Italy country tax guide

Italian (French and German are also used in some regions of northern Italy). 

As a general rule, documents in foreign language should be translated in Italian when provided to the Italian tax Authorities. 

Resident companies are taxable on their worldwide income. The corporate income tax (IRES) is levied  at the standard rate of 24%. 

Companies are also subject to tax on net value of the production arising in each Italian region (IRAP). 

The standard rate is 3.9% but regional authorities may increase or decrease the rate by up to 0.92%. 

Italy does not have a corporate wealth tax. 

Specific tax regime for dividends / interest / capital gains 

As a general rule: 

1. dividends are subject to IRES at the standard rate of 24% on the 5% of their amount (effective tax rate of 1.2%); 
2. capital gains derived from the sale of assets are subject to IRES and IRAP at the standard rates of 24% and 3.9%; 
3. capital gains derived from the sale of shares are subject to IRES at the standard rate of 24% on the 5% of their amount if the following conditions are met:  

• holding period as from the first day of the twelfth month preceding that of the disposal; 
• registration of the investment among financial fixed assets in the first financial statement closed during the period of ownership; 
• tax residence of the participated company in states or territories other than those with privileged taxation; 
• exercise by the participated company of a business activity. 

Italian tax law does not provide for any general regime of exemption. 

Specific regimes of taxation may apply to certain sectors of activities and/or under certain conditions. 

Individuals are considered to be resident in Italy for tax purposes if they meet at least one of the following conditions for the greater part of the year (i.e. for more than 183 days or 184 days for leap years), including fractions of a day:

• residence in Italy as defined in the Italian Civil Code (i.e., having the habitual dwelling in Italy); or
• domicile in Italy as defined in the Italian Tax Code (i.e., having the principal centre of personal and family interests in Italy); or
• physical presence in Italian territory; or

Registration in the register of the Italian resident population (rebuttable presumption).

As of 1st January 2024, personal income tax (IRPEF) ordinarily applies with the following progressive rates: 

The above progressive rates are increased by: i) regional surcharge ranging from 0.7% to 3.63%; and ii) municipal surcharge up to 1.2%.

Italian law provides for certain mechanisms to reduce the taxation of personal income tax of families. These mechanisms do include tax deductions and social amortizations. 

Interest, capital gains and dividends are taxed at a flat rate of 26%  

Interest, capital gains and dividends are taxed at a flat rate of 26%.

Capital gains on real estate are subject to ordinary progressive taxation or, upon option of the seller, to a 26% flat tax. Capital gains on real estate held for at least five years are not taxable.

Newcomers – flat tax regime 

To attract HNWI into Italy, new residents may apply for a “flat tax regime”. Under such regime: 

• incomes produced in Italy are subject to tax according to ordinary rules; and 
• incomes produced outside Italy will be subject to a flat tax of 200k€ per year. 

For individuals who have transferred the tax residence in Italy before  the 10.08.2024, the old regime, which allows a lower flat tax of 100k€, is still applicable.

The “flat tax regime” is optional and is applicable to individuals that were not  resident in Italy for tax purposes for at least nine years out of the ten years preceding the first year of effect of the option .  

In addition, in case of option for the flat tax regime: 

• taxes on assets held abroad are not due; and 
• assets and rights held abroad are exempted from inheritance and gift taxes. 

The option has a 15-year duration, is revocable but it is not renewable. 

During the period of validity of the option the “flat tax regime” may be extended by the individual (the principal) to one or more family members. For each member of the family the flat tax is equal to 25k€ per year.  

Inpatriate workers  

Workers who transfer their tax residence to Italy, starting from fiscal year 2024, may apply for a special tax scheme if they meet the following conditions:

• they not have been resident in Italy in the 3 tax periods prior to the transfer (longer periods are required if the worker works in Italy in continuity with the activity performed abroad);
• they undertake to remain tax resident in Italy for at least 4 years; 
• the working activity is carried out mainly in the Italian territory; and
• the workers are highly qualified or specialised.

This regime applies to employment (and assimilated) income and “professional” self-employment income produced in Italy. Compared to the previous regime, business income is no more included.

Under the special scheme, income up to the annual threshold of € 600,000 is subject to taxation only on 50% of its amount (i.e., being the remaining 50% exempt from taxation). The threshold of exemption is increased to 60% if workers transfer their tax residence in Italy also with children. 

The special regime is generally applicable for 5 tax periods and it is not renewable.

Foreign source pension income 

Individuals with foreign sourced pension income who transfer their residence in certain areas of Italy may benefit from a flat tax rate of 7% on the overall foreign income., whilst Italian sourced income is subject to taxation according to ordinary rules.  

In particular, this regime applies to individuals who: 

• are entitled to receive foreign pension income; 
• transfer their residence in a municipality of southern Italy (i.e., in the Regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia) with a population not exceeding 20,000 inhabitants or in a municipality affected by certain eligible seismic events; 
• have been tax resident abroad for at least 5 tax periods prior to the one in which the option becomes effective; 
• transfer their residence from countries with which administrative cooperation agreements are in force. 

In case of option for this regime also taxes on assets held abroad are not due whilst the exemption from inheritance and gift taxes does not apply.

The option is valid for 10 tax periods and it is not renewable.

As a general rule, the Italian tax system does not provide for any wealth tax for individuals. Despite of that, Italian law provides for the following “possession” taxes:

• IMU: real estate tax, levied at the standard rate of 0.86% (subject to increase/decrease by the municipality);
• IVIE: tax on real estate held abroad, levied at the rate of 1.06%
• IVAFE: tax on financial assets held abroad, levied at the rate of 0.2%. Starting from 2024, the rate is increased to 0.4% for financial products held in “black-list” countries.

As a general rule, and in accordance with tax treaties, gifts and inheritance transmissions are subject to Italian gift and inheritance taxes if one of the following conditions is met: 

• the donor/deceased is Italian tax resident; or, 
• the asset transferred is in Italy. 

If at the date of the opening of the succession (or donation), the deceased (or donor) is not resident in Italy, the tax due is limited to the assets and rights “existing” in Italy. 

Gift/Inheritance tax rates depend on the amount received by each donee/beneficiary, and on the proximity of the relationship between the donor/deceased and donee/beneficiary. In particular, tax rates shall apply as follows: 

1. 4% on the value of the gift/inheritance exceeding 1 million/€ per beneficiary, to the spouse and to direct descendants or ascendants; 
2. 6% on the value of the gift/inheritance exceeding 100 k/€ per beneficiary, to brothers or sisters; 
3. 6% to all other relatives up to the fourth degree or relatives-in-law up to the third degree; 
4. 8% to any others.

Italy has implemented an Investor visa programme which consists in a new type of entry visa for foreign citizens who intend to make eligible investments or donations. 

The Investor visa is a two-year residence permit, renewable for a period of additional three years. 

HNWI may obtain a “standard” visa and residence permit if a number of conditions are met. 

As Italy belongs to the Schengen Space, Italian citizen and persons having an Italian visa or residence permit are allowed to travel in the European-Union within a passport or a visa. 

Trusts, foundations and similar foreign structures are generally recognised under Italian law. 

Trusts, foundations and similar foreign structures are subject to ordinary rules, depending on their tax characterization