Taxes in Italy in 2026 for foreigners and expats

Tax rates in Italy in 2026: the short version

In 2026 Italy cut the tax on middle incomes: the rate on income between €28,000 and €50,000 fell from 35% to 33% under the 2026 Budget Law (Legge 30 dicembre 2025, n. 199). The saving is capped at €440 a year, and above €200,000 of income it is clawed back through reduced tax credits.

Where the money is bigger, taxes went up: crypto gains are taxed at 33% instead of 26% from 2026, the lump-sum tax for wealthy new residents is €300,000 a year against €200,000 in 2025 and €100,000 before August 2024, and no more than two flats can be let short-term at the preferential rate.

The main personal tax is IRPEF (Imposta sul reddito delle persone fisiche, personal income tax). On top of it come a regional surcharge (addizionale regionale) and a municipal surcharge (addizionale comunale), which is why the same salary is taxed differently in Milan and in Naples.

Compare taxes in 146 countries: relocation taxes 2026

Who becomes an Italian tax resident

Since 2024 Italy counts days more strictly than before: even partial days spent in the country count towards the 183. The rule came with Legislative Decree 209/2023 (Decreto legislativo 27 dicembre 2023, n. 209), which rewrote article 2 of the TUIR (Testo unico delle imposte sui redditi, the consolidated income tax code).

A person is resident if, for more than half the calendar year, at least one test is met: physical presence in Italy, habitual residence there, or domicile. Since 2024 the law defines domicile (domicilio) as the place where personal and family ties are centred. Courts used to weigh business interests too; now family comes first.

A resident pays IRPEF on worldwide income: salary from a foreign employer, rent from a flat in Moscow or Kyiv, bank interest and dividends. Italy does not split the year: if the tests are met, the whole calendar year is resident, unless a tax treaty with another country says otherwise.

Holders of a passport obtained through Italian citizenship by descent face a trap: an Italian citizen living abroad registers with AIRE (Anagrafe degli italiani residenti all'estero, the register of Italians resident abroad), but one living in a country on Italy's tax blacklist is treated as an Italian resident until proven otherwise.

A residence permit and tax residence are different things: an Italian residence permit does not make a holder resident if fewer than half the year is spent in the country, while a tourist who stays 190 days is already resident for tax purposes. How the 183-day rule works in different countries is covered in our article on tax residency.

Italy tax residency: how to become a resident and count the days

Italy makes you resident for more than half of the calendar year in the country, and since 2024 even partial days count. Any of three grounds held for most of the year also makes you resident: residence, domicile, meaning the centre of personal and family ties, or registration in the population register.

Registration is a presumption that is hard to rebut. A resident pays progressive income tax on worldwide income, a non-resident only on Italian income. The status is confirmed by an Italian Revenue Agency certificate.

The law does not stop you from confirming the status on your own. But mistakes cost more: a municipal registration left in place after leaving keeps you an Italian resident. Murblz support removes these risks: we count days, check the registration and ties, and obtain the certificate. We guarantee professional work and a transparent process, and in most cases a result on the first filing.

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How much tax is taken from a salary in Italy: worked example

On a gross salary of €40,000 a year, about €28,000 reaches the bank account in Italy, roughly 70%. The same salary costs the employer about €55,000. The gap goes on income tax, local surcharges and pension contributions: together, employee and employer pay around 40% of the salary to INPS.

The IRPEF scale now has three bands instead of five in 2021, and each rate applies only to the slice of income within its band.

Tax credits (detrazioni) are then subtracted from the gross tax. The main one is the employee credit under article 13 of the TUIR: up to €1,955, fading to zero at €50,000 of income. Since 2025 another one applies (Law 207/2024): up to €20,000 of income part of the salary is tax-free, between €20,000 and €32,000 there is an extra €1,000 credit, and it tapers to zero at €40,000.

Worked example for an employee on €40,000 gross a year with no children or dependants. We assume a regional surcharge of 1.5% and a municipal one of 0.8%; actual rates depend on the city.

Compared with 2025, this employee saves about €166: 2% of the €8,324 in the second band. The full €440 a year goes to incomes between €50,000 and €200,000.

The annual amount is usually paid in 13 instalments: collective agreements give a thirteenth salary (tredicesima) to practically everyone, and retail often adds a fourteenth. That works out at about €2,150 a month with 13 payments and about €2,000 with 14.

On top of the gross salary, the employer pays about 30% in contributions and sets aside the TFR (trattamento di fine rapporto, a severance allowance paid on leaving) - roughly one month's pay per year of service.

