Italy's taxes at a glance
| Tax on $50,000 of revenue | 25% to 35% |
|---|---|
| Tax on $100,000 of revenue | 25% to 35% |
| Effective rate at $100,000On profit, after costs of 15% | 31.9% Source: agenziaentrate.gov.it, checked September 29, 2026. Computed: revenue EUR 87,889, profit EUR 74,706, INPS EUR 19,476, taxable EUR 17,877, IRPEF EUR 4,112, regional surcharge EUR 220 |
| Tax on $250,000 of revenue | 25% to 35% |
| Tax system | Worldwide |
| Foreign income, new residents | Covered by a lump sum Source: agenziaentrate.gov.it, checked September 29, 2026 |
| Social contributions, self-employed | 26.07% Source: inps.it, checked September 29, 2026. INPS circular 8 of February 3, 2026: 25% pensions plus 0.72% and 0.35% for professionals not covered by another pension fund, on income up to EUR 122,295 |
Structure used: Self-employed professional (partita IVA, ordinary regime) using the impatriate regime (50% of work income taxed, first 5 years), INPS Separate Management contributions on full income, regional surcharge at the 1.23% base rate. Bands are the effective tax on profit for a remote worker using this structure, with clients abroad and costs of 15% of revenue.
Italy tax residency: the 183-day tests and the Anagrafe presumption
Italy has 3 tests, and each one counts days. You are resident if, for more than 183 days of the year (184 in a leap year), you are physically present in Italy, have your habitual residence there, or have your domicile there, meaning the center of your personal and family relationships. Fractions of a day count as days of presence.
Registering in the resident population register, the Anagrafe, for most of the year creates a presumption that you are resident, which you then have to disprove. And there is no split year: a resident is taxed for the whole calendar year, January through December, unless a tax treaty says otherwise.
The 170-day plan in Italy
Works
You spend 170 days in Italy on a short-stay basis, never register with the Anagrafe, and your partner, children and home stay in a country where you are tax resident and hold a residence certificate. None of the 3 tests reaches 183 days.
Fails
You spend the same 170 days in Italy, but you registered with the Anagrafe to rent an apartment, and your partner and children live in Florence all year. The domicile test and the registry presumption both point to Italy, and your worldwide income is taxed there for the whole year.
Italy income tax rates for 2026
Budget Law 199/2025 cut the middle rate of IRPEF, the national income tax, from 35% to 33% for 2026, and clawed that cut back for total income above €200,000 (about $228,000). Each rate applies only to the slice of income inside its band.
Italy IRPEF rates, 2026
| Taxable income (EUR) | About (USD) | Rate on the slice |
|---|---|---|
| €0–€28,000 | $0–$31,858 | 23% |
| €28,000–€50,000 | $31,858–$56,890 | 33% |
| Over €50,000 | Over $56,890 | 43% |
On top of IRPEF come a regional surcharge that starts at 1.23% and varies by region, and a municipal surcharge of 0% to 0.9% set by each town, so 2 people on the same income can pay different totals in Milan and in a small village.
What a freelancer pays: the ordinary regime, the forfettario and INPS
A freelancer opens a VAT number (partita IVA) and chooses at that point between the ordinary regime, which taxes actual profit at IRPEF rates plus surcharges, and the forfettario flat-rate regime, a 15% substitute tax on a fixed share of revenue. The forfettario is closed to anyone with staff costs over €20,000 (about $22,800) or employment income over €35,000 (about $39,800) in the prior year, and to people working mainly for a recent employer.
Either way, professionals without their own pension fund pay 26.07% to the INPS Separate Management on income up to €122,295 (about $139,000) in 2026, and the contributions are deductible. Pension contributions are due on the full income even under the impatriate regime, which is why the worked example below carries a large INPS line.
| Revenue | €87,889 (about $100,000) |
|---|---|
| Profit after costs of 15% | €74,706 (about $85,000) |
| INPS pension contributions26.07% on the full profit | €19,476 (about $22,200) |
| Taxable income50% of profit, less INPS | €17,877 (about $20,300) |
| IRPEF23% band | €4,112 (about $4,680) |
| Regional surcharge1.23% base rate, municipal surcharge taken at 0% | €220 (about $250) |
| Total tax and contributions | €23,807 (about $27,100), 31.9% of profit |
A qualifying professional in the ordinary regime during the 5 impatriate years. Without the regime the same profile pays about 48% of profit.
