Taxes in Italy

A Practical Guide for Expats and Property Buyers

Moving to Italy, with its mild climate, rich cultural heritage, and vibrant lifestyle, is a dream for many expats, young professionals, and digital nomads from around the world. Whether you are a family looking for a welcoming home or a remote worker seeking a new base, Italy offers an appealing environment for people of all ages.
However, relocating to Italy or purchasing property involves navigating a complex tax landscape.

This guide, written for the ITS Journal audience, outlines the key tax aspects for those relocating to Italy or buying a home, explaining tax residency, relocation-related obligations, and the main principles of the Italian tax system.

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Tax Residency in Italy

Your tax obligations in Italy depend on whether you are considered an Italian tax resident or not. This determines whether you are taxed on your worldwide income or only on income sourced in Italy, and it applies both to property buyers and to those moving for work or other reasons.

Conditions

You are considered an Italian tax resident if, for more than 183 days per year, you meet at least one of the following conditions:

• Registration in the municipal population register (Anagrafe);

• Civil-law residence: your habitual home is in Italy;

• Domicile: your main personal or economic interests are based in Italy;

• Physical presence: you spend more than 183 days in Italy, even without formal registration with the Anagrafe.

Implications

• Tax residents must declare all worldwide income (employment, self-employment, capital income, investments), subject to progressive tax rates from 23% to 43%.

• Non-residents are taxed only on income produced in Italy, such as rental income.

Example:
A digital nomad from Northern Europe purchases a property in Italy for €150,000 and spends 200 days per year there while working remotely. Since they spend most of the tax year in Italy, they become an Italian tax resident and must declare their €50,000 annual income in Italy, even if earned abroad.
Note: In cases of double taxation, a foreign tax credit may be available in Italy under double taxation treaties.

You can read our article “Understanding Italy’s Tax Residency Rules / Residenza fiscale in Italia, come funziona?” on ITS Journal for a more in-depth analysis of the implications of Italian tax residency.

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Obligations When Moving to Italy

Relocating to Italy involves several administrative and tax-related steps, especially if you purchase a home and intend to use it as your base. Completing these steps ensures compliance and access to tax benefits, making the transition smoother and safer.

• Codice fiscale (tax ID): Required from the Italian Revenue Agency or via an Italian consulate abroad. It is essential for property purchases, contracts, and tax filings.

• Municipal registration (Anagrafe): Anyone staying in Italy for more than 3 months must register with the local municipality. This is key for tax residency and “prima casa” (main residence) benefits.

• National Health Service (SSN): Registration provides access to public healthcare, particularly important for families and children.

• VAT number (Partita IVA): Self-employed workers must register to manage freelance or business income.

Example:
A family from Northern Europe relocates to Italy and purchases a home for €200,000. After obtaining their tax codes, they register with the local municipality and enroll in the National Health Service to access healthcare for their children, ensuring compliance and eligibility for tax benefits.

You can read our article “Italian Property Tax / Tasse sulla proprietà in Italia per acquirenti stranieri: IMU, TASI e altro” on ITS Journal for a deeper look at tax advantages linked to buying property in Italy.

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Tax Regimes: Residents vs Non-Residents

Tax residency affects how income and property are taxed. Below is a summary of the key differences:

Tax Residents

• Employment income taxed under IRPEF rates (23–43%) plus local surcharges (around 3–4%).

• Eligibility for deductions (children, education, home renovations).

• Flat-rate regime for self-employed workers (5% or 15%) up to €85,000 turnover.

• Taxes on foreign assets:

  • 0.2% on foreign financial assets (IVAFE);

  • 0.76% on foreign real estate (IVIE);

  • €34 annual stamp duty on bank accounts.

• IMU applies to non-primary residences.

Non-Residents

• Taxed only on Italian-source income (e.g. rental income), under IRPEF or the flat “cedolare secca” regime.

• Limited access to deductions.

• Pay IMU on Italian properties but no IVAFE or stamp duty on foreign bank accounts.

Example:
An expat living abroad owns a second home in Italy rented out for €12,000 per year. As a non-resident, they may pay €2,520 annually (21% cedolare secca; lower rates may apply in specific cases) on rental income, plus IMU, without having to declare foreign income.

IMU is an annual municipal property tax calculated on the cadastral value of the property. Rates vary by municipality and generally range between 0.4% and 1.06%.

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Financial Asset Monitoring for Tax Residents

Italian tax residents must declare foreign assets in the RW section of their annual tax return, even if they do not generate income. This is particularly relevant for expats and digital nomads with foreign income or investments.

Assets to Declare (examples)

• Foreign bank accounts;

• Company shares;

• Cryptocurrencies;

• Foreign real estate.

Related Taxes

• IVAFE: 0.2% on the value of foreign financial assets.

• IVIE: 0.76% on the value of foreign properties (foreign taxes paid may be credited).

• Penalties: Failure to declare can lead to fines of 3–15% of the undeclared asset value. Voluntary disclosure (“ravvedimento operoso”) is available.

Example:
A French professional, tax resident in Italy, holds a French bank account with an average balance of €50,000. They declare it in the RW section and pay €34 in IVAFE (stamp duty), avoiding penalties.

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“Impatriati” (Inbound Workers) Tax Regime

For individuals relocating to Italy under certain conditions, the impatriati regime offers significant tax benefits, particularly attractive for young professionals and digital nomads.

Requirements

• Not resident in Italy in the previous 3 years;

• Work mainly performed in Italy;

• Higher education qualification or high-level skills;

• Commitment to remain in Italy for at least 4 years.

Benefits

• 50% income exemption (60% with children), up to €600,000 per year, valid for 5 years.

How It Works

• Employees: apply through their employer using the relevant form.

• Self-employed: apply directly via the tax return.

Example:
A Swedish software engineer relocates to Italy, earning €60,000 per year as an employee of an Italian company. Under the impatriati regime, 50% of taxable income is exempt, resulting in approximately €50,000 net income per year and savings of around €13,000 annually compared to standard taxation.

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Practical Tips

To navigate the Italian tax system effectively:

• Plan your residency: Carefully track time spent in Italy (watch the 183-day threshold).

• Use the “prima casa” status: Register your main home to reduce property taxes.

• Assess the impatriati regime: Inform your employer early to benefit from exemptions.

• Remember the RW section: Monitor and declare foreign assets accurately.

• Consult a tax advisor: A professional can help with residency status, treaties, and deductions, ensuring compliance and savings.

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Why Italy?

Climate, culture, and community make Italy an ideal destination for families, young professionals, and digital nomads. Tax incentives and quality of life make relocation easier and more attractive.

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Next Steps

Understanding the Italian tax system is key to planning a relocation or property purchase. Residency rules and the impatriati regime can significantly improve the financial outcome of your move.
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Disclaimer:
This article provides general information only. For advice tailored to your specific situation, consult a qualified tax advisor. Contact us via the ITS Journal platform.