending on the type of services you need and the complexity of your financial situation.

If you’re an employee with a single source of income and are seeking help with filing taxes, or claiming tax deductions or incentives, fees will be on the low end of the spectrum. 

But if you have multiple sources of income, or have foreign income or assets and are subject to taxation in multiple countries, the commercialista will need expertise in international tax law, which may significantly raise costs.

READ ALSO: The Italian tax calendar for 2024: Which taxes are due when?

If you are a freelancer or the owner of a small business, you may need monthly consulting and regular services such as bookkeeping and VAT reporting. In this case, services may be bundled in an annual package. 

Finally, if you own a large business or corporation, you may need to hire more than one commercialista to deal with payroll management, VAT declarations, and corporate tax filings. 

Please note that the cost of a commercialista can also vary by region as prices tend to be higher in large metropolitan areas such as Milan or Rome, while you may find particularly advantageous rates in small towns and less populated areas around the country. 

Annual tax returns

According to financial advice platform Fiscozen, income tax filing services generally start at €120 but can rise to over €700 depending on your personal situation.

Generally speaking, tax filing fees are higher if you’re a VAT number holder (or partita Iva) as this entails more work on the part of the commercialista (think of all the invoices issued and claimable VAT detractions) compared to an employed individual or pensioner.

Paying taxes

Most types of taxes in Italy (from income to property taxes to waste collection charges) must be paid by completing and submitting form F24 (modello F24) with Italy’s tax office.  

A commercialista can do this for you, with services costing between €15 and €30 per form, according to online investment advisor Moneyfarm. 

Registering a new business

Freelancers and business owners in Italy are required to register with Italy’s tax office by getting a VAT number (known as partita Iva). 

If you’re starting out as a freelancer, hiring a commercialista to get your personal VAT number and set up an electronic invoicing system on your behalf will cost you €150 on average, according to Fiscozen.

Fees will be higher if you’re starting a new business as this generally involves more paperwork and compliance with a number of tax requirements. 

In this case, a commercialista’s services may cost anything between €300 and €500, though you’ll also have to factor in the payment of a number of taxes (including up to €200 for the Certified Start of Business Report, or SCIA). 

‘Year-long administration’

As mentioned earlier, if you are a freelancer or a business owner, you may need monthly consulting services, as well as regular bookkeeping, VAT reporting and – if you have employees – payroll management. 

In this case, commercialista services may be bundled in a gestione annuale (‘year-long administration’) package. 

According to Fiscozen, a 12-month package for freelancers operating under Italy’s flat tax scheme costs €60 a month on average (€720 a year). 

But costs can be much higher for freelancers working under the so-called regime ordinario (‘ordinary regime’) and business owners. 

In this case, you may pay anything from €2,000 to €4,000 a year depending on: number of clients, business size and number of employees (if applicable).

How can I find a commercialista?

All commercialisti in Italy must be registered with national association CNCDEC (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). 

The association’s website gives you the option to look for registered professionals in your area (see an example via the screen grab below).

A screen grab of the search tool on Italy's national 'commercialisti' association's website

A screen grab of the search tool on Italy’s national ‘commercialisti’ association’s website. Source: Consiglio Nazionale dei Commercialisti

As with most things in Italy however, word of mouth is key, so make sure to ask friends and family for recommendations if you can.

Alternatively, online forums and message boards for foreign nationals in Italy often share names of professionals that are particularly experienced in international tax law.

Finally, you can also find a list of commercialisti working in your area in Italy’s pagine gialle (Yellow Pages). 

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