Tax Residency and Taxes in Italy

Since 1992, Feod Group has been providing a wide range of immigration, business, and legal services in Italy.

Our team includes international lawyers and Italian attorneys.

Tax Resident of Italy

When planning to move to Italy, obtain a residence permit, purchase property, or establish a business, it’s essential to understand the tax implications. What taxes will you need to pay as an individual or business? What are the tax obligations for purchasing and maintaining property?

First, it’s important to distinguish between two types of residency: tax residency and immigration residency.

Immigration residency gives you the right to live in Italy (meaning, acquiring either temporary or permanent residency). However, obtaining a residence permit does not automatically make you a tax resident in Italy.

Tax residency status, on the other hand, determines in which country you will pay taxes.

Criteria for Determining Individual Tax Residency in Italy

The main criterion is registering in the municipal registry when moving to Italy with a residence permit. A foreign national who relocates to Italy must register with the Municipal Registry of Permanent Residents and spend more than 183 days a year in Italy. Additional criteria include:

Having the “center of life interests” in Italy (meaning Italy is the main hub for business, economic, social interests, or where family resides).
Having a “place of residence” in Italy (such as a property used as the main home).

Meeting any of these criteria qualifies an individual as a tax resident for Italian taxation purposes.

Legal Entities as Italian Tax Residents

Companies and other legal entities are considered tax residents in Italy if their place of incorporation, management, or primary and secondary activities are in Italy. Meeting one or more of these conditions for at least half of the tax period establishes residency.

Difference Between Tax Resident and Non-Resident Status

With a tax residency certificate in Italy, you will pay tax on your worldwide income.
Non-residents are taxed only on income earned within Italy.

Taxes in Italy in 2024

Main Taxes for Individuals in Italy

1.IRPEF (Imposta sui redditi delle persone fisiche) – This is Italy’s personal income tax, which applies to both residents and non-residents.

An individual who is a tax resident of Italy pays this tax on all income earned both in Italy and abroad.

Non-residents are only taxed on income earned within Italy.

Income tax in Italy is levied at three levels: national, regional, and municipal.

National-level income tax for individuals:

Income up to €15,000 – 23%

Income from €15,001 to €28,000 – 25%

Income from €28,001 to €55,000 – 35%

Income over €55,001 – 43%

Regional income tax depends on the region of residence, with rates ranging from 1.23% to 3.33%.
Municipal income tax depends on the municipality, with rates from 0% to 0.8%.

2. Social Security Contributions

The total social security contribution rate is approximately 40% of the employee’s gross remuneration, with 30% paid by the employer and 10% by the employee.

3. Inheritance and Gift Tax

4% for spouses or direct-line relatives. This tax applies to assets exceeding a €1 million exemption (per heir).
6% for siblings on amounts exceeding €100,000 (per heir).
6% for other family members up to the fourth degree.
8% for all others.

Real Estate Taxes in Italy

Tax rates for purchasing, owning, and selling property in Italy depend on several factors, including:

Whether you are an Italian resident or non-resident and whether you live in the municipality where the property is located.
Whether the property is your first or second home, a vacation property or investment, or your primary residence.
The type and value of the property you are purchasing.

For example, if you buy a home in Italy but do not plan to live in it permanently, it is considered a second home, which generally incurs higher taxes than a primary residence. Additionally, primary residences benefit from certain tax exemptions unavailable to second homes.

1. Taxes on Purchasing Property in Italy

Registration Tax (Imposta di Registro) – paid by the buyer:

- - New property from a developer – exempt from this tax; instead, VAT (IVA) is paid (ranging from 4% to 22%).
  - Purchase as primary residence – 3%
  - Purchase of a second home – 7%
  - Purchase of land for construction – 8%
  - Purchase from a private individual by a non-resident – 9%
VAT (IVA) on Property from Developer:

- - 4% for primary residence as a resident
  - 10% for a second home or as a non-resident
  - 22% for luxury property (categorized as A/1 for luxury residences, A/8 for villas, and A/9 for castles and properties of significant historical or artistic value).
Additional Taxes and Fees: cadastral tax, stamp duty, and notary fees.

2. Taxes on Owning Property in Italy

Italy has two primary types of annual property taxes: IMU and TARI.

IMU (Imposta Municipale Unica) – a municipal property tax levied on property owners, usually 0.4% to 0.76% of the cadastral value. Rates can vary by municipality and taxpayer status. If the property is your primary residence, you are generally exempt from IMU.
TARI (Tassa sui Rifiuti) – a service tax for waste disposal and street cleaning, set by the municipality based on the property’s size and number of occupants.
Property Insurance typically costs 1-2% of the property value.

