Taxes in Italy in 2025-2026

When moving to a new country, it is essential to understand the local tax system — at the very least to avoid issues with the authorities. For employees working under an employment contract, taxes and contributions are often handled by the employer. However, the situation can be far less straightforward for the self-employed, business owners, or those renting out property.

In this article, we explain which taxes foreigners are required to pay in Italy, who is considered a tax resident, and which tax rates apply to different categories of taxpayers.

Previously, we wrote about taxes in France.

Under Italian law, a foreign national is considered a tax resident if at least one of the following conditions are met:

Once you become a tax resident, it is important to understand that you are required to annually declare to the Italian Tax Authority all active and passive income from any sources both within Italy and abroad, as well as ownership of real estate worldwide.

Non-residents, by contrast, are taxed only on income and assets sourced in Italy.

Personal income tax in Italy — IRPEF (Imposta sul Reddito delle Persone Fisiche) — applies to anyone who earns income from:

IRPEF is mandatory for all individuals, regardless of residency status, on income derived from Italian sources.

Italy applies a progressive income tax system. Income of up to €5,500 per year is not subject to taxation.

Italy’s progressive income tax is applied step by step, rather than to the entire income at once. This means that a person earning €60,000 per year calculates tax as follows:

In some cases, regional surcharges (ranging from 1.23% to 3.33%) and municipal surcharges (up to 0.9%) also apply, depending on the place of residence.

Italy also has indirect taxes, such as VAT. However, we will not go into detail here, as these charges are already included in the prices of goods and services, and ordinary consumers do not need to calculate or pay them separately.

A person who acquires tax resident status in Italy may still receive tax claims from another country, including their country of origin, requiring payment of personal income tax and other contributions on income earned both domestically and abroad, as well as on assets such as real estate, investments, and bank accounts.

Italy has signed numerous double taxation avoidance agreements with other countries, including several CIS states. If the same income has been taxed twice, taxpayers in Italy may claim a tax credit equal to the amount of tax paid abroad.

The productivity bonus is a non-regular employee reward linked to improvements in product quality or company performance, provided that the bonus is granted to all eligible staff. The eligibility criteria must be transparent and are usually defined as key performance indicators (KPIs). These may include not only work performance, but also factors such as reduced energy consumption, increased company revenue, lower production waste, faster delivery times, and similar achievements.

The bonus is capped at €3,000 per person per year. It is subject to a flat tax rate of 10% and is not exempt from social security contributions, regional, or municipal surcharges. In 2025, the tax rate on the productivity bonus was temporarily reduced to 5%, effective until 2027.

Only employees whose gross income in the previous year did not exceed €80,000 are eligible for this benefit. In addition, to apply the reduced taxation, the employer must have a collective agreement with a trade union. If no union is present in the region, a collective agreement may be used instead.

Social contributions in Italy are payable by employees under employment contracts, the self-employed, companies, and employers. The overall contribution rate is around 40% of an employee’s gross salary. The larger share of social taxes — approximately 30% — is paid by the employer, while about 10% is withheld from the employee’s salary.

Around 33% of the total contribution is allocated to the National Pension Fund, while the remaining portion finances social security benefits such as unemployment assistance, sick leave, maternity benefits, and other welfare programs.

Self-employed individuals who do not have a VAT number and are not covered by a private pension fund must register with INPS independently. Contribution rates range from 24% to 35.04%, depending on the type of self-employment. If certain conditions set out in Law No. 190/2014 are met, the rate may be reduced to 15%.

Italy applies several taxes and duties when purchasing residential property. The amount payable depends on the type of property, its condition, and its intended use. The main charges are outlined below.

For private individuals, the stamp duty ranges from 2% to 9% of the cadastral value of the property, but not less than €1,000. This tax is paid once at the time of purchase. The cadastral value is usually significantly lower than the market price and is indicated in the purchase deed (rogito).

If the buyer spends less than 6 months per year in Italy and the purchase is a second property, the duty is always 9% of the cadastral value.

If the property is purchased by a company registered in Italy, the stamp duty is a fixed €200.

