This article provides an overview of how British individuals in Italy are taxed under Italian law and the UK–Italy Double Taxation Treaty. It outlines residency rules, differences between tax years, income tax rates, reporting obligations and reliefs that prevent double taxation.
Moving from the UK to Italy can have far-reaching tax implications. Both countries have comprehensive tax systems and while there is a tax treaty between the UK and Italy, it’s essential to have a broad understand of your tax requirements in both countries. Just because you have left, or are leaving, the UK doesn’t necessarily mean that your UK tax obligations have ended.
This guide explains how tax residence is determined, what types of income are taxable in Italy and how British citizens in Italy can potentially benefit from treaty reliefs to avoid double taxation.
The information provided in this article is for general information and educational purposes only and should not be construed as tax or financial advice.
Tax laws and bilateral treaties can change, and their application depends on individual circumstances.
Before making any decisions or submissions to HMRC or the Agenzia delle Entrate, you should seek advice from a qualified cross-border tax professional. Experts for Expats is an information service and does not provide regulated tax or financial advice.
Tax residence determines whether you pay tax on your worldwide income or only on income from a specific country.
Under Italian domestic law (Article 2 of the Italian Income Tax Code), an individual is considered tax resident in Italy for a given year if, for more than 183 days, they meet any one of the following conditions:
If you are resident under these criteria, Italy taxes you on your worldwide income. Non-residents are taxed only on Italian-source income.
Because the UK and Italy both apply residence-based taxation, it is possible to be considered resident in both countries under domestic rules.
If that’s the case, the tie-breaker clause in the tax treaty between the UK and Italy determines which country is your residence for treaty purposes. This is decided by looking at:
One of the most common sources of confusion when moving between the two countries is that the UK and Italy operate different tax years:
This mismatch means that the same income or event (such as a move date, sale, or pension withdrawal) may fall into different tax years in each country.
For example, if you move to Italy in June, Italy will treat you as potentially resident for the full calendar year, while the UK might still regard you as UK resident until the following 5 April, depending on your circumstances and the Statutory Residence Test.
Because the tax years don’t align, it’s common for people to have part-year residence in both countries. This requires careful timing and coordination of tax filings, especially when claiming foreign tax credits or using the double taxation treaty.
Professional advice is strongly recommended when your relocation spans two tax years to ensure that income is reported correctly in both jurisdictions and that relief is claimed efficiently.
Italy’s main personal income tax is IRPEF (Imposta sul Reddito delle Persone Fisiche), a progressive tax applied to all residents’ worldwide income.
|
Taxable income (€) |
Rate |
|
Up to 28,000 € |
23% |
|
28,001 – 50,000 € |
35% |
|
Over 50,000 € |
43% |
In addition to national IRPEF, residents also pay:
IRPEF applies to income from:
Employment income is generally taxed through payroll withholding. Self-employed individuals and landlords must file annual returns (Modello Redditi Persone Fisiche).
Italian tax residents must report and pay Italian tax on worldwide income, including income earned or taxed abroad, for example, UK employment, pensions or rental income.
However, where the same income has already been taxed in the UK, the Italian system and the UK–Italy treaty provide a foreign tax credit (credito d’imposta). This allows you to deduct UK tax paid on that income from your Italian liability, up to the amount of Italian tax due on the same income.
To claim the credit, you generally need:
The credit cannot exceed the Italian tax otherwise payable on that income, and unused relief cannot normally be carried forward.
If you are tax resident in Italy but continue to receive UK-source income, such as:
the UK retains a limited right to tax that income under domestic law and the treaty.
For example:
It is therefore important to coordinate the timing of payments and ensure that any UK tax withheld can be credited in Italy.
Even after you leave the UK, you may still need to complete certain filings to close off your UK tax affairs or continue reporting UK-source income.
You must inform HMRC when you permanently move abroad. This is done using form P85, submitted once you’ve left the UK. If you were employed, include your final P45 from your employer. Submitting a P85 ensures HMRC knows you’ve become non-resident and allows them to issue any final refund or calculation for the year you left.
If you are required to complete a Self-Assessment, your final UK tax return (form SA100) must include:
The deadlines mirror the standard UK Self-Assessment timetable:
If you continue to earn rental income from UK property, you may register under the Non-Resident Landlord Scheme using form NRL1 (individuals) or NRL2 (companies).
