Are You A Resident In Italy And What Taxes Apply To You?

Updated to reflect current Italian tax rules (2026)

I want to talk about the subject of residency in Italy and the taxes that apply to you if you are considered resident. This is a subject that causes a lot of confusion, but the rules themselves are actually quite clear.

Italian tax residency is determined by the Italian Civil Code and the Italian Tax Code. You are considered resident in Italy for tax purposes if, for the majority of the tax year (more than 183 days), you meet one of the following conditions:

• You are registered at the Anagrafe (the official registry of the comune).
• Your domicile is in Italy (your main centre of personal or business interests).
• Your residence is in Italy (your habitual home).

If any one of these applies, you are considered tax resident and therefore subject to Italian taxation on your worldwide income.

This means that all income — whether earned in Italy or abroad — must be declared in Italy. This includes employment income, pensions, rental income, interest, dividends, capital gains, and any other form of income. Italy will then apply its own tax rules, although double‑tax treaties may prevent the same income from being taxed twice.

Italy operates a progressive income tax system. As of 2026, the national income tax brackets are:

• 23% on income up to €28,000
• 33% on income from €28,000 to €50,000
• 43% on income above €50,000

In addition, regional and municipal taxes apply, usually adding between 1% and 3% depending on where you live.

For those with foreign assets, Italy also applies two specific taxes:

• IVAFE — a tax on the value of foreign financial assets (bank accounts, portfolios, etc.).
• Bank accounts: fixed €34.20 per account (if above €5,000).
• Investments: 0.2% of the value.
• IVIE — a tax on foreign real estate.
• 1.06% of the property value, with reductions for EU/EEA properties where the foreign cadastral value is available.

These taxes must be declared through the RW section of the Italian tax return.

If you receive a foreign pension, the tax treatment depends on the type of pension and the double‑tax treaty between Italy and the country of origin. In many cases, the pension is taxed only in Italy, but there are exceptions (e.g., certain government pensions).

For those who have recently moved to Italy, there are also special regimes available, such as:

• The 7% flat tax regime for foreign pensioners moving to qualifying small towns in the South of Italy.
• The impatriate regime, offering significant tax reductions for workers relocating to Italy.
• The €300,000 flat tax for high‑net‑worth individuals on foreign income.

These can provide substantial tax advantages depending on your circumstances.

If you are resident in Italy, you are also required to declare any foreign bank accounts, investments, or properties, even if they produce no income. Failure to do so can result in fines ranging from 3% to 15% of the undeclared value (doubled for black‑list jurisdictions).

For most people who are doing things correctly, this becomes no more than an administrative exercise. But for those who have not yet regularised their position, the consequences can be more serious.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.