Italy has a progressive personal income tax system (IRPEF), with rates from 23% to 43% depending on how much you earn. If you are a resident, you pay tax on your worldwide income. Other important taxes are a standard VAT of 22%, extra regional and local taxes, and a 26% tax on most capital gains and dividends. There are also special tax options, such as a 7% flat tax for retirees in certain southern areas and a €300,000 flat tax for wealthy new residents.
Here is a guide to taxes in Italy, covering personal income tax, becoming a tax resident, and the important deadlines for filing your taxes.
Taxes in Italy: Key Takeaways
Who pays taxes in Italy?
You are considered a tax resident in Italy if you spend 183 days or more in the country in a year or if your main home or family is based there. As a resident, you are taxed on your worldwide income, and you are required to report foreign assets, including bank accounts and property, and pay wealth taxes on them. If you spend less than 183 days in Italy and your main ties are abroad, you are treated as a non-resident, meaning you are only taxed on income earned within Italy and do not need to report or pay tax on your foreign income or assets.
Personal Income Taxes in Italy (IRPEF) 2026
Personal income tax (IRPEF) in Italy is based on how much you earn. If you are a resident, you pay tax on all your income worldwide. If you are not a resident, you only pay tax on income earned in Italy.
National IRPEF Brackets 2026
| Annual Income Bracket | 2026 Tax Rate |
|---|---|
| Up to €28,000 | 23% |
| €28,001 to €50,000 | 33% (reduced from 35%) |
| Over €50,000 | 43% |
Regional and municipal taxes
In addition to the national tax, you must pay two local surtaxes based on where you live:
- Regional Tax: Ranges from 1.23% to 3.33% depending on the region.
- Municipal Tax: Ranges from 0% to 0.9% depending on the town/city.
Social Security Contributions in Italy
Social security is managed by INPS Istituto Nazionale Previdenza Sociale) and is a required payment for both employers and employees. It helps fund pensions, unemployment support, sick leave, and maternity or paternity benefits.
1. For employees (private sector)
The total social security cost is about 40% of your gross salary, but it is shared:
- Employer share: around 30% (paid by the company)
- Employee share: around 10% (taken from your salary)
There is also an income cap of €122,295 per year for people who started contributing after 1996, meaning income above this level is not subject to social security. Additionally, employees earning over €56,224 pay an extra 1% contribution.
2. For Self-employed and freelancers
If you are working as a freelancer or consultant without a dedicated professional fund, you register for the Gestione Separata:
- Standard rate: 26.07% to 35.03% of your net professional income, depending on your situation and whether you have other pension coverage.
- Artisans and traders: Rates are about 24% for artisans and 24.48% for commercial traders, and there is often a minimum annual payment of around €4,400–€4,500, even if your income is low.
Italian Corporate Tax
Italian corporate tax is based on two main parts: a national tax and a regional tax. Most companies in Italy, such as S.r.l. and S.p.A., pay two separate taxes.
| Tax Type | Rate (2026) | Description |
|---|---|---|
| IRES (National) | 24% | Applied to a company’s net taxable income. |
| IRAP (Regional) | 3.9% (standard) | A regional tax on business production value. Rates can vary slightly by region (±0.92%). |
| Effective Total | ~27.9% | The combined standard tax rate for most businesses. |
Tax incentives for companies
- New “Hyper-Depreciation” (2026–2028): Companies investing in new Industry 4.0 equipment like machinery or software made in the EU/EEA can increase the tax value of their investment:
- 180% for investments up to €2.5 million
- 100% for investments between €2.5 million and €10 million
- Participation exemption (PEX): The 95% tax exemption on capital gains now only applies if the company owns at least 5% or the investment is worth at least €500,000.
- Dividends: The 95% tax exemption on dividends only applies under the same rules. If not, dividends are taxed at the normal 24% corporate tax rate.
- Pillar Two (Global Minimum Tax): Large multinational companies with annual revenue over €750 million must pay a minimum tax rate of 15%, even if they operate in lower-tax countries.
Capital Gains Tax in Italy
Capital gains in Italy are taxed at different flat rates depending on the type of asset and how long you hold it. Most financial assets like stocks and bonds are taxed at 26%, while Italian government bonds and certain EU or US bonds are taxed at a lower rate of 12.5%.
Real estate is more attractive for long-term ownership because there is no tax on profits if you sell after 5 years, while sales before that are taxed at either your normal income rate or a 26% flat rate. Crypto gains are taxed at 33% above a certain amount, although euro-backed stablecoins are also taxed at 26%.
| Asset Type | Standard Tax Rate | Conditions / Exceptions |
|---|---|---|
| Stocks & Mutual Funds | 26% | 12.5% for government bonds |
| Real Estate ( | 26% | Or taxed at progressive rates up to 43% |
| Real Estate (> 5 years) | 0% | Tax-free after 5 years |
| Cryptocurrency | 33% | Reduced to 26% for euro stablecoins |
| Foreign Assets | 26% | 0% under the €300k flat tax regime |
Inheritance and Gift Taxes in Italy
Italy’s inheritance and gift tax system is considered one of the most competitive in Europe, and it is especially favorable for close family members, because it has high tax-free allowances. The tax is calculated for each person receiving assets, based on their relationship to the deceased or donor, and it now follows a self-assessment process.