How much employees, sole traders and freelancers pay to INPS

For sole traders and freelancers in Italy, contributions often weigh more than the tax itself: a shopkeeper pays at least €4,611 a year into the pension fund even without earning a cent. INPS (Istituto Nazionale della Previdenza Sociale, the National Social Security Institute) is the state pension fund and benefits agency. It set the 2026 rates for artisans and traders in Circular No. 14 of 9 February 2026.

Income above the €122,295 ceiling is free of contributions; this covers almost all newcomers, because the ceiling applies to those who started contributing after 1995.

That is why the type of activity matters at registration: programmers, designers and consultants usually pay 26.07% to the Gestione Separata with no fixed minimum, while trade and crafts mean a minimum of €4,500-4,600 a year from day one. Artisans and traders on the flat-rate regime can ask for a 35% cut in contributions, but their pension record is then credited proportionally less.

Corporate tax, dividends and VAT in Italy for businesses

Out of €100,000 of profit made by an Italian company, a resident owner ends up with about €56,240. First the company pays 24% IRES (Imposta sul reddito delle società, corporate income tax), leaving €76,000; then 26% is withheld from the dividend, another €19,760. That is about 44% in total, before the regional IRAP tax.

IRAP (Imposta regionale sulle attività produttive, regional tax on productive activities) is an Italian peculiarity. The base rate is 3.9%, and regions can raise or lower it by 0.92 points. It is charged not on profit but on a wider base, the value of production (valore della produzione), from which, for example, interest on loans is not deducted. So an indebted company can pay IRAP even in a loss-making year.

The reduced 20% IRES rate for companies that reinvested their profits applied to 2025 only and has not been extended. Instead, the 2026 Budget Law brought back iperammortamento, enhanced depreciation for technology investments made until 30 September 2028: the company deducts more than it actually spent.

An Italian holding company is taxed on only 5% of dividends from subsidiaries, about 1.2% in effective terms. The 2026 budget law limited this to stakes of at least 5% or worth at least €500,000, but in March Decree-Law 38/2026 scrapped the threshold retroactively from 1 January 2026.

Italian residents who own companies abroad fall under the controlled foreign company (CFC) rules. If such a company pays much less tax than it would in Italy and lives on passive income, its profit is taxed in the owner's hands even if not distributed. More on our CFC page.

VAT in Italy is called IVA (Imposta sul valore aggiunto). There is no threshold below which a business can trade unregistered: every business obtains a partita IVA (VAT number, in practice the registration of a business activity) before its first sale. Since 2019 invoices are issued only electronically through the state SdI system (Sistema di Interscambio, the e-invoicing exchange system).

A company in Italy, most often an SRL, is set up through a notary, and Murblz specialists organise its bookkeeping together with local partner accountants (commercialista). See company registration in Italy and business accounts in Italy. Other countries are covered under company formation abroad.

Special tax regimes in Italy: 15% for sole traders, half of income tax-free for newcomers, 7% for pensioners

For all its high headline rates, Italy has one of the most generous sets of tax breaks in the EU: the right regime can cut the bill several times over. The condition is almost always the same - not having been an Italian tax resident for several years before the move.

Flat-rate regime for sole traders and freelancers (regime forfettario)

Instead of IRPEF, surcharges and VAT there is a single 15% tax, or 5% for the first 5 years of a new business. It is charged not on actual profit but on deemed income: turnover is multiplied by a profitability coefficient (coefficiente di redditività) that the law sets for each activity. For programmers it is 67%, for consultants, lawyers, doctors and other professions 78%, for retail and food service 40%.

Conditions: turnover of up to €85,000 last year (above €100,000 the regime is lost immediately), employment income of up to €35,000 last year, staff costs of up to €20,000. Most invoices cannot go to a current employer or one from the last 2 years.

Worked example for a programmer who opened a sole proprietorship in 2026 and earned €50,000, simplified, ignoring the timing shift of contributions between years:

That is a burden of about 20% in the first five years and about 25% afterwards. An employee on €50,000 gross, with the same surcharge assumptions, would give up about 35%.

Inbound worker regime (regime impatriati)

Since 2024, under article 5 of Decree 209/2023, half of a salary or freelance income is exempt from IRPEF and surcharges for 5 years in a row. When moving with a minor child, or if a child is born during the period, 60% is exempt. The break covers income of up to €600,000 a year.

