Taxes in Italy for expats and non-residents: 2023 and 2024

Italian tax residents are subject to a range of taxes on their worldwide income at national, regional and municipal levels. This is in addition to wealth taxes and passive income taxes, which are all taxed at different rates.

This article provides a detailed explanation of your Italian tax obligations to help you understand what you Italian tax liabilities may be, however, due to the complexity, you should always seek help and this article should act as a guide only.

Always get professional help from a qualified Italian tax expert before making any decisions or calculating your tax returns.

How to become a fiscal resident in Italy

By getting your Codice Fiscale. Based on several personal information, like name, date and place of birth, citizenship, and a domicile, showing a valid ID document, any Embassy, Consulate and Agenzia delle Entrate local office can issue one.

Having a Codice Fiscale does not mean you become a tax resident of Italy anyway, the tax residency status is something you may/can get with your whole process of moving the center of your interests. It’s just a personal unique identification code you can use to open a bank account in Italy, to rent, buy a property or start a business.

How to become a tax resident in Italy

Italy considers as a tax resident every individual who, for the most part of the tax year (183 days or more, depending), is either registered as a resident in Italy (to the Anagrafe) or domiciled in Italy for more than 6 months. This definition is taken from art. 2 of TUIR, the main Tax Code in Italy.

The consequence of being considered a tax resident of Italy is the application of the worldwide principle.

This means that if you earn any kind of income in and out of Italy, if you have properties outside of Italy, foreign bank accounts paying interest, investment portfolios that pay dividends or realize capital gains, you must file everything to the Italian Revenue Agency.

Instead, if you are not a tax resident you have to pay taxes only on the Italian sources of income and assets (property tax called IMU).

Italian tax year and Italian tax deadlines

The Italian tax year is the same as the calendar year, starting from January 1st and ending on December 31st.

Personal income and business income is generally taxed on the cash basis, with very few exemptions.

The tax return deadline shows on November 30th of the following calendar year.

A missing tax return - or an incorrectly filed tax return -  can cost you a minimum fine of €250 and up to 240% of any tax liability resulting from the tax return bill.

The first tax deadline for payment(s) is usually June 30th and the second is by November 30th.

There are two deadlines for tax payments in Italy that you need to be aware of:

• June 30th: you must pay the balance for the past tax plus 40% of the past year tax liability;

• November 30th: you must pay the remaining 60% account.

Italian international tax agreements and tax domicile

Italy signed hundreds of tax agreements with other countries, in order to facilitate people in their life opportunities.

The main double tax treaty principle is that you ultimately pay tax in the country in which you are a tax resident; however, the other country or the country of origin could claim and require you to pay taxes on income generated on its territory or on any properties(investments there.

Should that happen, you may have the chance to deduct the tax paid in the income sourced country from your residency country tax; in that case you will not be taxed twice on the same income, but you will suffer “only” the highest tax rate between the two countries

Italian income tax rates for tax years 2023 and 2024

Once you become an Italian tax resident, your worldwide income will be taxed at the following rates

You may also be subject to a regional tax (between 1.23% and 3.33%) as well as a municipal tax (up to 0.9%) depending on where you live in Italy.

How pensions are taxed in Italy

Depending on your retirement account and source of income, generally Italy gives you the opportunity to benefit from tax exclusions provided by the International agreements in force for public sources of pension.

The main rule is that your pension income, of any kind, is considered personal income.

Tax on investments and savings (i.e. passive incomes)

Individuals who generate financial income through Italian banks and financial institutions generally do not disclose anything in their tax return, as taxes are already paid by the bank itself (as withholding taxes or ‘imposta di bollo’).

If you have any passive financial income (such as interests, dividends, and/or capital gains) earned abroad you must disclose it in your tax return and pay the capital gain and wealth taxes (income and wealth taxes).

The general rate for passive income is a flat tax of 26%.

Paying taxes in Italy

The majority of the payments take place by using the F24 form.

By using this form, you can offset tax credits and tax debits, as well as identify every single tax you pay with a different tax code given by the office. You pay to any bank and post office.

Italian wealth taxes

As a tax resident of Italy, you are required to disclose your foreign held assets and pay wealth tax when due; you must also disclose the assets of which you are the ultimate beneficiary despite not being in your name (normally this happens when you are the beneficiary of a trust, for example). So you’ll be required to pay what wealth tax, for example, on:

• Cryptocurrency
• Stock options
• Bank accounts
• Investment portfolio
• Foreign bonds
• Life insurance
• Investments
• Private shareholdings and Companies’ shares
• Private complementary pension funds etc.