How Italy taxes foreign income and remote work
Residents are taxed on worldwide income. Work you do while living in Italy is Italian-source income even when every client is abroad, so a remote salary or foreign freelance fees earned from an Italian desk are taxed in Italy under every regime.
Foreign investment income is different. People who were not Italian resident in 9 of the previous 10 years can choose the €300,000 flat tax on foreign income, about $341,340 a year for people moving from 2026 plus €50,000 (about $56,900) per family member, which replaces Italian tax on everything earned abroad for up to 15 years.
David's note
I would only run the numbers on the lump sum with foreign investment income well above €1 million (about $1.14 million) a year. At Italy's 26% rate on dividends, €300,000 (about $341,000) is the tax on about €1.15 million (about $1.31 million) of them, so below that the ordinary rules cost less.
If Italy and another country both treat you as resident, the tax treaty between them settles it, starting with where you have a permanent home. The Agenzia delle Entrate issues the tax residence certificate that foreign clients and tax offices ask for.
Filing your Italian tax return
Your first year as an Italian tax resident
- Get your codice fiscale (tax code) and, if you work for yourself, open a VAT number, choosing the forfettario at that moment if you qualify for it.
- Register with the INPS Separate Management and pay contributions on your professional income.
- Claim the impatriate regime in the return for the year you move, and keep proof of the qualification it needs.
- Elect the flat tax on foreign income in the return for your first year of residence if you use it, and pay it by June 30.
- File the annual return (Redditi PF) online for the previous calendar year, and pay the balance together with the advances for the current year.
Ways to move to Italy
| Route | Minimum income or investment | Permit length | Makes you tax resident | Status |
|---|---|---|---|---|
| Digital nomad and remote worker visa (art. 27-quater Immigration Code) Source: consnewyork.esteri.it, checked September 29, 2026. Remote employees must also show a salary at least equal to the national collective agreement or the ISTAT average gross annual salary (Embassy in Chisinau checklist, March 18, 2026)Digital nomad visa | €24,789.93 (about $28,200) a year Source: gazzettaufficiale.it, checked September 29, 2026. Decree of February 29, 2024, art. 3(1)(a): at least 3 times the minimum level for exemption from healthcare co-payments, which is LIT 16 million (EUR 8,263.31) under Law 537/1993 art. 8(16); 3 x EUR 8,263.31 = EUR 24,789.93 a year, about $2,350 a month | 12 months, renewable | With enough daysNo tax break of its own; holders become resident under the normal tests and may use the impatriate regime if they qualify. | Open |
Special tax regimes in Italy
Impatriate regime (art. 5 Legislative Decree 209/2023)
Highly qualified workers who move their tax residence to Italy have only 50% of their employment and professional self-employment income taxed, up to EUR 600,000 a year. It lasts for the year of the move and the next 4 years. The share falls to 40% for people who move with a minor child or have one during the regime.
Open to new applicants. Lasts up to 5 years. Source: agenziaentrate.gov.it, checked September 29, 2026 Claimed in the tax return (or through payroll) from the year of the move.
Regime forfettario (flat regime for small self-employed)
Sole traders and professionals with revenue up to EUR 85,000 pay a single 15% tax on a fixed share of revenue instead of income tax and surcharges. The regime ends from the same year revenue passes EUR 100,000.
Open to new applicants. Source: agenziaentrate.gov.it, checked September 29, 2026 Chosen when opening the VAT number.
Flat tax for new residents (art. 24-bis TUIR)
New residents pay a fixed annual sum instead of Italian tax on all their foreign income, for up to 15 years. Italian-source income, including work done in Italy, is taxed normally. It only pays off for people with very large foreign income.
Open to new applicants. Lasts up to 15 years. Source: taxsummaries.pwc.com, checked September 28, 2026 Elected in the tax return for the first year of residence; paid by 30 June.
