Moving to Italy changes more than your surroundings. Once you become tax resident, your income, savings and investments fall under Italy’s tax system, even if they remain in the UK. For many British people, this comes as a surprise.
Tax-free wrappers lose their advantages, pension withdrawals may be taxed differently, and currency movements can erode income if unmanaged.
Building a sound financial plan in Italy means understanding how your assets are treated, how to adapt your investment strategy, and how to manage cross-border complexity.
Disclaimer
This article is for general information purposes only and does not constitute personal financial advice. Tax rules and regulations can change, and their application depends on individual circumstances. Always seek advice from a qualified, regulated professional before acting on information relating to taxation, pensions or investments
Understanding how Italy taxes investments
As an Italian tax resident, you’re taxed on worldwide income and gains. This includes everything from UK bank interest to offshore funds, share portfolios and pensions.
Italy applies:
- A flat 26% tax rate on most investment income and capital gains
- An annual IVAFE wealth tax of 0.2% on the value of foreign financial assets
- A property wealth tax, IVIE, of 0.76% on foreign real estate
- Reporting obligations under Quadro RW for all non-Italian accounts or investments
The Italian tax system doesn’t distinguish between UK and Italian investments meaning your UK tax shelters no longer apply.
How common UK investments are treated in Italy
- ISAs: No longer tax-free once you’re Italian resident. Interest, dividends and capital gains are all taxed at 26%, and the total value is subject to IVAFE.
- Investment accounts or general portfolios: Income and realised gains are taxed at 26%. You must declare the total portfolio value annually through Quadro RW.
- ETFs and funds: UK-listed ETFs are often classed as non-harmonised funds under Italian law, meaning different reporting and sometimes less favourable treatment than EU-domiciled funds. Switching to EU or Italian-compliant versions can simplify taxation.
- Onshore/offshore bonds: Any withdrawals or gains are taxable as income in Italy. Unlike in the UK, there is no deferral advantage.
- Italian-compliant investment structures (polizze assicurative vita): Life-insurance-based investments that allow returns to roll up tax-deferred until you withdraw. They can simplify both tax and inheritance planning, but the structure and underlying costs must be reviewed carefully.
Pensions and retirement income
For many expats, pensions remain their largest link to the UK. The UK–Italy Double Taxation Convention determines where your income is taxed.
- Private or workplace pensions: Usually taxable in Italy once you are resident there. Income is treated as ordinary earnings, subject to Italy’s progressive tax rates (roughly 23%–43%).
- Government or civil service pensions: Typically remain taxable only in the UK under the treaty.
- Lump sums: The 25% UK “tax-free” portion is not automatically exempt in Italy and may be subject to income tax there. Timing withdrawals before becoming resident can sometimes reduce exposure.
- QROPS (Qualifying Recognised Overseas Pension Schemes): Can offer flexibility in currency and investment control for long-term residents. However, transfers must be reviewed carefully to avoid unintended UK tax charges or poor alignment with Italian law.
Effective retirement planning in Italy requires modelling how your income looks in euros after Italian tax, not in sterling before deductions. That shift alone can change the affordability of your lifestyle.
Wealth tax and high-net-worth considerations
Italy’s wealth taxes, IVAFE on financial assets and IVIE on foreign property, can materially impact high-value portfolios.
IVAFE (Imposta sul valore delle attività finanziarie detenute all’estero)
Applied at 0.2% per year to the value of all foreign financial assets: bank accounts, shares, ETFs, bonds, funds and insurance policies. Even dormant or low-yield accounts are included.
IVIE (Imposta sul valore degli immobili situati all’estero
Applied at 0.76% per year to the cadastral or market value of property held outside Italy. For UK property, the tax base is generally the cost or market value rather than the UK’s council tax valuation.
While the rates appear modest, combined with income tax and currency fluctuations they can make a noticeable difference over time — particularly for people with significant assets abroad.
High-net-worth individuals (HNWIs) also need to consider:
- Asset diversification. Italian tax favours simplicity; holding multiple offshore structures can create unnecessary reporting complexity.
- Succession planning. Italy’s inheritance regime enforces forced heirship, meaning portions of your estate are automatically reserved for close family members. Estate planning structures, including polizze vita or Italian wills, must reflect this.
- Remittance planning. Unlike the UK, Italy does not offer a remittance basis. Income earned abroad is taxable even if it remains offshore.
- Special tax regimes. Italy offers preferential regimes for new residents, such as the res non dom flat tax (a fixed €100,000 annual tax on foreign income for qualifying individuals), which can be attractive for very high earners.
HNWs planning to relocate should always review their holdings before establishing Italian tax residency. Once you are resident, restructuring can trigger taxable events and restrict options for efficient wealth transfer.
Managing risk and currency exposure
Currency management is often overlooked but can have a bigger impact on your real-world income than market performance. If you earn or draw income in sterling but spend in euros, fluctuations in GBP/EUR can either boost or cut your spending power overnight.
Approaches vary depending on how long you plan to stay:
- Short-term residents may choose to keep investments in the UK, accepting some exchange-rate volatility for simplicity.
- Long-term residents often move towards euro-based holdings, reducing exposure to currency swings and simplifying tax reporting.
- Multi-currency bank accounts can bridge the gap, allowing income in one currency and expenditure in another, without repeated conversions.
- Staggered conversions and forward contracts can also smooth out timing risk for larger transfers, such as property purchases or annual pension drawdowns.
Aligning your investment currency with your spending currency reduces day-to-day anxiety and makes your portfolio easier to manage.
The limitations of FCA protection in Italy
One of the biggest misconceptions among British expats is that the UK’s Financial Conduct Authority (FCA) protections automatically follow them abroad. In reality, FCA regulation only applies within the UK and that has important implications once you’re living in Italy.
