Living in Italy

Taxes in Italy for Expats and Foreign Residents

Moving to Italy changes more than your address. It may also change where you are considered tax resident, which income you must declare and how your overseas investments, pensions and property are treated.

The most important distinction is not nationality but tax residence. An American, British, Canadian or Australian citizen living in Italy may become liable for Italian tax on worldwide income, while a foreign citizen who remains non-resident normally pays Italian tax only on income arising in Italy.

This guide explains the principal rules expats and foreign residents should understand before moving, working, retiring or investing in Italy.

This article provides general information and does not replace personalized advice from a qualified Italian commercialista or international tax adviser.

Are You Tax Resident in Italy?

Under Italian domestic law, an individual is generally considered tax resident when, for most of the tax year—including fractions of days—at least one of the following conditions applies:

The person is registered as resident in an Italian municipality
The person has their habitual residence in Italy
Italy is the principal location of their personal and family relationships
The person is physically present in Italy

Because the Italian tax year follows the calendar year, the timing of a move can have significant consequences.

The familiar “183-day rule” is useful as a starting point, but it should not be treated as the only test. Registration, physical presence, habitual residence and the center of personal relationships can all matter.

A person registered in Italy for most of the year is presumed to be tax resident unless the contrary can be demonstrated. Conversely, failing to register does not necessarily prevent Italy from treating someone as resident when the facts show that they live there.

Anyone organizing an international move should review these issues alongside the practical steps covered in Italia Mia’s guide to moving to Italy as an expat.

Tax Residents and Non-Residents

The difference between resident and non-resident taxation is fundamental.

Italian tax residents

Italian tax residents are generally taxed on their worldwide income. This may include:

Italian and foreign employment income
Self-employment and business income
Italian and overseas pensions
Rental income from properties in Italy or abroad
Dividends and interest
Capital gains
Income from foreign companies, trusts or partnerships
Certain cryptocurrency income and gains

Foreign financial accounts, investments and property may also have to be reported even when they produce little or no taxable income.

Non-residents

People who are not Italian tax residents are normally taxed only on income considered to arise in Italy.

Examples include:

Salary for work physically performed in Italy
Income from an Italian business or professional activity
Rent from Italian property
Certain Italian pensions
Capital gains connected with taxable Italian assets

The applicable tax treaty may modify these rules or assign taxing rights between Italy and the taxpayer’s country of residence.

Italian Income Tax: IRPEF

Italy’s national personal income tax is called IRPEF, or Imposta sul Reddito delle Persone Fisiche.

For the 2026 tax year, the principal national brackets are:

Taxable income	National IRPEF rate
Up to €28,000	23%
€28,001–€50,000	33%
Over €50,000	43%

These are marginal rates. Moving into a higher bracket does not mean that all income is taxed at the higher percentage. Only the portion falling within that bracket is subject to the corresponding rate.

Taxpayers may also owe:

Regional IRPEF surcharge, which varies by region
Municipal IRPEF surcharge, which varies by municipality
Social-security contributions, where applicable

The amount actually payable depends on deductions, tax credits, family circumstances and the type of income received. Gross salary should therefore never be confused with net take-home pay.

If you are evaluating employment opportunities, Italia Mia’s guide to finding a job in Italy provides additional context on salaries and working conditions.

Employment Income

Employees working in Italy usually have income tax and social-security contributions withheld through payroll.

Employers commonly deduct:

National IRPEF
Regional and municipal surcharges
Employee social-security contributions
Adjustments resulting from available tax credits

Many employees can use the simplified Modello 730 tax return. This can allow additional tax due or a refund to be processed through payroll or a pension provider.

Foreign employees should check whether they also receive compensation outside Italy, stock options, restricted shares, foreign bonuses or employer-funded benefits. These items may require separate Italian reporting even when the Italian payroll appears complete.

Self-Employment and Freelancing

Freelancers and independent professionals normally need a partita IVA, Italy’s VAT and business tax identification number.

Depending on income, profession and other eligibility conditions, a self-employed person may use either:

The ordinary accounting and tax system
The simplified regime forfettario

The forfettario regime can apply to qualifying small businesses and professionals within the statutory revenue limit. It uses a substitute tax—normally 15%, potentially reduced to 5% for qualifying new activities—on income calculated using a profitability coefficient rather than ordinary itemized expenses.

The headline rate does not include every cost. Social-security contributions may still be substantial, and not every foreign resident or business structure qualifies. The regime should be reviewed before opening a partita IVA, not after invoices have already been issued.

