If you live in Italy as a non-resident, you’re only taxed on income earned in Italy. However, if you’re an Italian resident, spend more than 183 days a year in Italy, and your “centre of economic interest” (i.e. your business and investments) is in Italy, your worldwide income is subject to Italian taxes.
Tax in Italy for expats
Italian tax residency rules
To become a tax resident in Italy, you have to live in the country for a minimum of 183 days a year.
If you stay in Italy fewer than 183 days a year, you are considered a non-resident.
When you move to Italy, you must register with the Record of the Italian Resident Population in your local municipality. When you move out of the country, you are also required to de-register there. This allows you and the authorities to keep an exact record of the time you stayed in the country.
If you fail to either register or deregister, factors such as your domicile (the centre of your vital interests) and your permanent abode might be considered in order to determine your tax residency.
Residents are taxed on their worldwide income and non-residents on income earned in Italy only.
Taxes in Italy for non-residents
If you’re a non-resident for tax purposes in Italy, you will only be taxed on income earned in Italy.
However, should you spend six months or more (183 days) in the country, you are considered a resident and would be taxed as such. This also applies if a non-resident’s central interest (domicile) is in Italy.
Taxes in Italy for residents
Residents in Italy pay income tax
Italian tax rates, or Imposta sul Reddito delle persone Fisiche, range between 23% to 43%, with the lowest rate on income under €15,000, and the highest rate on income over €75,000.
Italian income tax rates:
Income between 0 and €15,000 – 23%
€15,000 – €28,000 – 27%
€28,000 – €55,000 – 38%
€55,000 – 75,000 – 41%
€75,000 and over – 43%
Regional tax ranges from 0.9% to 1.4% and a minor, local tax ranges from 0.1% to 0.8% of gross income.
Is there a tax-free allowance in Italy?
No, there is no personal allowance below which you don’t have to pay income tax.
There are allowances for dependant family members (dependant partner and/or children). Also, tax credits can be granted on mortgage interests, educational expenses and medical bills.
Italian tax relief for expat workers
Recently, Italy introduced a massive expat tax relief known as “Decree of Growth”, a bill seeking to help workers regardless of skill level willing to relocate to Italy.
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%.
Does Italy tax retirement income?
Yes, as a tax resident in Italy you pay tax on your world-wide retirement income. However, expat retirees can benefit from Italy’s quite generous flat-rate tax offer as long as they qualify.
Italian flat-rate tax for expat retirees
Italy offers a 7% flat tax incentive for retirees moving to Southern Italy.
To qualify, you must officially transfer your tax residency in a municipality with a population 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 9 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 5 years and come from a country that has a Tax Information Exchange Agreement, Double Taxation agreement, or Foreign Account Tax Compliance Agreement with Italy. Fortunately, the UK, USA, Canada and most other countries are valid.
Italian Non-Dom Tax
In 2017, Italy introduced a special tax regime for higher net-worth foreigners willing to relocate to Italy.
This regime allows Italian non-domiciled residents to pay a flat rate of €100,000 per year on all foreign income for a maximum of fifteen years.
You are entitled to this benefit if:
- You have transferred your tax residence in Italy. This favourable tax regime can be enjoyed for a maximum of fifteen years, and you may revoke it at any time.
- You have not been a tax resident for 9 of the previous 10 years prior to the introduction or application of the bill.
- Italian Tax Authorities formally approve your request.
Income from certain countries may not be valid for the entitlement of these grants. Any income from these countries is subject to standard Italian taxation up to 43%.
The annual flat tax will replace the income tax, and local and wealth taxes.
Finally, you may extend these benefits to family members for an additional €25k, per person, per year. Laws that define “family members” are extremely vague and therefore are not limited to spouses or children.
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.
How taxes are filed in Italy
Taxes are filed electronically in Italy, but there are two different tax returns depending on your situation.
Tax residents that have lived in the country for two consecutive years are entitled to use the 730 form, a simplified form that comes with most of your details already completed.
It is downloadable from the Italian Tax Authority Website. It is not obligatory to declare changes to your income when using this form, unless significant events have happened, such as the purchasing of a house.
Seek the help of an accountant when filing your taxes in Italy.
