Taxes

How to file your income taxes in Italy in 2023

Learn about income taxes in Italy, including the latest tax bands for employees and advice on how to file an Italian tax return.

Italy income tax
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By Stephen Maunder

Updated 5-3-2024

If you’re living and working in Italy, you’ll almost always need to pay income tax on your earnings. Italy’s tax rates are relatively easy to understand, but there is a range of allowances and deductions you can take advantage of.

Keep reading to get to know the Italian income tax system, including advice on the following:

Income tax in Italy

The Italian income tax system

The Italian Revenue Agency (Agenzia della Entrate) oversees tax in Italy. The agency is part of the Ministry of Economy and Finance (Ministero dell’Economia e delle Finanze – MEF) and has local, regional, and national offices. The Italian tax year runs concurrently from 1 January to 31 December.

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To register to pay tax in Italy, you’ll first need to obtain a tax identification number (codice fiscale). Citizens from the European Union (EU) can take identification to any tax office and fill out a form to apply. Non-EU citizens must attend a specific tax office or police headquarters. However, if you’re not yet living in Italy, you can receive your tax identification number from the Italian embassy in your country.

Income tax in Italy is called imposta sul reddito delle persone fisiche (IPREF). Tax applies to earnings from employment, pensions, and investment dividends. Italian income is taxed progressively, so the more you earn, the more you’ll pay.

Most employees have their income tax withheld at source by their employer. Self-employed people, meanwhile, must pay freelance taxes via an annual tax return.

Who pays income tax in Italy?

Your income tax liability depends on how much time you spend in Italy and whether you’re considered a resident for tax purposes.

If you live in the country for less than 183 days a year, you’ll only need to pay Italian income tax on money earned in Italy. However, those who live there for longer than 183 days a year are considered permanent residents for tax purposes and must pay Italian income tax on their worldwide earnings.

Italy has double taxation agreements (convenzioni per evitare le doppie imposizioni) in place with many countries to ensure people aren’t taxed twice on the same income.

Earnings in Italy subject to income tax

Taxes on income and salary in Italy

  • Employed income: workers in Italy pay income tax on their earnings. Rates are charged across four bands, ranging from 23% to 43%.
  • Self-employed income: self-employed workers, freelancers, and sole traders can choose between paying tax on their earnings at the same rates as employees or paying tax at a reduced flat rate.
  • Business income: businesses in Italy need to pay corporate tax on their profits. Italian corporate tax rates have been falling steadily in recent years, dropping from 31% in 2013 to 24% in 2022.

Taxes on employment benefits

If you are given benefits by your employer (such as health insurance or a company car), you may need to pay tax on them.

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Benefits are usually taxed on their actual value – the amount you’d otherwise have to spend to obtain them. Some company benefits, such as out-of-town travel and relocation allowances, come with specific rules.

You can find the latest information in PwC’s guide.

Taxes on savings and investments

Financial investments owned in Italy are subject to wealth tax. This is based on their value on 31 December each year. The tax rate for investments is 0.2%.

In 2023, Italy will introduce a new tax on gains made from trading cryptocurrency. Capital gains will be charged at 26% on profits of more than €2,000. As of 1 January 2023, the government will tax the value of cryptocurrency assets at a lower rate of 14%, in order to encourage people to document their assets.

Taxes on rental income

There are two options for taxation on rental income. First, you can pay tax at standard income tax rates if you’re letting a property as an individual rather than a business. If you do this, you can deduct 5% to cover expenses incurred letting the property.

Alternatively, you can choose the flat-rate (cedolare secca) scheme. This allows landlords to pay a flat tax rate of 21% on their rental income, but no deductions are allowed.

How to file your Italian tax return

Residents and non-residents who earn money in Italy must file annual tax returns. However, there are a few exceptions:

  • You won’t need to file a return if you exclusively receive your income from a single employer, and it is taxed at source (deducted from your take-home pay each month)
  • People who earn less than €8,000 a year from employment or €7,500 from retirement income don’t need to submit a return

There are two tax return forms in Italy, form 730 and the Redditi PF. People who make their income from employment or pensions will use form 730. Couples can file jointly.

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The Redditi PF form is used by self-employed people and anyone who isn’t an Italian resident for tax purposes. You will also need to complete the Redditi PF if you have assets that aren’t included in form 730 (such as real estate in another country).

Residents must use the Public Digital Identity System (SPID) to file their taxes online. Once you’ve logged in, you can fill out your return and submit it. The tax agency provides a pre-completed version of form 730, which includes standard deductions for things like healthcare expenses, insurance premiums, and social security contributions. This aims to reduce the time it takes to file the return.

Income tax deadlines in Italy

Form 730 must be submitted by 30 September in the year after the tax year (so 2022’s return must be filed by 30 September 2023). The deadline for the Redditi PF form is 30 November. However, non-residents who are abroad at the time the return is due can file by registered post.