When you become Italian resident, your financial advice, investments and insurance products typically fall under Italian or EU regulation, not the FCA’s jurisdiction. That means:
- Losses aren’t covered by the UK’s Financial Services Compensation Scheme (FSCS). If you hold investments or insurance products through a UK adviser or platform, you may no longer be protected for losses once resident overseas.
- Cross-border advice requires EU or Italian authorisation. A UK adviser must hold the right permissions to serve clients in Italy. Without these, their advice could fall outside local regulatory protection and you could have limited recourse in the event of poor advice.
- Financial promotions and compliance standards differ. Italy’s regulator, CONSOB (Commissione Nazionale per le Società e la Borsa) and the Bank of Italy oversee investment and banking activities locally. Their framework aligns with EU rules but is administered differently from the UK’s system.
- Insurance and investment “passporting” ended with Brexit. Before 2021, many UK firms could operate in Italy under EU passporting rights. Those permissions no longer apply, meaning cross-border services must now be arranged through EU-authorised entities.
If you’re approached by a financial adviser in Italy, always check:
- Whether they are authorised to operate in Italy or through an EU-regulated parent company.
- Whether client assets are held within the EU (for example, in Luxembourg or Dublin custodianship) to maintain investor protection.
- Whether your existing UK adviser can continue to serve you legally or whether you’ll need an EU-licensed partner for ongoing management.
Ultimately, while FCA oversight remains a hallmark of quality in the UK, it provides no automatic consumer protection in Italy. For peace of mind, ensure any adviser you work with is correctly regulated for cross-border or EU client relationships and always confirm how your money is held and safeguarded.
Building a cross-border (Italy-UK) financial plan
The goal isn’t to start again; it’s to restructure what you already have. A coherent plan should consider:
- Tax residency: When it starts, and how it affects your global income.
- Asset location: Whether it’s worth moving holdings into EU-compliant or Italian structures.
- Wealth taxes: The cumulative effect of IVAFE and IVIE over time.
- Income source and currency: Ensuring you’re not overexposed to GBP if your life is in euros.
- Time horizon: Matching your investments and withdrawal strategies to how long you’ll stay.
When done correctly, cross-border planning provides clarity, stability and fewer tax surprises. The key is to act before residency or major life events, not after.
Checklist for managing your investments and finances in Italy
- Confirm the date you become Italian tax resident as this determines when worldwide taxation starts.
- Review all UK savings, ISAs, and investment accounts to understand how they will be taxed under Italian law.
- Declare foreign-held assets annually through the Quadro RW section of your Italian tax return.
- Check whether your adviser or wealth manager is authorised to advise clients in Italy or under EU regulation.
- Assess potential exposure to IVAFE (0.2%) and IVIE (0.76%) wealth taxes on overseas assets and property.
- Reconsider whether to keep UK-listed ETFs or funds, or switch to EU-domiciled versions for simpler reporting.
- Evaluate whether an Italian-compliant investment structure (polizza assicurativa vita) could offer tax deferral or estate-planning benefits.
- Review your UK pensions and identify which parts are taxable in Italy and whether QROPS or other restructuring is suitable.
- Analyse your currency exposure and decide whether to convert, hedge or retain GBP assets.
- If you hold significant assets, seek specialist advice on succession law, inheritance tax and forced heirship
- Keep documentation for all accounts, trades and valuations to support your annual declarations.
- Review your strategy at least once a year to ensure your plan still aligns with Italian tax changes and your residency status.
Frequently asked questions
Do I need to declare my UK savings and investments in Italy?
Yes. Once you are tax resident in Italy, you must declare all foreign-held assets and accounts through the Quadro RW section of your Italian tax return. This includes UK bank accounts, ISAs, investment portfolios, pensions and insurance bonds, even if no income has been generated.
Are my ISAs still tax-free when I live in Italy?
No. Italy does not recognise the UK ISA wrapper. Income and gains inside your ISAs become taxable in Italy at the standard investment rate of 26%, and the total value is also subject to the IVAFE wealth tax.
What happens if I still receive advice from my UK financial adviser?
After Brexit, UK advisers lost the automatic right to “passport” their services into the EU. Unless they are part of an EU-regulated group or have local authorisation, they may not be allowed to advise Italian residents. Any advice received in that situation may fall outside both FCA and Italian investor protections.
How are UK pensions taxed in Italy?
Private and workplace pensions are generally taxable in Italy as ordinary income, while UK government and public service pensions remain taxable only in the UK. Withdrawals from UK pensions are not subject to the UK’s “tax-free lump sum” rules once you are Italian resident unless taken before arrival.
What is the Italian wealth tax and when does it apply?
Two types of wealth tax apply to Italian residents with overseas assets: IVAFE (0.2% per year on the value of foreign financial assets such as bank accounts, shares, bonds, funds, insurance policies) and IVIE (0.76% per year on the value of foreign property). Both are payable annually and declared through your Italian tax return.
Can I still keep my UK bank and investment accounts?
Yes, but they must be reported and are fully taxable in Italy. Some UK banks have stopped servicing EU residents, so international or multi-currency accounts may provide more flexibility.
When to speak to an independent financial specialist
If you hold UK pensions or investments, are living in or planning to move to Italy, specialist independent advice is essential.
A financial adviser who understands the nuances of cross-border matters between the UK and Italy can assess your tax residency, review your portfolio structure and design a retirement and investment plan aligned with Italian regulations.
We work with a number of trusted partners who provide cross border financial advice, who can ultimately guide you to create a financial plan to maximise your life in Italy.