A 730 form can also be used by tax residents who are not employed at the time of tax day. The filing deadline is the 23rd of July, so keep in mind that you must declare your unemployment by the end of the tax season, December.
The second form is Modello Redditi, which will include employment income, tax withheld, capital gains, foreign income and other sources of income of the resident.
You must file this by the 30th of November of the current year for the previous year. So, for example, if your income in 2020 was €40,000 a year, then in 2021 you will have to declare your income as €40,000, regardless of any increase or decrease in the current year.
The Modello Redditi is preferred by people who hold non-Italian investments, bank accounts or non-Italian payrolls.
Taxes in Italy – summary
Regardless of whether you currently have employment interests in Italy or not, it’s vital that you have a firm grasp of the taxation system. Once you know your position regarding residency and your source of income, it’s not too difficult to understand.
Of course, if you’re unsure or need any clarifications, the best thing you can do is speak to an Italian accountant.
They will be able to answer questions specifically relating to your situation and will likely be able to help you with your tax returns too. It shouldn’t be a challenge to find an accountant that speaks English, particularly in larger towns and cities.
You might find useful:
- Living In Italy – The Expats’ Essential Guide
- The Best Places To Live In Italy For Expats
- Didn’t find what you were looking for or need further advice? Comment with your question below and we will do our best to help.
Helpful external links:
- The tax regime for new high-net-worth residents – The Revenue Agency. You can also find tax return forms and information on various taxes for businesses and individuals.
first of all thanks for this absolutely useful article, summarizing the basic principles.
I have been working in Italy at a company (employee) since October 2021, and I’ve been enjoying 70% tax relief since February 2022 (I am resident in Italy since December 2021).
Reading the related regulation, I understand that I have to complete minimum 2 fiscal years in Italy in order to not being punished (meaning: paying back the whole tax benefit + extra penalty). Based on my calculation, I will complete my 2nd fiscal year early July, 2023.
Could you you please confirm, which is the earliest date for leaving Italy (and e.g. moving to another EU country)?
Many thanks in advance for your kind help!
@Eszter Sallai, this is Studio Rigo. First of all, there is NO unique answer for this question, as it depends on the full fiscal profile. And it looks like some details are missing, for obvious reasons. The fiscal year is not divided into small chunks, so it’s full calendar year. If you became tax resident in 2022, it seems like you should file your taxes for fiscal year 2023 in Italy – as permanent resident – before leaving.
@Studio Rigo, thank you for the prompt answer, really appreciated.
Of course, I have to file taxes for fiscal year 2023 in Italy, and will do in due course. My question regarded the potential repayment of tax benefit + penalty. Unfortunately, for sad personal reasons, it seems that I need to move back to my home country (still in EU) and finishing soon my job in Italy. Taking into consideration that this tax benefit started from January 2022 for me, I would like to clearly understand which is the first date when I can give the resignation letter, obviously respecting the min. 2-year tax resident condition mentioned above. Could you please help me to understand that? Thank you in advance for your kind help.
@Eszter Sallai, Our pleasure supporting this community. Actually we’re proud of being part od Expatra, they bring a lot of value. Your question is legitimate, in order to minimize the risk we suggest to resign from July 1st onwards. Or at least keep your ‘iscrizione anagrafica’ in your Municipality for more than 183 days for that given fiscal year. This would facilitate the tax residency confirmation for 2023 a lot!
Thanks a ton for this quick feedback. Reviewing the related regulation, that was my understanding too, though the confirmation of an expert is much appreciated. Your support is really a great job. Thank You, again. Have a great day!
Thanks for the great article. I have a question regarding freelance/self employment.
In case I come in as an employee (expat), I have 70% exemption, but social security and employer cost do not change, so actual tax ends up being around 35% instead of around 6% as some calculators suggest.
What happens if I start my business as a self employed instead? Do I end up paying just the income tax (~6%), income tax + social security (~16%) or income tax + social security + employer tax/corporate tax (>~35%) based on the revenue generated.