Italian income tax forms

Income tax rates in Italy

Tax rates in Italy are set on an annual basis as part of the national budget. For 2023 (covering income for 2022), the rates are as follows:

EarningsTax rate
Up to €15,00023%
€15,001–28,00025%
€28,001–50,00035%
€50,001+43%

The above rates apply to earnings within each level. So, if you earned a total of €30,000 in 2022, you’d pay:

  • 23% on the first €15,000
  • 25% on the next €13,000
  • 35% on the remaining €2,000

In addition to the income tax rates above, people living in Italy may need to pay municipal and regional taxes, which are also deducted from income. Municipal taxes are usually less than 1%, while regional taxes can vary from around 1–3%, depending on where you live.

Income tax in Italy for the self-employed

Self-employed workers must usually pay Italian income tax on their earnings. If you own a limited liability company, however, you’ll need to pay corporate tax.

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There are two tax options for self-employed workers. You can either pay tax at the same rates as employees or use the flat-rate tax system (regime forfettario).

This allows people earning up to €65,000 per year (rising to €85,000 from 2023) to pay a tax rate of 5% for the first five years they run their business and 15% thereafter. In this way, you can cut your tax bill and save time compared to filing a full return. However, you won’t be able to offset business expenses or be eligible for the regime if you earned €30,000 or more as an employee the year before you started your business.

Tax deductions in Italy

There is a range of tax deductions available in Italy, which you can offset when filing your tax return. Tax deductions depend on your personal situation and the latest bonuses (in Italian) available from the Italian government.

Deductions commonly include credits for medical bills, school fees, and home renovations. The rules around some deductions are complicated, so it can be helpful to take advice from an accountant on what is available before filing your tax return.

Some of the most common deductions are as follows:

  • Employment tax credit: ranges from €690 to €1,910, depending on your earnings. Self-employed workers can get a credit of between €500 and €1,265. See PwC’s full guide for more information.
  • Pension income tax credit: ranges from €713 to €1,880 depending on your pension income.
  • Family tax credit: the maximum amounts are €1,220 for each child below three years of age, €950 for each child above three years of age, €800 for a dependent spouse, and €750 for other dependents.
  • Medical expenses credit: 19% of the medical expenses incurred above €129.
  • Education expenses credit: 19% of nursery, elementary, secondary, or high school education expenses up to €800 per annum per child. University costs are fully deductible.
  • Mortgage interest credit: 19% of mortgage interest paid, up to a maximum of €4,000.

Workers relocating to Italy scheme

New residents in Italy can benefit from a scheme that allows them a discount on their taxes for up to five years. This is called the workers relocating to Italy scheme (lavoratori impatriati).

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Under this scheme, expats only need to declare 30% of their earnings for tax purposes for the first five years. You can reduce your taxable base even further – to 10% of your income – if you live in:

  • Abruzzo
  • Molise
  • Campania
  • Puglia (Apulia)
  • Basilicata
  • Calabria
  • Sardinia (Sardegna)
  • Sicily (Sicilia)

After the five years have elapsed, you may qualify for a further, less lucrative tax break. In addition, the scheme allows workers to pay tax on just 50% of their income, for another five years, if they buy a property in Italy or have dependent children.

Tax regime for new residents

Attractive tax regimes are also available for high-net-worth individuals relocating to Italy. Those eligible can transfer their official tax residence to Italy and pay a flat sum of €100,000 under the neo-domiciled tax regime.

This flat sum replaces any income tax payable on earnings, foreign investments, and real estate owned outside of Italy. It also means the individual will not need to declare their foreign assets on an Italian tax return. Family members can be added for a fixed sum of €25,000. If you wish to apply for this regime, you should contact the tax agency in advance.

Tax relief for retirees moving to Italy

If you move to Italy after retirement, you may be able to benefit from a flat tax rate of 7% on any income from foreign sources. This includes pension income, dividends, rental income, and capital gains and lasts for 10 years.

To qualify, residents must move to a qualifying municipality with 20,000 inhabitants or less in one of the following regions:

  • Abruzzo
  • Puglia
  • Basilicata
  • Calabria
  • Campania
  • Molise
  • Sardinia
  • Sicily

Italian tax fines and refunds

If you fail to file a tax return, you may be liable to pay a fine.

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Fines vary from €250 to €1,000. If you fail to pay the tax that you owe, you will face a further penalty of 120–240% of the amount owed. Fines are also levied on late returns or if you declare an asset in a blacklisted country or jurisdiction.

If you’re unhappy with a tax assessment made by the tax authorities, you can appeal to the Court of Tax Justice (corti di giustizia tributaria). How much this will cost depends on the size of the sum being disputed.

The Italian Revenue Agency provides a guide on raising a dispute, as well as a list of payment terms, and details on refunds.

Income tax advice in Italy

If you have a complicated tax situation or need help with allowances and exemptions, it is an excellent idea to speak to an English-speaking tax professional.

You can find an accountant in our listings or online. Italian accountants should be registered with the National Council of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili – CNDCEC), a mandatory membership organization.

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