Social-Security Contributions

Income tax and social security are separate obligations.

Employees usually contribute through payroll to INPS or, for certain professions, another pension fund. Self-employed workers may pay into:

INPS Gestione Separata
An artisans’ or merchants’ INPS scheme
A professional pension fund associated with a regulated profession

Contributions can represent a significant part of the total cost of working in Italy.

EU social-security coordination rules and bilateral agreements may prevent workers from contributing in two countries simultaneously. International assignments should be supported by the appropriate certificate of coverage where applicable.

Foreign Pensions

Italian tax residents generally declare foreign pensions in Italy unless a tax treaty assigns exclusive taxing rights elsewhere.

Treatment depends on:

Whether the pension is private or public-sector
The country paying it
The taxpayer’s nationality
The wording of the applicable tax treaty
Whether the pension has already been taxed abroad

Government-service pensions often follow different treaty rules from private pensions. A pension that is tax-free in its country of origin is not automatically tax-free in Italy.

The 7% Tax Regime for Foreign Pensioners

Italy offers a special regime for certain people receiving a foreign pension who transfer their tax residence to an eligible municipality in southern Italy.

Qualifying taxpayers may elect to pay a 7% substitute tax on foreign-source income. The election can generally apply for up to ten tax years.

The regime is subject to detailed requirements, including:

Receipt of a qualifying foreign pension
Previous tax residence outside Italy for the required period
Transfer from a country with qualifying administrative cooperation
Residence in an eligible municipality
Compliance with the election and annual filing rules

Eligible locations are generally found in specified regions of southern Italy and are subject to population and, in some cases, earthquake-zone requirements.

This regime can be attractive, but it should not be chosen solely on the basis of the 7% rate. The taxpayer should first compare ordinary Italian taxation, foreign tax credits, healthcare costs, estate planning and the tax treatment of each pension and investment.

The Impatriate Workers Regime

A separate incentive may be available to qualifying employees and self-employed professionals who move to Italy for work.

Under the regime applying to eligible relocations from 2024 onward, only 50% of qualifying Italian employment or professional income may be included in taxable income, subject to an annual income ceiling of €600,000.

The taxable portion can be reduced to 40% in certain circumstances involving a minor child.

Important conditions include:

The worker must not have been Italian tax resident during the required preceding years
The person must commit to remaining tax resident in Italy for at least four years
The work must be performed mainly in Italy
Professional qualification or specialization requirements must be satisfied
Longer periods of previous foreign residence may be required when continuing to work for the same employer or corporate group

The benefit generally lasts five tax years. Unlike the older regime, the current rules are more restrictive and should be checked carefully before the move takes place.

The Flat Tax for High-Net-Worth New Residents

Italy also offers an elective regime for individuals who transfer their tax residence to Italy after having been non-resident for at least nine of the previous ten tax years.

For new qualifying residents entering the regime under the rules effective in 2026, the annual substitute tax on foreign-source income is €300,000 for the principal taxpayer. Qualifying family members may generally be included for €50,000 each per year.

The election can remain in effect for up to 15 tax years.

Italian-source income remains subject to ordinary Italian taxation. The regime may also provide relief from certain foreign-asset reporting and wealth-tax obligations for covered assets, although exclusions and special rules apply.

The taxpayer can exclude selected countries from the election through a “country-by-country” exclusion. Income from an excluded country is then taxed under the ordinary rules, potentially allowing foreign tax credits.

This regime is designed for people with substantial foreign income. It is rarely economical for an ordinary salaried worker or retiree and requires careful advance planning.

Foreign Bank Accounts and Investments

Italian tax residents may be required to report foreign investments and financial assets through Quadro RW of the Italian tax return or the corresponding section of Modello 730.

Reportable assets can include:

Foreign bank and savings accounts
Brokerage and investment accounts
Shares and bonds held abroad
Interests in foreign companies
Foreign pension or insurance products in certain circumstances
Overseas real estate
Precious metals held abroad
Cryptocurrency and other qualifying digital assets

Reporting may be required even if the asset produced no income and even if the money was earned before moving to Italy.

Penalties for incomplete foreign-asset reporting can be significant, particularly when assets are located in jurisdictions with special monitoring rules.

IVAFE and IVIE

Foreign assets may also be subject to Italian wealth-style taxes.

IVAFE

IVAFE applies to certain foreign financial assets held by Italian residents.