The fixed imposta catastale ranges from €50 (when buying from a private individual) to €200 (when the seller is an Italian-registered company). It is charged for updating ownership records in the land registry.

An additional tax of the same amount, imposta ipotecaria, is also levied on property purchases, even if no mortgage is taken out.

Value-added tax applies to property purchases as well. VAT can be avoided if the property is bought from a private individual.

When purchasing from a company registered in Italy, VAT rates are:

For luxury properties, the 22% VAT rate applies regardless of whether the buyer owns other property in Italy. While not officially designated as such, this can be considered a form of luxury taxation.

Plusvalenza is a tax on capital gains arising from the sale of property and is paid only by the seller. There are several important exceptions:

In other cases, the tax rate is 26% of net profit. Net profit is calculated by deducting transaction costs, agent fees, and documented construction or renovation expenses from the sale price. Engaging a professional is advisable to ensure accurate calculations.

The purpose of plusvalenza is to discourage speculative property purchases. Various exemptions exist, so it is recommended to consult a real estate tax lawyer to determine eligibility.

Ongoing property-related charges in Italy are grouped under IUC (imposta unica comunale) and include IMU, TASI, and TARI.

IMU and TASI are paid twice a year, in June and December. Payment notices are sent by the local municipality by post.

Expats who transfer their tax residency to Italy may opt for an alternative flat-tax regime on their income. Instead of paying progressive personal income tax (IRPEF), they can choose a fixed annual tax of €100,000 for 2024 and €200,000 for 2025.

This regime is designed for high-net-worth individuals and aims to attract foreign capital and investment into Italy. Once chosen, the flat-tax status can be applied for up to 15 years, provided all tax obligations are met on time. Family members may also be included in the scheme for an additional €25,000 per person per year.

It is important to note that the flat tax applies only to income sourced outside Italy. Any income generated within Italy remains subject to the standard progressive IRPEF rates.

The Italian tax year совпадает с календарным годом — он начинается 1 January и заканчивается 31 December.

Most types of income are declared using one of the following forms:

There are two main tax payment deadlines:

The Italian Tax Authority provides official forms and detailed instructions, which are available free of charge.

The Redditi PF form can be submitted online using the RedditiOnLine PF software. This tool allows taxpayers to complete the declaration, generate an electronic file for submission, and create the F24 payment form, which is used to pay taxes.

Both Redditi PF and Form 730 may be available in a pre-filled version, automatically compiled using data held by the Tax Authority. This may include deductions for:

To access a pre-filled tax return, you must log in using SPID (Public Digital Identity System), Electronic Identity Card (CIE), or National Services Card (CNS). After logging in, you can review, correct, and add information as needed. Detailed instructions are available on the official website.

Expats who are tax residents in Italy must declare their foreign assets using Form RW, which is attached to the annual tax return.

All assets must be declared, even if they are not registered in your name. Failure to declare foreign assets may result in penalties ranging from 3% to 15% of the value of the undeclared asset per year.

Foreign passive income, including capital gains and dividends, is taxed at a flat rate of 26%.

Additional taxes on foreign assets include:

To submit the declaration, you need to download the relevant form, complete it, and submit it to the competent authority. Taxes can be paid at any bank or post office.

Failure to submit a tax return, or submitting it incorrectly, may result in:

In simple terms, missing the deadline or failing to file correctly can mean paying up to 240% more in taxes, plus an additional €250 fine, compared to timely and accurate submission.

After paying all mandatory taxes and contributions, there is usually an amount left that can be allocated to daily expenses and savings. For many people who move to Italy, regular international money transfers become a fixed part of their budget — most often to support family members and loved ones who remain abroad. Since the tax burden in Italy is relatively high compared to some other EU countries, choosing a transfer method with minimal fees is especially important.

The Korona app offers one of the lowest commissions on the market. Sending money is simple and takes no more than five minutes thanks to a clear and intuitive interface. Funds are delivered almost instantly.

Korona is available for download in the App Store and Google Play.

On our blog, we also publish many other materials about living and working in Europe. If this topic is relevant to you, we recommend browsing the article catalog — you may find answers to many of your questions.