This is Paolo Rigo from Studio Rigo. Very smart question! As an employee your Italian Employer must pay withholding taxes plus social security on your behalf. If you start as self employed/freelancer, you have to take care of both yourself. As much as the 70/90 percent off is provided by the law, there is no official evidenza of the social security payments due. Why? Because it depends on you country of origin, your activity code and fiscal status. In few cases you may get a full exemption, if provided by the Tax Agreement. So as a lot pf professionals use to say: ‘It depends!’
I have recently had residency in a small village in Sardinia. Im retired and have a uk pension of around £1800 a month and still working remotely for a university with a monthly salary of £6,900 per month
I currently pay 40% tax at source in the uk on both my pension and salary
I will be ending my job in the university in July so will only receive my pension
Should I move to the Italian taxation system?
Hi Naldo, this is Paolo Rigo from Studio Rigo. The main question here is ‘you should’ or ‘you must’? If you’re spending the majority of the time in Italy, automatically you’re under the tax radar and you’re required to file your taxes on the worldwide incoma basis. Maybe you can choose between a flat 7 % tax or regular brackets, depending on your UK tax return.
For a UK citizen, does this tax ‘write-down’ of 70%/90% apply post Brexit?
I am considering moving to Italy for a new job, and want to make sure that this would apply to me? I have lived in the UK for 4 years prior (never lived in Italy before)
Also, assuming I qualify for the 70% tax exemption, is the 30% tax charged according to the progressive scale or does it get charged at the highest rate when consider gross salary pre-tax exemption?
Actually the benefit is applied and AFTER that you start paying your 23 to 43 per cent taxes. So you start from the lowest (fair enough right?).
EU or extra EU citizenship, to date, does not effect the benefit application.
Requirements mostly deal with other personal information (employment, tax residency)
Best wishes for your big move!
Thanks for this!
OK great, so for UK citizens they also get this benefit? Because i was reading the law and i think it is only for countries where Italy has a tax double tax treaty. The UK has one i believe?
thanks so much for providing this overview.The expat tax regulations have become increasingly interesting to me and I would like to ask for some more guidance, especially with regards to taxation in Germany, my current country of residence. May I ask you to connect me with your points of contacts for further exchange of thoughts, pls.
Have a great day,
Hi Jens, could you be more specific as to what exactly you are looking for? Do you need professional advice on taxation in Germany?
Thank you very much for an excellent guide. Just a question to see if I understood it correctly.
If I as an EU citizen move from abroad to Southern Italy (Sicily) with a salary of 80 000 Euro/year. Then my taxes will be (80 000 EUR x 10%) x 43% = 3 440 Euro/year during 5 years?
Then if I decide to buy a house or get three kids after those 5 years. For 5 additional years the taxes will be (80 000 EUR x 50%) x 43% = 17 300 Euro/year.
Sounds almost too good to be true with the untaxed income bracket, so just want to be sure I grasped everything.
@Rikard, it IS too good AND it IS true. It’s called ‘ regime impatriati ‘, but the application is not that straightforward.
Also the progressive brackets go from 23 to 43 per cent, so it’s not a flat 43. How does it sound?
Thank you very much Paolo for the confirmation and sounds amazing actually. Seriously considering move to Italy then in the near future.
Do you have someone who can give advice on UK / Italy taxation for individuals who have do not understand what their tax situation is and also give an idea of the cost of such a consultation?
@Caron Broadbent, this is Paolo Rigo, CEO of Studio Rigo. We actually have a YouTube channel with almost 100 videos about taxes and Expats’ dual taxation issues. Also we offer a first intro call free of charge. Plus we host live Q&As and free webinars just to educate people. You can contact us firstname.lastname@example.org
I do not understand what you are saying about taxes. I have enough income from Social Security to retire in Italy — but not if I have to pay 23% of it in taxes. Don’t understand who the 7% tax applies to. Social Security is not taxed in the US. It is not a pension. Please explain.
Hi Diane, this is Paolo Rigo from Studio Rigo. I’m an International Tax Advisor. The 23 per cent is the lowest rate in Italy, the 7 per cent is an alternative tax to the progressive rates. It’s basically a choice you can make, only if you’re moving to a Souther >20k Comune and you’re retired from work. Your pension could be taxed anyway, depending on the type of pension and the tax treaty application.
Firstly thank for the article. Very concise.