The wealth tax rate is generally 0.2% of the asset value, Bank accounts only pay a flat 34 (rounded down) tax, whereas public/gov pension funds are generally excluded from the wealth tax payment.

If you do not disclose your assets, you may be liable to a ranging penalty from 3% up to 15% of the asset value, per tax year.

Tax incentives for property renovations

Every house requires renovation or restoration from time to time. The Italian government has set up a series of tax incentives to facilitate house renovations, seismic structural improvements, and energy efficient investments in general.

Those who can benefit from such deductions are usually:

• Owner
• Usufrutturario
• Tenant
• Partnerships and corporations
• Civil union partner
• Family member of the owner

Taxes on foreign owned properties

It is very common for an expat in Italy to have ownership of foreign located real estate property or land, and this can create more than one tax consequences while living in Italy.

First of all, you must declare the ownership (and its percentage) and pay property tax in your return.

The tax is VIE and goes with the 0.76% of the property value shown in the tax return (taken between cadastral value, acquisition value and market value).

Generally speaking, you can deduct the property taxes paid abroad.

Italian tax relief for expat workers

Recently, Italy introduced a massive expat tax relief known as the “Decree of Growth”, a bill seeking to help workers, regardless of skill level, willing to relocate to Italy. This bill is in force up to December 31st 2023.

Under this law, during the first five years of employment in Italy, only 30% of your income is taxable, leaving 70% of your gross income as yours to keep.

This bill increases the untaxed income bracket to 90% if you seek to relocate to southern Italy or the islands of Sicily or Sardinia, which are southern islands under the Italian domain.

Furthermore, house ownership/mortgage or dependent children will extend this grant for an extra five years, with taxable income remaining at 50% for those extra five years. However, if three or more children are dependent on you, the five-year extra grant will stay at 90%.

Property taxes in Italy

When buying a property in Italy, you will have to pay 2% – 9% of the cadastral value of the house.

If you are a tax resident and the property will be your main residence, you will pay 2%.  Non-residents or second-home buyers, however, will pay 9%.

Whether you are a resident or non-resident, the tax will never be less than €1000 regardless of the value of the property.

Land registry tax: €50-200 depending on whether you are buying from a private seller or a company.

VAT: you pay no VAT if buying from a private seller. If buying from a company, you might pay from 4% to 22% in VAT. For a main residence, it is 4%. For a second home –  10%, and for a luxury home – 22%.

IMU or Italian regular property tax: you don’t pay this tax if you are a resident in Italy and the house is your main residence and not classified as luxury. Otherwise, you pay this tax. The calculations are complicated and vary from municipality to municipality, so it’s best to consult an accountant.

To benefit from the main residency tax reduction, the buyer is required to move his/her residency to the same municipality in which the property is located within 18 months of the date on the purchase deed.

As a buyer, you are not required to move to the property you purchased, for the simple fact that your property might require renovations that take longer than 18 months.

Failure to move your residency within 18 months of the purchase deed will make you liable to pay the difference between the taxes paid and the taxes payable on top of a fine amounting to 30% of any tax due.

Italian tax relief for retirees in Southern Italy

Italy offers a 7% flat tax incentive for retirees moving to Southern Italy.

To qualify, you must officially transfer your tax residency to a municipality with a population of less than 20,000 that’s located in a region of Southern Italy (Sicily, Calabria, Sardinia,  Campania, Basilicata, Abruzzo, Molise, and Puglia).

Under this regime, pensioners with a foreign-sourced income are taxed at a flat rate of 7% for the first nine years of residency. 

You will also be exempt from tax on property and financial assets, provided that you haven’t been a tax resident in the past five years and come from a country that has a Tax Information Exchange Agreement, Double Taxation Agreement, or Foreign Account Tax Compliance Agreement with Italy.

Next step: Speak to an Italian tax specialist

It is possible to manage your Italian tax situation yourself however due to language barriers and general administrative headaches and delays, it isn't as straightforward as other countries. This is in addition to the complexities associated with international taxes, the cost of making a mistake will be much greater than seeking help from an experienced Italian tax specialist.

Our free introduction service connects people around the world with one of our trusted Italian tax partners, which will also provide you with an initial free consultation where you will be able to ask basic questions and get an idea of your situation and decide whether you wish to proceed with formal, paid services.

All of our partners are fully qualified and experienced in assisting foreigners living in Italy, Italian expats living abroad as well as people who have connections to Italy whether they still live there or not.

Request introduction to a trusted Italian tax specialist >

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