In our previous articles, we explained how Italian tax residency is determined, which taxes apply to property owners, and how rental income is taxed in Italy. These topics provide the foundation for understanding tax obligations when living in or investing in Italy.

In this article, we focus on how expats should file their tax return in Italy. We explain who is required to file, what income must be declared, and the key differences between residents and non-residents. We also provide an overview of the main special tax regimes available to new residents, helping expats stay compliant while optimizing their tax position in Italy.

1. Recap: Italian tax residency – who must file a tax return?

As discussed in our previous articles, tax residency is the key factor in determining whether and how you must file a tax return in Italy. Below is a brief reminder of the main rules.

You are generally considered an Italian tax resident if you meet at least one of the following conditions:

You spend more than 183 days in Italy during the calendar year

You have your primary home (habitual residence) in Italy

Your economic or personal interests are in Italy

Italian tax residents are required to declare worldwide income, while non-residents must declare only Italian-sourced income.

This distinction remains fundamental for expats relocating to Italy or owning property in the country, as it directly affects both filing obligations and the scope of income that must be reported.

 

2. What income must expats declare in Italy?

If you are an Italian tax resident, your annual tax return must include all worldwide income, regardless of where it was earned or paid.

Types of income that must be declared:

• Employment income (Italian and foreign)
• Self‑employment or freelance income
• Pensions and retirement income
• Rental income from property in Italy or abroad
• Investment income (dividends, interest, capital gains)
• Other reportable income

Non‑residents must declare only income generated in Italy, such as Italian rental income or employment income.

 

How income is taxed in Italy (IRPEF Rates)

Italy applies a progressive personal income tax system (IRPEF).

Current IRPEF tax brackets:

• Up to €28,000 → 23%
• €28,001 – €50,000 → 35%
• Over €50,000 → 43%

In addition to national income tax, expats may also pay:

• Regional surtax (approximately 1.23%–3.33%)
• Municipal surtax (up to approximately 0.9%)

Rates vary depending on the municipality and region of residence.

 

Which Italian tax return form should expats use?

Not all expats file taxes in Italy using the same form. The correct tax return depends on the type and source of income. Choosing the right form is essential to avoid compliance issues.

Modello 730

• For employees and pensioners
• Suitable for straightforward tax situations
• Refunds or payments handled directly through payroll or pension

Modello Redditi Persone Fisiche (PF)

• Required for self‑employed individuals
• Used by expats declaring foreign income or overseas assets
• Mandatory for non‑residents with Italian‑source income

Most expats with international income will need Modello Redditi PF.

 

Italian Tax Deadlines Expats Must Know

The Italian tax year runs from January 1 to December 31.

Typical filing deadlines:

• Modello 730 → by September 30
• Modello Redditi PF → by October 15

Late filing can result in penalties and interest

 

Declaring foreign assets and bank accounts

Expats residing in Italy must also report foreign financial assets, including:

• Overseas bank accounts
• Investment portfolios
• Foreign real estate

This is done through the RW section of the tax return and may trigger:

• IVAFE (foreign financial asset tax)
• IVIE (foreign property tax)

Failure to report foreign assets is one of the most common and serious compliance issues for expats in Italy.

 

Avoiding double taxation: treaties and tax credits

Italy has double taxation treaties with many countries. These treaties help ensure that income is not taxed twice.

Expats may:

• Claim foreign tax credits for taxes paid abroad
• Apply treaty rules to determine taxing rights

Correct application of treaties is essential and often requires professional guidance.

 

Special tax regimes for expats in Italy

In addition to the standard Italian tax system, expats moving to or residing in Italy may benefit from special tax regimes designed to attract foreign professionals, investors, and high‑net‑worth individuals. These regimes can offer significant tax advantages when eligibility conditions are met. Below is a brief overview of the main special tax regimes available to expats in Italy.

 

Impatriate (“Impatriati”) Tax Regime

The Impatriate Regime is designed to attract highly skilled professionals and workers relocating to Italy.

Key benefits and rules:

• 50% tax exemption: only 50% of eligible employment or self‑employment income is taxable, up to a maximum of €600,000 per year.
• Residency requirement: you must not have been an Italian tax resident for the previous three years and must commit to residing in Italy for at least four years.
• Returning employees: if you return to work for a previous employer or the same corporate group, a longer non‑residency period may apply (up to seven years).
• AIRE registration: prior registration with AIRE is not mandatory; effective residence abroad is sufficient.
• Clawback risk: if residency commitments are not met, tax benefits must be repaid with interest.

 

Flat Tax for High‑Net‑Worth Individuals (HNWIs)

This regime is aimed at high‑net‑worth individuals relocating their tax residence to Italy.

Key benefits and rules:

• Annual flat tax of €200,000: covers all foreign‑sourced income, regardless of amount.
• Duration: valid for up to 15 consecutive years.
• Family extension: immediate family members may join the regime for an additional €25,000 per person per year.
• Eligibility: you must not have been an Italian tax resident for at least nine of the ten years prior to moving to Italy.

Italian‑source income remains subject to ordinary taxation.

 

Retirees’ 7% Tax Regime

Foreign retirees who move to qualifying municipalities in southern Italy may opt for a 7% flat tax on all foreign‑source income.

• Duration: up to 10 years
• Geographic limitation: applies only to designated southern regions and smaller municipalities

 

Regime Forfettario (simplified regime)

This regime is available to qualifying self‑employed individuals and freelancers.

• Revenue threshold: annual revenues up to €85,000
• Flat tax rate: 5% for new businesses (for a limited period), 15% thereafter
• Simplified compliance: reduced accounting obligations and no VAT charges

These regimes can significantly reduce the overall tax burden if applied correctly.

 

Common Tax Mistakes Expats Should Avoid

• Assuming foreign income does not need to be declared
• Missing asset disclosure requirements
• Using the wrong tax return form
• Ignoring regional and municipal surtaxes
• Filing late or incomplete returns

 

Final takeaways for expats filing taxes in Italy

Understanding how the Italian tax system works is a key part of settling into life in Italy as an expat. Your tax obligations will depend largely on your residency status, the type of income you earn, and whether you hold assets abroad.

• Italian tax residency determines whether worldwide income must be declared
• Most expats with international income are required to file Modello Redditi PF
• Foreign income and overseas assets are subject to strict disclosure and reporting rules
• Double taxation treaties and special tax regimes can significantly reduce your overall tax burden
• Professional support helps ensure accuracy, compliance, and peace of mind

Filing your Italian tax return correctly is not just about meeting legal requirements, it’s also an opportunity to structure your tax position efficiently and avoid unnecessary penalties. With the right guidance, expats can navigate the Italian tax system with confidence and focus on making the most of their life and investments in Italy.

About ItalianTaxes.com

ItalianTaxes.com is a digital platform designed to simplify Italian tax compliance for expats, non-residents, and returning Italians. Combining advanced technology with personalized support from licensed professionals, it helps users navigate filings, optimize tax positions, and remain compliant with confidence. For anyone planning a move or property purchase in Italy, expert tax guidance is a critical part of a successful transition.

You can start using the platform right away by accessing it through our special link:  Italiantaxes

Take a look at our previous articles here:

1. Understanding Tax Residency in Italy: The first step for Property Buyers
2. Owning Property in Italy as a Non-Resident: Tax Guide
3. Renting Out Property in Italy as a Non-Resident