| Beneficiary Relationship | Tax Rate | Tax-Free Threshold (Exemption) |
|---|---|---|
| Spouse & Direct Heirs (Children/Parents) | 4% | €1,000,000 |
| Siblings | 6% | €100,000 |
| Other Relatives (up to 4th degree) | 6% | None |
| All Others (Unrelated) | 8% | None |
| Disabled Beneficiaries | Applicable rate | €1,500,000 |
VAT- Value Added Tax in Italy
In Italy, the standard VAT (IVA) rate is 22% and applies to most goods and services. There are lower rates, such as 10% for hotels and restaurants, 5% for some foods and social services, and 4% for books and basic food items. Non-EU residents can also get tax-free shopping on certain goods.
- Standard Rate (22%): Applies to most goods like clothing, electronics, alcohol, and luxury items.
- Reduced Rate (10%): Applies to services like transport, hotels, restaurants, and some food.
- Reduced Rate (5%): Applies to certain foods, social services, and some healthcare services.
- Super-Reduced Rate (4%): Applies to books, newspapers, and basic foods like milk and vegetables.
- Exemptions (0%): Some services, such as international transport and certain medical care, are not taxed
Property Taxes In Italy
Italian property taxes are mainly set and managed by local municipalities. The system has two main taxes: IMU, which is a tax on owning or buying property in Italy, and TARI, which is a tax for waste collection.
1. IMU (Property Tax)
IMU is the main tax on owning property in Italy. If the home is your main residence and you officially live there, you don’t pay this tax. However, luxury homes are not exempt, even if they are your main home. For second homes or rental properties, you must pay IMU, between 0.76% and 1.06%, depending on the area. It is paid twice a year, in June and December.
2. TARI (Waste Tax)
TARI is a tax for waste collection and disposal. It is paid by the person living in the property, whether that is the owner or a tenant. The amount depends on the size of the home and how many people live there, and it can differ by city. It is paid in one or more installments based on a bill from the local municipality.
| Tax Type | Who Pays? | Primary Residence | Second Home |
|---|---|---|---|
| IMU | Owner | Exempt (unless luxury) | Taxed (~0.76%–1.06%) |
| TARI | Occupant | Taxed (based on size and number of people) | Taxed (often at a lower rate) |
Special Tax Regime and Incentives for Non-Residents in Italy
Italy has several attractive tax regimes designed to attract high-net-worth individuals, skilled professionals, and retirees. Italy also allows non-domiciled individuals to combine different tax regimes, such as the Italian flat tax regime for HNWI with the Impatriate Workers Regime. It is possible to qualify for the Italy tax regime through programs like the Italy Golden Visa, or the Italy Elective Residence Visa for retirees.
| Tax Regime | Annual Tax | Eligible Beneficiaries | Duration | Key Benefits |
|---|---|---|---|---|
| Flat Tax for High-Net-Worth Individuals | €300,000 (plus €50,000 per family member) | Individuals not tax residents in 9 of the last 10 years | Up to 15 years | Exemption from Italian inheritance/gift taxes on foreign assets; no wealth tax on foreign assets; simplified tax reporting |
| 7% Flat Tax for Foreign Pensioners | 7% Flat Tax for Foreign Pensioners | Retirees establishing residency in specific southern municipalities | 10 years | Applies to all foreign income, including pensions; exemption from wealth tax on foreign assets |
| Impatriate Regime for Workers | 50%–60% of employment income exempt from taxation | Professionals moving to Italy for employment | Up to 5 years | Exemption applies to employment and self-employment income; higher exemption for those with minor children |
How to Become a Tax Resident in Italy
To become a tax resident in Italy, you need to meet at least one of these conditions:
- You spend more than 183 days a year in Italy (184 in a leap year), or
- Your main home or family is in Italy, or
- You are registered as a resident at your local Town Hall (Anagrafe)
Registering with the Anagrafe makes it likely that you are seen as a tax resident, but this can be challenged if you can prove your main life and ties are in another country.
To live and pay taxes in Italy, you will also need a tax number (Codice Fiscale). This is a personal identification number used for things like opening a bank account, signing a rental contract, or paying taxes. You can get it for free from the Italian tax office (Agenzia delle Entrate) or through an Italian consulate before you move.
Tax Filing Deadlines in Italy
| Payment Type | Deadline | What is being paid? |
|---|---|---|
| First Deadline | June 30, 2026 | 1. Balance of tax owed for 2025 |
| 2. First advance payment (40%) for the 2026 tax year | ||
| Optional Extension | July 30, 2026 | Same as above, but with a 0.4% penalty fee |
| Second Deadline | November 30, 2026 | Second advance payment (60%) for the 2026 tax year |
How Can Global Citizen Solutions Help You?
Global Citizen Solutions is a boutique migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments.
We guide you from start to finish, taking you beyond your citizenship or residency by investment application.