This allows rent to be paid without UK tax deducted at source, provided you continue filing UK tax returns directly.
When you claim double taxation relief in Italy, the Italian tax authorities may request proof that you were UK resident for the relevant period. You can obtain a certificate of residence by writing to HMRC or applying through your HMRC online account. This document confirms where your tax obligations lie and is essential for treaty relief.
Once you become tax resident in Italy, you must comply with Italian filing obligations under the Agenzia delle Entrate.
The Italian tax year follows the calendar year (1 January to 31 December).
This is the main Italian tax return for individuals, covering both Italian and worldwide income.
The deadline for online submission is usually 30 November of the year following the tax year (for example, income earned in 2024 must be declared by 30 November 2025). If you use a tax intermediary (CAF or accountant), earlier submission windows may apply.
Italian residents must declare all foreign-held financial assets and property in their tax return. The Quadro RW section captures:
This declaration forms the basis for calculating IVAFE (foreign financial asset tax, typically 0.2%) and IVIE (foreign property tax, generally 0.76%).
Italy operates a system of advance payments towards next year’s tax liability, usually split into two instalments:
These payments are based on your prior-year tax liability, with a final balancing payment due the following year.
Missing or underpaying these instalments can lead to penalties and interest, so it’s important to review them each year with your tax adviser.
If you work or are self-employed in Italy, you must register with the Istituto Nazionale della Previdenza Sociale (INPS). Payments are made periodically throughout the year based on your income level and professional category.
Failure to register or pay can affect future pension rights and lead to enforcement action.
The UK–Italy Double Taxation Convention, signed on 21 October 1988 and effective since 31 December 1990, allocates taxing rights between the two countries and ensures that individuals are not taxed twice on the same income.
Under the treaty, each country retains primary taxing rights over income arising within its borders but grants relief to residents who are also taxed abroad. For example, if you are resident in Italy and receive UK-source income, you may be able to offset the UK tax paid against your Italian tax liability.
The treaty covers:
For the most part, the country of residence has the main taxing right, with the source country retaining the right to levy limited withholding tax or tax on income connected to that country. Any double taxation is relieved by way of a tax credit in the country of residence.
Italy offers several incentives to attract new residents, though these must be considered carefully in the context of UK connections and treaty reliefs:
Each regime has strict eligibility requirements and professional advice is essential to determine whether you qualify and how it interacts with the UK treaty relief.
Cross-border taxation between the UK and Italy is complex.
Even straightforward situations can create complications, such as overlapping residence, pension taxation or timing differences between tax years.
You should seek advice from a specialists familiar with assisting British citizens in Italy when:
An expert can confirm your residency status, calculate the correct tax exposure in each country, and prepare the documentation needed for HMRC and the Agenzia delle Entrate.
If you continue to earn UK-source income, such as rental income, government pensions or investment dividends, the UK may retain taxing rights under domestic law and the UK–Italy Double Taxation Convention.
In most cases, you’ll also need to declare the same income in Italy, but you can claim a credit for the UK tax already paid to avoid double taxation.
You’re considered tax resident in Italy if, for more than 183 days in a calendar year, you are registered in the Italian population register (Anagrafe), have your habitual home in Italy, or have your centre of personal and economic interests there. Residency is assessed for the whole calendar year, so even arriving mid-year can make you resident for the full year.
Double taxation relief is available under Article 24 of the UK–Italy tax treaty. You’ll need to declare foreign income in both countries and claim a foreign tax credit in Italy for any UK tax paid. Keep records of your UK filings and tax payments, and request a certificate of residence from HMRC when needed.
Yes. Italian residents must report foreign financial assets and property annually in their Quadro RW declaration. This includes UK bank accounts, shareholdings, pensions, and property. IVAFE and IVIE taxes may apply based on the value of those assets.
The UK tax year runs from 6 April to 5 April, while Italy’s runs from 1 January to 31 December. If your move spans both systems, you may have to file part-year returns in both countries. Coordinating reporting dates and using the treaty tie-breaker rules can help you stay compliant and avoid gaps in reporting.
If you’re planning to move to Italy or have already become resident there, understanding the UK–Italy tax systems affect you is essential.
Our trusted partners can help you clarify your residency status, assess your exposure to UK and Italian taxes, and ensure you’re claiming the reliefs available to you.