Conditions: no Italian tax residence for 3 years before the move (6-7 years if the work continues for the same employer or group), a commitment to stay resident in Italy for 4 years, and proof of high qualification or specialisation, usually a university degree. Leave early and the benefit is clawed back with interest. Business income, such as from trading, is not covered. Teachers and researchers have a separate regime exempting 90% of income.

Lump-sum tax for new residents (art. 24-bis TUIR)

Tax on all foreign income can be replaced with a fixed amount: for those moving from 1 January 2026 it is €300,000 a year plus €50,000 for each family member. Those who moved earlier keep their original amount, €100,000 or €200,000 depending on the year of arrival. The regime lasts up to 15 years and requires not having been resident in Italy in 9 of the last 10 years. Italian income is taxed as usual.

It can be combined with the inbound worker regime only when moving by the end of 2026: for moves from 2027, Law Decree 38/2026 bans it.

7% for pensioners in southern Italy (art. 24-ter TUIR)

Recipients of foreign pensions who move to a municipality of up to 30,000 inhabitants in Sicily, Sardinia, Calabria, Campania, Basilicata, Abruzzo, Molise or Apulia pay 7% on all foreign income for 10 years. The small business law (Legge 11 marzo 2026, n. 34) raised the limit from 20,000 to 30,000 inhabitants from 7 April 2026. The condition is not having been resident in Italy for the 5 years before the move.

Digital nomads

There is no special regime for holders of the digital nomad visa: after 183 days in the country, a salary from a foreign employer is taxed on the normal scale, and 15% is only possible through an Italian sole proprietorship on the flat-rate regime.

Property, rental, inheritance and crypto tax in Italy

Buying a home in Italy is taxed not on the sale price but on the cadastral value, which is usually several times below market value. So the 9% rate on a second home is gentler in practice than it looks, and a lot depends on who the seller is: a private individual or a developer.

Taxes on purchase

Foreigners can also claim the first-home relief if they register as residents of that municipality within 18 months of the purchase and own no other home there.

Annual IMU tax

IMU (Imposta municipale propria) is charged on a base which, for flats, equals the cadastral income (rendita catastale) × 1.05 × 160. The base rate is 0.86%, and the municipality can raise it to 1.06%. The main home, where the owner lives and is registered, is exempt unless it falls into a luxury category (A/1, A/8, A/9). A non-resident with a holiday flat in Italy usually pays IMU at the full rate in two instalments, by 16 June and 16 December.

Worked example: a flat with a cadastral income of €1,000 in a municipality charging 1.06%. The base is 1,000 × 1.05 × 160 = €168,000, and IMU comes to about €1,781 a year.

Renting out and selling

A landlord can have rent taxed on the IRPEF scale or at the flat cedolare secca rate: 21%, or 10% for agreed-rent contracts (canone concordato) in cities with housing shortages. From 2026 short-letting a first flat is taxed at 21%, a second at 26%, and three or more count as a business.

Selling a home owned for more than 5 years, or one the owner's family lived in for most of the ownership period, is tax-free. Otherwise the gain is taxed under IRPEF or at 26% through the notary.

Inheritance and gifts

By European standards this is mild: in France, rates for children reach 45%. Inherited property also attracts charges of 2% and 1% of cadastral value.

Crypto, foreign accounts and cars

Crypto gains are taxed at 33% from the first euro in 2026 (the €2,000 allowance was abolished in 2025), euro stablecoins at 26%. On top of that comes 0.2% a year on the value of crypto-assets. More on moving with crypto in our article on crypto and taxes when relocating.

An Italian resident also pays tax on assets abroad. IVIE (Imposta sul valore degli immobili situati all'estero, tax on foreign real estate) is 1.06% of the value, for example of a flat in Russia or Ukraine. IVAFE (Imposta sul valore delle attività finanziarie detenute all'estero, tax on foreign financial assets) is 0.2% a year on brokerage portfolios and deposits, 0.4% in blacklisted countries. An ordinary bank account pays a fixed €34.20 a year if the average balance exceeds €5,000.

Car tax (bollo auto) is paid to the region according to engine power in kilowatts. For Euro 4-6 cars the base tariff is €2.58 per kW up to 100 kW and €3.87 for each kW above; regions can deviate by up to 10%. A 110 kW car (about 150 hp) costs roughly €297 a year.

What taxes non-residents pay in Italy

A non-resident pays tax in Italy only on Italian income, on the same IRPEF scale of 23-43%, but without credits for family and most expenses. The exception is EU and EEA residents who earn at least 75% of their total income in Italy: they are treated like residents.

Non-residents most often meet withholding tax: the Italian payer deducts it at source. A double tax treaty lowers the rate if the payer receives a certificate of residence and the treaty forms in advance.