Foreign bank accounts are generally subject to a fixed annual charge when the relevant conditions and average balance thresholds are met. Other foreign financial investments are commonly taxed as a percentage of their value.

IVIE

IVIE applies to real estate situated outside Italy and held by Italian tax residents.

The taxable value and available credits depend partly on where the property is located. Foreign property taxes paid in the country where the property is situated may sometimes be credited against IVIE.

Owning a holiday home abroad can therefore generate both reporting obligations and Italian tax, even when the property is not rented.

Dividends, Interest and Capital Gains

Many forms of investment income received by individuals outside a business activity are subject to a 26% substitute tax.

This commonly includes:

Dividends
Interest from many financial products
Capital gains from shares and securities
Certain investment-fund distributions

Important exceptions exist. Italian government bonds and certain qualifying government securities can benefit from a lower 12.5% rate.

Foreign investment income may not be taxed automatically at source in Italy. The taxpayer may need to calculate and report it through the annual return.

Foreign funds, retirement accounts and tax-advantaged savings plans do not necessarily retain the same tax treatment they receive in their home country. An account described as “tax-free” in another jurisdiction may still be taxable or reportable in Italy.

Cryptocurrency

Italian tax rules specifically cover crypto-assets.

Italian residents may have obligations involving:

Reporting of crypto-assets
Taxation of qualifying capital gains
Payment of the applicable tax on the value of crypto-assets
Documentation of acquisition costs and transactions

The treatment can differ depending on the type of token, transaction and custody arrangement. Anyone with frequent transactions, staking income, decentralized-finance activity or crypto held across multiple exchanges should keep complete records rather than relying only on year-end account balances.

Rental Income and Property Taxes

Rental income from Italian property must normally be declared in Italy, even when the owner lives abroad.

Residential landlords may, when eligible, choose the cedolare secca, a substitute tax that can replace ordinary IRPEF and certain registration and stamp taxes.

Rates and conditions vary according to the contract. Long-term residential leases and agreed-rent contracts can receive different treatment. Short-term rentals are subject to their own rules, including a 26% rate in many cases and limited access to the 21% rate for one selected property where the statutory conditions are satisfied.

Property owners may also encounter:

IMU, the municipal property tax
TARI, the local waste charge
Registration tax and stamp duty
Tax on capital gains when property is sold in certain circumstances
Reporting and tax obligations in their country of residence if they are not resident in Italy

A principal residence is often exempt from IMU unless it falls within certain luxury cadastral categories. Second homes and investment properties are generally taxable, with rates determined locally.

Double-Taxation Treaties and Foreign Tax Credits

Italy has tax treaties with many countries. These agreements help determine:

Where a person is considered treaty-resident
Which country may tax employment income
How pensions are treated
Whether rental income is taxable in both countries
Maximum withholding rates on dividends and interest
How double taxation is relieved

Tax treaties do not normally mean that income can simply be omitted from the Italian return. In many cases, Italy taxes the income and grants a credit for qualifying tax paid abroad.

The credit is subject to limitations and documentation requirements. Differences between the Italian and foreign tax years can also complicate the calculation.

Special Considerations for US Citizens

US citizens and green-card holders generally continue to have US federal tax-filing obligations while living in Italy because the United States taxes them based on citizenship or immigration status, not only residence.

An American resident in Italy may therefore need to file:

An Italian income-tax return
A US federal income-tax return
FBAR reports for qualifying foreign financial accounts
Form 8938 or other international information returns when applicable

The US–Italy tax treaty, foreign tax credits and, in appropriate cases, the Foreign Earned Income Exclusion can reduce double taxation. However, they do not automatically eliminate filing requirements.

American owners of foreign companies, partnerships, trusts and certain investment funds face particularly complex rules. Many non-US investment funds can be treated as Passive Foreign Investment Companies under US law, creating burdensome reporting and potentially unfavorable taxation.

US citizens should ideally obtain advice from someone who understands both Italian and American taxation.

Inheritance and Gift Tax

Becoming resident in Italy can also affect estate planning.

Italian inheritance and gift tax depends on the relationship between the donor or deceased person and the beneficiary. Allowances and rates differ for:

Spouses and direct descendants
Siblings
Other relatives
Unrelated beneficiaries
Beneficiaries with qualifying disabilities

Tax residence, the location of assets, nationality and international succession rules can all influence the final result. People with property, trusts, businesses or heirs in more than one country should review their wills and estate plans after relocating.