Given that I am moving to Tuscany I presume I should be taking my full 25% Tax Free Allowance from my Pension pot in the UK before moving. If so, is there an amount of time before registering as an Italian resident this needs to be done? For example, if I withdraw my allowance in the UK and move within the same Tax year to Italy, will this be regarded as Income and taxed?
This is a complex issue involving cross-border taxation planning. You need somebody who understands both UK and Italian tax affairs, residency rules, etc. I am sending you an email with a little more detail.
Question: what if an expat gets 100.000 Euro from his native country via bank transfer and sends it to crypro investment company? This guy already earned 124k in 2,5 years from his salary İn Italy but he took his earnings to his native country and now decided to send back them to his italian bank account and invest in crypto curencies via another company in euro. This 100k needs to be taxed first or?
Hi this is Paolo Rigo from Studio Rigo, International Tax Firm. According to our worldwide principle, every souce of income (passive and personal) should be put in the IT tax form. The point is choosing the right tax treatment, floating from personal income or capital gain flat tax. Either way, it seems like the RW must be filled out.
Hi, according to PWC, in Italy residents are also taxed on investments they own WITHIN Italy:
Financial investments owned in Italy by an individual are subject to the Italian wealth tax.
The taxable base is the value of the financial investments at 31 December. The applicable tax rate is equal to 0.2% for FY 2020.”
Can somebody please confirm if this is true??
Hi Hartz, please contact our Italy Tax expert Paolo with your enquiry: email@example.com
Wait, if I retire to Italy they will tax my social security? Tax withdrawals I make from my IRA? Tax withdrawals from my US bank accounts? All of this is money already taxed by the US government.
@Jim, pension withdrawals and pension received in Italy may or may not be taxable. There are few details that may include or exclude that income from the tax basis. Worst case, thanks to the Tax Treaty in force, you will never pay twice as much in taxes. Usually, you can deduct the amount paid in your country of origin
Jim. I have asked our Italian tax expert Paolo to comment for you. If you have any further questions, let us know, we will connect you with Paolo directly.
Hello, how can I contact with your italy tax expert Paolo or someone else? Thank you.
Just emailed you Paolo’s contact details
Can I still eligible for “Italian tax relief for expat workers”, in case my spouse will move to Italy after 1 year or 2 years?
I work for Hexedes Group, an international relocation company operating in Italy as well, we do have a number of professionals cooperating with us and I can certainly provide you with a couple of names, so they will be able to assist with your queries. Please feel free to contact me at firstname.lastname@example.org and I will be happy to help!
Excellent summary article, thank you. You alluded to wealth taxes….Can you please explain that aspect? I think it’s the only piece missing here? Thanks!
Italian tax residents pay tax on properties and investments owned outside of Italy. The calculations are pretty complex so it’s best to consult a tax specialist.
Thanks for your response. The last question I have is regarding properties and investments owned INSIDE Italy when you are a resident. I thought there was no wealth tax on this, but according to PWC:
Financial investments owned in Italy by an individual are subject to the Italian wealth tax. The taxable base is the value of the financial investments at 31 December. The applicable tax rate is equal to 0.2% for FY 2020”
Is this true?? Why does everyone else say there are no wealth/stamp taxes on investments held WITHIN Italy? It does sound draconian…
Hi, Paolo Rigo here. CEO of Studio Rigo, certified International tax advisor.
Usually on properties IN the Italian territory there is a property tax called IMU ( around 1 per cent). Your primary residence would be exempt.
Any tax on investments are usually held by the Bank or the Fund itself (as witholding tax).
Hi there. I am looking for an English speaking accountant who can help me with the tax declarations in Italy. I am originally from Holland, work for a Dutch company, live in Italy. Any suggestions are welcome.
There’s an email in the previous comment, try to get in touch with Desiree, she is our Italy expert and helps our readers with all aspects of relocation to Itlay.
Hi Diann I work for Hexedes Group, an international relocation company operating in Italy as well, we do have a number of professionals cooperating with us and I can certainly provide you with a couple of names. Please feel free to contact me at email@example.com and I will be happy to help!
We would like to locate an English speaking commercialista who is familiar with and knowledgeable of the U.S.A. / Italy tax treaty. Any suggestions will be appreciated.