Income Tax and Property Tax in Italy for Expats

Published on April 27, 2026 and written by Cyril Jarnias

Italy, with its rich cultural heritage, renowned cuisine, and enviable lifestyle, attracts many French expatriates each year. However, settling in the Italian peninsula involves familiarizing oneself with a new tax system, which can seem complex at first glance. This article aims to demystify Italian taxation for expatriates, covering the key aspects to know for a smooth transition.

The Italian Tax System: A Labyrinth to Decode

The Italian tax system is built on several main pillars, each with its own particularities and implications for expatriates. Understanding these elements is essential for navigating the Italian tax landscape effectively.

Income Tax (IRPEF): The Heart of the System

The Imposta sui Redditi delle Persone Fisiche (IRPEF) is the Italian equivalent of the French income tax. It applies to all Italian tax residents, including expatriates, on their worldwide income. The system is progressive, with rates ranging from 23% to 43% depending on income brackets.

• Up to €15,000: 23%
• From €15,001 to €28,000: 25%
• From €28,001 to €50,000: 35%
• Over €50,000: 43%

It is important to note that these rates can be increased by regional and municipal surcharges, potentially adding up to 3.33% more.

VAT (IVA): Ever-Present in Daily Life

• 10% for certain food products, tourism services, and home renovations
• 5% for some essential goods
• 4% for basic items like bread, milk, and books

Corporate Income Tax (IRES): For Expat Entrepreneurs

The Imposta sul Reddito delle Società (IRES) applies to companies and is set at 24% of profits. Expatriates planning to start a business in Italy need to factor this tax into their fiscal planning.

Local Taxes: A Specific Aspect Not to Overlook

Italy also has several local taxes, the most notable being the Imposta Municipale Unica (IMU), a property tax applied to real estate. Its rate varies by municipality but generally ranges from 0.4% to 1.06% of the property’s cadastral value.

Tax Returns in Italy: An Essential Annual Exercise

For expatriates residing in Italy, the annual tax return is an obligation not to be overlooked. This process, while potentially complex, is crucial for staying compliant with Italian law.

Modello 730: The Simplified Return

The Modello 730 is the most common tax return for employees and retirees. It has the advantage of being pre-filled and allows for a quick refund in case of overpayment. Expatriates with only salary or pension income can generally use this form.

Modello Redditi PF: For More Complex Situations

For expatriates with more diverse income (rental income, self-employment income, foreign income), the Modello Redditi PF (formerly Unico) is required. This return is more detailed and often requires professional assistance.

Deadlines to Respect

Tax returns in Italy generally must be submitted between May and June of the year following the income year. For example, for 2024 income, the return must be filed in 2025. It is crucial to meet these deadlines to avoid penalties.

Reporting Foreign Accounts

Expatriates must also declare their foreign bank accounts using the RW form. This obligation applies to all accounts held outside Italy, including those left in France.

Expert Tips for a Stress-Free Tax Expatriation in Italy

Expatriating to Italy can be a rewarding experience, but it is crucial to prepare well from a tax perspective. Here are some tips to optimize your situation and avoid common pitfalls.

Anticipate Your Tax Residency Status

In Italy, you are considered a tax resident if you spend more than 183 days per year in the country or if your center of economic and social interests is located there. It is important to anticipate this status as it determines your obligation to declare your worldwide income in Italy.

Familiarize Yourself with the Franco-Italian Tax Treaty

France and Italy have signed a tax treaty to avoid double taxation. This treaty is essential for understanding how your different types of income will be treated, particularly French retirement pensions or rental income from properties located in France.

Explore Special Tax Regimes

Italy offers advantageous tax regimes for certain types of expatriates. For example, the “neo-resident” regime provides a flat tax of €100,000 on foreign income for individuals who have not been tax residents in Italy for at least 9 of the previous 10 years.

Consider Legal Tax Optimization

There are several ways to legally optimize your tax situation in Italy. For instance, donations to certain charitable organizations can qualify for tax deductions. Similarly, some investments in energy-efficient renovations can benefit from attractive tax incentives.

Don’t Forget Your French Tax Obligations

Even as an Italian tax resident, you may have reporting obligations in France, particularly for French-source income. It is crucial not to overlook these to avoid any issues with the French tax authorities.

Get Professional Guidance

The Italian tax system can be complex, especially for an expatriate. Do not hesitate to consult a certified public accountant or a tax lawyer, ideally bilingual, to guide you through the process and optimize your situation.

Expatriating to Italy is an exciting adventure, but it requires careful preparation, especially from a tax perspective. By understanding the Italian tax system well, diligently meeting your reporting obligations, and exploring tax optimization opportunities, you can fully enjoy your new life in the Boot without unnecessary tax stress.

Italy, with its cultural richness and art of living, offers many opportunities for expatriates. A good understanding and management of your tax situation will allow you to focus on what matters most: fully enjoying your Italian experience.