Filing an Italian Tax Return

The two principal individual returns are:

Modello 730, commonly used by employees and pensioners
Modello Redditi Persone Fisiche, used for more complex circumstances and by taxpayers who cannot use the 730

The tax year is the calendar year.

The ordinary deadline for filing Modello 730 is generally September 30 of the following year. Modello Redditi PF generally has a later electronic filing deadline. Exact deadlines should always be confirmed for the relevant filing season because extensions and procedural changes can occur.

Even when an employer has withheld tax, a return may still be necessary if the taxpayer has:

Foreign income
Overseas bank or investment accounts
Foreign property
Multiple employers
Rental income
Capital gains
Self-employment income
Tax credits or deductions to claim

Taxes are generally paid using the F24 payment form. Advance payments may also be required based on the previous year’s liability.

The Codice Fiscale

The codice fiscale is Italy’s personal tax identification code. It is needed for many everyday activities, including:

Employment
Filing tax returns
Opening many bank accounts
Signing property and rental contracts
Registering for healthcare
Purchasing property
Dealing with public authorities

Having a codice fiscale does not by itself make someone tax resident. Similarly, obtaining a residence permit or owning an Italian home does not automatically settle every question of tax residence.

Tax Deductions and Credits

Depending on individual circumstances, taxpayers may be able to claim deductions or credits for expenses such as:

Certain medical costs
Mortgage interest on a qualifying principal residence
Education expenses
Social-security contributions
Some insurance premiums
Renovation and energy-efficiency work
Contributions to qualifying charities
Dependent family members

Rules, limits and payment-traceability requirements differ by expense. Receipts, invoices, bank-transfer records and medical documentation should be retained.

Common Tax Mistakes Made by Expats

Assuming the 183-day rule is the only test

Tax residence depends on several factors. Registration, habitual residence, personal relationships and physical presence may all be relevant.

Declaring only Italian income

Italian tax residents generally report worldwide income, not merely amounts transferred to an Italian bank.

Ignoring foreign accounts

Overseas accounts and investments can trigger reporting and wealth-tax obligations even when no money is brought into Italy.

Assuming a foreign tax-free account is also tax-free in Italy

The Italian tax treatment may differ entirely from that of the account’s country of origin.

Believing that a tax treaty removes the obligation to file

A treaty may provide a credit or allocate taxing rights, but reporting can still be required.

Waiting until after the move to obtain advice

The timing of a relocation, sale, pension withdrawal, dividend or capital gain can materially alter the tax result.

Choosing a special regime without comparing the alternatives

The 7% pension regime, impatriate regime and new-resident flat tax are designed for different taxpayers. The lowest advertised percentage is not always the best overall choice.

A Practical Tax Checklist Before Moving

Before establishing residence in Italy:

Identify your likely date of Italian tax residence.
List every source of income in every country.
Record all bank, investment, pension, crypto and property assets.
Review the tax treaty between Italy and your current country.
Calculate the likely effect of Italian taxation on investments and pensions.
Check eligibility for any special tax regime before moving.
Review company, trust and partnership interests.
Consider realizing gains or restructuring investments before residence changes, but only after professional advice.
Obtain a codice fiscale.
Find an Italian commercialista experienced in international taxation.
Keep evidence of foreign taxes paid.
Review wills, inheritance planning and property ownership.

When to Consult a Professional

Professional advice is particularly important if you:

Are a citizen or green-card holder of the United States
Receive pensions from several countries
Own a foreign company or partnership
Work remotely for a foreign employer
Hold shares, options or restricted stock
Own property outside Italy
Have foreign trusts or foundations
Hold substantial cryptocurrency
Intend to claim a special expat tax regime
Split your time between two countries
Are uncertain where you are tax resident

A standard local accountant may be excellent at ordinary Italian returns but have limited experience with international assets. Ask specifically whether the adviser regularly handles foreign-income reporting, Quadro RW, tax treaties and your country of origin.

Planning Makes Living in Italy Easier

Italy’s tax system can appear intimidating because national income tax, local surcharges, social-security contributions, foreign-asset reporting and international treaties interact with one another.

The system becomes more manageable once the key question—tax residence—is settled and every income source and foreign asset has been identified.

Do not assume that money held abroad is outside the Italian system, and do not base a relocation on a special tax rate without reviewing all the conditions. Careful planning before the move can prevent double taxation, penalties and expensive restructuring later.

For the broader administrative side of relocation, see Italia Mia’s guides to visas for moving to Italy and moving to Italy as an expat.