An owner of an Italian flat who does not live in the country needs a codice fiscale (Italian tax number) and pays IMU every year. Rent from such a flat is declared in Italy even if the money arrives in an account abroad: under the treaties, income from real estate may be taxed in the country where the property is located.

Is the Italy-Russia double tax treaty still in force

The treaty is formally in force, but it now works in one direction only. By Presidential Decree No. 585 of 8 August 2023, Russia suspended most articles of its treaties with 38 countries it considers unfriendly, Italy among them. Italy has not suspended anything in response.

The convention was signed in Rome on 9 April 1996 and ratified by Italy with Law No. 370 of 9 October 1997. The Russian decree suspended articles 5-23 and 25, covering permanent establishments, dividends, interest, royalties, capital gains, salaries and pensions. Article 24, on how double taxation is eliminated, still applies.

The Italian Revenue Agency (Agenzia delle Entrate) stated in ruling No. 206 of 7 August 2025 that, since neither side has withdrawn, the treaty is fully effective for Italy, and allowed a company to withhold 5% instead of 26% on dividends paid to a shareholder in Russia.

The upshot for people moving from Russia: Russian income has become more expensive since the decree, and a flat in Moscow or Russian deposits also fall under IVIE and IVAFE. The income goes in the main part of the Italian return, and the assets themselves in the RW section (quadro RW, the foreign assets section).

With other countries the treaties work both ways. Withholding rates under Italy's treaties:

Disputed residence, for example when the family lives in Italy and the business in another country, is sorted out by Murblz specialists before the move, not after the first letter from the tax office.

When to file a tax return in Italy and what the penalties are

In Italy tax is paid before the return is filed: the balance for 2025 was due by 30 June 2026, with the return following in the autumn. The first advance for the next year is paid at the same time, so a newcomer's first bill is often close to double.

Employees with simple income file the Modello 730 (a simplified form; the employer withholds or refunds the resulting tax). Everyone else, including sole traders and owners of foreign accounts or property, files the Modello Redditi PF (the full individual return). Returns are filed online directly, through a CAF (Centro di assistenza fiscale, a tax assistance centre) or with Murblz specialists.

Since 1 September 2024 penalties have been lowered by Decree 87/2024, but they remain steep. Failing to file costs 120% of the tax, at least €250. Under-declaring costs 70% of the shortfall, at least €150. Late payment costs 25%, less if paid within 90 days. A missing RW section on foreign assets costs 3% to 15% of their value, and 6% to 30% for assets in blacklisted countries.

Mistakes can be corrected voluntarily before the tax office finds them: ravvedimento operoso (voluntary correction) reduces the penalty more the sooner the debt is paid. The tax office can audit a return until 31 December of the fifth year after filing, or the seventh if no return was filed.

A forgotten foreign account is usually visible to the tax office anyway: banks in most countries, including the UAE and Cyprus, report accounts of Italian residents under the CRS (Common Reporting Standard, the automatic exchange of financial account information).

Who Italian taxes suit and who they do not

Italy is not a tax haven: on an ordinary salary the state and the pension fund take about 30% from the employee and another 30% or so on top from the employer. The gains come only from special regimes, with the move planned around them in advance.

Who it suits. University-educated specialists moving to work in Italy: the inbound worker regime exempts half of income from tax for 5 years. Freelancers and consultants with turnover up to €85,000: 5% in the first five years plus contributions is a very low burden for a legal sole trader in Western Europe. Pensioners with a foreign pension willing to live in a small town in the south: 7% for 10 years. Families with large wealth abroad: the €300,000 lump-sum tax, which beats the normal scale once foreign income exceeds roughly €700,000 a year (300,000 / 43%).

Who it does not suit. Owners of large income from Russia: Russia no longer reduces its rates under the treaty, and Italy does not credit foreign tax on every type of income, so part of the money may be taxed twice. Remote employees of foreign companies earning €50,000-100,000 without the inbound worker regime: the full scale up to 43% plus surcharges. Holders of large crypto portfolios: 33% on gains and 0.2% of value every year. Anyone unwilling to report foreign assets: penalties for the RW section reach 30% of their value.

The order of steps for a move: first a legal basis for living in the country - an investor residence permit, a digital nomad visa or, for descendants of Italians, citizenship by descent. Then, before moving, calculate the taxes on actual income and choose a regime: many breaks are elected in the return for the year of the move and cannot be claimed retroactively. A general overview is on our Italy page, and a comparison with other countries is under taxes by country.

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