3. Capital Gains Tax on Property Sales

Italy’s Plusvalenza tax applies to capital gains from the sale of property at a progressive rate of 26%.

Exemptions from Capital Gains Tax:

If you have owned the property for more than five years.
If the property was owned for less than five years but was used as the primary residence for most of the ownership period.

Explore real estate options in Italy »

Italian Fixed Tax

By obtaining a Certificate of Tax Residency in Italy, you also have the option to apply for a unique tax benefit under the Non-Domiciled Resident status.

The Italian government introduced a new tax regime for individuals seeking to establish their tax residency in Italy – Imposta forfettaria.

This is also known as the “flat tax in Italy,” “lump-sum taxation,” or “accorded tax.”

The main advantage of this law is the annual payment of a fixed tax on personal income declared from any amount earned outside Italy:

€200,000 tax on income for the primary applicant;
€25,000 tax on income for each additional family member.

This tax benefit for declaring personal income is granted for a period of 15 years, with the possibility of extension.

The annual tax payment replaces the need for income tax, local taxes, and property taxes on foreign assets.

Another significant advantage is that the non-dom regime fully exempts from inheritance and gift taxes on all foreign assets held by individuals using this special regime.

The non-dom status in Italy can be revoked upon request and will automatically be canceled if the annual payment is not made.

The first step to obtaining non-dom status in Italy is to apply for an Italian Residence Card.

Once the Italian Residence Card is obtained, a preliminary application is submitted to the Italian tax authorities, which includes:

Italian social security number;
Residential address in Italy;
Information on the last jurisdiction where the taxpayer was a resident before the start of the fiscal period in which they chose the Italian tax regime.

Taxes for Legal Entities in Italy

Companies registered in Italy or with primary activities in Italy are considered resident companies and are taxed in Italy on their worldwide income.

Legal entities are subject to Italy’s corporate income tax, Imposta sul reddito sulle società (IRES), and a regional tax on production, Imposta Regionale sulle attività produttive (IRAP).

Non-resident companies are subject to IRES and IRAP only on their income from Italian sources.

IRES – The standard corporate income tax rate is 24%.
IRAP – The regional tax on production activities is applied at a fixed rate of up to 3.9%. Since IRAP is levied at the regional level, regions may increase or decrease the standard rate by up to 0.92%.
VAT – The standard Italian VAT rate is 22%, with reduced rates of 10%, 5%, and 4%.
Dividends paid to non-residents (outside the EU) are taxed at a 26% rate, though reduced rates and refunds may apply under certain conditions.
Interest – Rates are 0%, 12.5%, and 26%.
Royalties – Tax rates are 22.5% and 30%.

➡️ How to Start Your Own Business in Italy: Advantages, Procedures, and Taxes

Feod Group Services

✓ Development of business and family relocation strategies; legal case assessment.

✓ Consulting on Italy’s tax system, including tax comparisons between Italy and other EU countries.

✓ Assistance with obtaining Italian residence permits for financially independent foreigners, Italian residence by investment (Investor Visa), business immigration to Italy, and more.

✓ Preparation of documents verifying the legality of fund sources.

✓ Assistance with obtaining an Italian tax residency certificate and exiting tax residency in the country of primary residence.

✓ Help with opening personal and corporate bank accounts in Italy.

✓ Assistance with the purchase and sale of commercial and residential real estate in Italy.

✓ Legal support for company registration in Italy (office leasing assistance, business plan preparation, required documentation, and employment contracts).

✓ Enrollment of children in schools, colleges, and universities in Italy and other EU countries.

Learn more about all services offered by Feod Group »

Tax Residency and Taxes in Italy - FAQ

What Does It Mean to Be a Tax Resident of Italy?

A tax resident of Italy is an individual or legal entity subject to taxation in Italy based on residence, property ownership, or having their center of life interests in Italy, or, for legal entities, based on registration there.

In other words, tax residency status determines the country in which you will pay taxes on all your income.

How to Become a Tax Resident of Italy in 2024?

According to the legislation, an individual is considered a tax resident of Italy if one of the following conditions is met:

The foreigner lives in Italy for more than 183 days in a year.
The “center of life interests” is located in Italy.
The foreigner has a “place of residence” in Italy (a property in Italy that the individual uses as their primary residence).

Tax residency is confirmed by a Tax Residency Certificate.

What is a Tax Residency Certificate of Italy?

A Tax Residency Certificate is a document that confirms that an individual or legal entity is a tax resident of Italy.

Article author

Anastasia Taran Head of Corporate Services
Ukraine

In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes i...

family and corporate immigration solutions.
establishing a business in Europe.
personal and corporate taxation in Europe.
opening accounts in European banks.
obtaining a tax resident status.

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