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Italy Tax Guide

Europe
Updated January 2025
Sources + last updated

This page includes citations to the sources used for this entry. Always verify with official sources before making decisions.

Tax Foundation Europe
High Tax Comparator
Personal Tax Score
42/100
High Tax
Business Tax Score
60/100
Moderate

Personal Income Tax

Tax Residency

Day Threshold
183 days
Note
183 days or center of vital interests or domicile

Income Tax Rates

Top Marginal Rate
43%
Structure
Progressive 23-43% plus regional and municipal surcharges

Foreign Income Treatment

System
Worldwide
Details
Italian residents taxed on worldwide income; foreign tax credits available

Investment Income

Capital Gains
26%%
Dividends
26%%
Interest
26%%

26% flat rate on most capital gains (PIT); real estate taxed differently

Wealth & Inheritance

Wealth Tax
Yes - IVIE 0.76% on foreign real estate; IVAFE 0.2% on foreign financial assets
Inheritance Tax
Yes - Inheritance tax 4-8% with exemptions for close family

Special Regimes

Flat Tax for New Residents (HNWI)
€100,000/year lump-sum tax on all foreign income for new residents (plus €25,000 per family member). No matter the amount earned abroad — flat €100K covers it. Duration: 15 years. Must not have been Italian resident for 9 of prior 10 years.
7% Flat Tax for Retirees
7% flat tax on all foreign income for up to 10 years. Must move to a southern Italian municipality with population under 20,000. Must not have been an Italian tax resident in prior 5 years.

Practical Notes

High standard tax burden but excellent special regimes. €100K lump-sum is extremely attractive for HNWIs earning €500K+. 7% retiree flat tax in southern Italy is one of Europe's best deals for pensioners. IVIE/IVAFE wealth taxes apply on foreign assets.

Business & Corporate Tax

Corporate Income Tax

Headline Rate
27.8%
Effective Rate Note
24% IRES + 3.9% IRAP regional tax
Free Zone / Incentives
Limited incentives in certain southern regions

Withholding Taxes

Dividends
26%
Interest
26%
Royalties
30%

VAT / GST

Rate
22%
Note
22% standard VAT; reduced rates 4% and 10%

Compliance & Substance

Substance Requirements
High - strict requirements
Compliance Friction
High - complex tax system

Notable Regimes

  • Patent Box
  • New resident flat tax
  • Southern Italy incentives

Data Sources

Tax Foundation Europe

Last updated: January 2025. Always verify with official sources before making decisions.

FAQ

What is the personal income tax rate in Italy?

Italy has a top personal income tax rate of 43%. The tax structure is: Progressive 23-43% plus regional and municipal surcharges. See the detailed breakdown above and verify with official sources.

Do I need to pay tax on foreign income in Italy?

Italy uses a worldwide system for foreign income. Italian residents taxed on worldwide income; foreign tax credits available

What are the residency requirements for Italy?

Tax residency in Italy generally requires 183 days of physical presence. 183 days or center of vital interests or domicile. Always verify current rules with official sources.

Is there a wealth tax in Italy?

Yes, Italy does have a wealth tax. IVIE 0.76% on foreign real estate; IVAFE 0.2% on foreign financial assets

What is the corporate tax rate in Italy?

The corporate tax rate in Italy is 27.8%. 24% IRES + 3.9% IRAP regional tax