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TAXES

When do I need to start paying Italian taxes?

Many people living between two or more countries are unclear about whether or at which point they face the requirement to pay income tax in Italy. So what exactly are the rules?

When do I need to start paying Italian taxes?
(Photo by ANDREAS SOLARO / AFP)

Question: “We lease an apartment here in Italy and come over a couple of times a year. Since we pay taxes in America, we are unsure if we can apply for an Italian driver’s license or health card, or apply for residency permits. My question is, what would trigger the need to file an Italian tax return?”

As Italy’s revenue office (Agenzie delle entrate) explains, the requirement to pay income tax in Italy is triggered if and when you become a ‘tax resident’ in Italy. 

The revenue office website says you’re considered a tax resident in Italy if, for at least 183 days a year, you:

  • Are registered with Italy’s national population registry office (known as the Ufficio Anagrafe) or
  • Have your “place of residence or habitual residence” in Italy.

Essentially, spending more than six months of the year in Italy means that the Italian tax authorities can view Italy as your primary place of residence.

If you’ve chosen to officially move to Italy, have navigated any visa requirements, and are now successfully registered as a resident with your local municipality, then it’s simple enough: you’ll now need to be prepared to pay taxes in Italy on all income made anywhere in the world.

The tax requirement probably won’t apply if you’re spending less than half of your time at a second home in Italy. This should be the case if you’re a non-EU national subject to the 90-day rule when visiting Italy and other European countries.

READ ALSO: Can second-home owners get an Italian residency permit?

But if you do live in Italy most of the time, or if Italy is where you have most of your business or other interests, you could also be viewed as an Italian tax resident even if you are not legally registered as a resident with the Ufficio Anagrafe.

And, even if you’re not considered an Italian tax resident, be aware that you may still have to pay Italian taxes on any income generated in Italy.

Those who buy a property in Italy are also liable for certain local taxes, regardless of their residency status. You can see more information about these taxes in a separate article.

It’s also important to note that many countries, including the US, have double taxation treaties with Italy which set out the rules on which country should levy certain taxes. These are intended to prevent you from being taxed twice on the same income.

Agreements between Italy and other countries may affect whether you pay tax on certain sources of income, such as pensions, in Italy or in your home country.

Becoming a tax resident

Tax obligations will be one of the most important considerations for anyone deciding whether or not to take up Italian residency

The main thing you’ll need to be aware of is that becoming officially resident means filing annual tax returns with the Italian authorities, even if all your income comes from your home country or elsewhere.

Once you are a taxpayer in Italy, you will have the right to register with the Italian healthcare system. Depending on your circumstances however, doing so may not be free.

Please note that The Local is unable to advise on individual cases. For more details on how the Italian tax rules may apply in your circumstances, seek independent advice from a qualified tax professional.

You can also find more information about Italy’s income taxes on the Italian revenue agency’s website (in English). 

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READER QUESTIONS

Can I open a bank account in Italy as a non-resident?

Having an Italian bank account is an advantage when it comes to paying for utilities and services in Italy, but can foreign residents get one?

Can I open a bank account in Italy as a non-resident?

Opening an Italian bank account is one of the very first things people moving to Italy are generally advised to do as overseas accounts (especially those from outside the eurozone) are unlikely to cut it when it comes to things like receiving an Italian salary, paying taxes and taking out insurance.

But there are some cases in which even non-Italian residents may hugely benefit from or may need to have an account with an Italian IBAN number.

For instance, owners of a second home in Italy may be required to provide an Italian account to set up a direct debit for utility bills and internet or phone payments, and even paying IMU (Italy’s main property tax) is generally a much more straightforward process for Italian account holders, though it can still be paid via a foreign account.

But can foreign nationals that don’t enjoy residency status under Italian law (that’s anyone who spends less than 183 days a year in the country) open an Italian bank account?

The short answer is yes, though there are a number of things to be aware of.

Any foreign national aged 18 or over can open a bank account in Italy, but the full range of account types – from regular bank accounts, or conti correnti, to savings and deposit accounts – is generally only available to legal residents.

READ ALSO: Which are the best banks for foreigners in Italy?

In particular, non-Italian residents can only open international accounts (known as conti internazionali or conti correnti per residenti stranieri), which often come with a number of limitations regarding the banking services and operations holders can have access to.

Generally speaking, major banks (UniCredit, Intesa Sanpaolo, BancoBPM, BPER, etc.) tend to have better international account offers as they regularly operate with foreign clients, whereas local institutions often only provide very basic non-resident accounts. 

The documentation needed to open non-resident accounts tends to vary from bank to bank, and at times even from branch to branch. 

That said, the following documents are generally required:

  • A valid identification document (usually a passport)
  • An Italian tax code (or codice fiscale)
  • Proof of foreign address
  • Proof of income or employment, which may include pay stubs, employment contracts, or other financial documents

Additional documents may be required depending on the bank’s policies.

The relevant documentation will in most cases have to be presented in person, as most branches will not be able to perform identity checks and anti-money laundering procedures remotely. 

As a final note, it’s advisable for foreign nationals looking to open non-resident accounts to enquire about the type of verification checks they’ll have to go through to access online banking services.

Access to desktop or app services generally happens by means of a two-step verification process, with one step usually involving information sent to a mobile phone. 

In some cases, passcodes can only be sent to an Italian phone number.

Have you opened an Italian bank account as a non-resident? Share your experience and recommendations below.

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