Running your own company from Italy
Moving to Italy changes how a company you own abroad is taxed, even if it stays registered where it is.
How Italy taxes a company you own abroad
| Situation | What Italy taxes | Rule |
|---|---|---|
| Strategic decisions or day-to-day management in Italy for most of the year | The company itself, as an Italian resident | TUIR art. 73 |
| Controlled foreign company taxed below 15% effective, or below half the Italian rate, with over a third passive income | Its income, attributed to you each year | CFC rule, TUIR art. 167 |
| Dividends from a normally taxed foreign company | 26% substitute tax | Dividend rules |
| Dividends from a low-tax jurisdiction | Full IRPEF rates | Dividend rules |
| Dividends while on the flat tax for new residents | Covered by the annual lump sum | TUIR art. 24-bis |
A company is Italian resident if, for most of the tax period, its legal seat, its place of effective management or its ordinary day-to-day management is in Italy. Effective management means the continuous, coordinated taking of strategic decisions, so a foreign company whose only director runs everything from an apartment in Milan meets the test.
The CFC rule reaches individuals who control a foreign company taxed at an effective rate below 15%, or below half the Italian rate, when more than a third of its income is passive: dividends, interest, royalties, leasing or low-value services to related companies. A company billing clients for your own work usually fails the passive test, which makes management the bigger risk for a solo founder.
Dividends you pay yourself from a normally taxed foreign company face a 26% substitute tax, and those from a low-tax jurisdiction can be taxed in full at IRPEF rates. Picking among the places founders incorporate changes the corporate tax, but not the Italian dividend rate or the management test that follows you.
US citizens living in Italy
The 1999 US-Italy income tax treaty does not stop the US taxing its citizens, because treaties generally do not reduce the US tax of US citizens. You still file a US return and claim the foreign tax credit or the 2026 foreign earned income exclusion of $132,900.
The impatriate regime cuts your Italian tax, and with it the credit you can claim, so a US citizen using it can owe US tax on the half Italy leaves untaxed. The US-Italy totalization agreement means you pay social security in one country, not both.
The impatriate regime's 4-year stay commitment
Leaving Italy early claws back the impatriate break
The impatriate regime taxes half your work income for 5 years, but only if you commit to stay resident in Italy for at least 4. Leave earlier and the benefit is clawed back, so a nomad who moves on after 2 years ends up paying close to the ordinary rates on those years after all.
The regime also needs a high qualification or specialization as defined in Legislative Decrees 108/2012 and 206/2007, no Italian tax residence in the 3 prior tax years, and work performed mainly in Italy. A freelancer who fails any of these pays the ordinary rates from day 1: about 48% of profit at $100,000 of revenue once INPS is counted.
Plan for year 6 as well. When the 5 years end, the full income falls under rates of up to 43% plus surcharges, and the jump is steep for anyone who built a budget on the regime.
Who Italy suits, and who it does not
Good fit
- Qualified freelancers and professionals who will stay at least 4 years: the impatriate regime taxes half their work income for 5 years.
- New freelancers with revenue up to €85,000 (about $96,700) who prefer a 15% flat tax on 78% of revenue.
- Very wealthy people with large foreign income, through the €300,000 (about $341,000) annual lump sum.
Poor fit
- Freelancers without the high qualification the impatriate regime requires: about 48% of profit goes to tax and contributions at $100,000 of revenue.
- Anyone after year 5 of the impatriate regime, when normal rates of up to 43% plus surcharges apply.
- People who cannot commit to 4 years of Italian residence, since leaving early claws back the impatriate benefit.
Recent tax and visa changes in Italy
Budget Law 199/2025 cut the middle IRPEF rate from 35% to 33% on income from EUR 28,000 to EUR 50,000, with the benefit clawed back above EUR 200,000. agenziaentrate.gov.it
New-resident flat tax raised to EUR 300,000 a year (family members EUR 50,000) for people moving from 2026. taxsummaries.pwc.com
New impatriate regime: 50% of qualifying work income taxed, capped at EUR 600,000, 3 prior years abroad, 4-year stay commitment, high qualification required. agenziaentrate.gov.it
