Italian wealth tax
Nicolò Bolla

Nicolò Bolla

Wealth tax in Italy

The Italian tax system also includes wealth tax for assets held by Italian residents. Since 2012, the 0.2% IVAFE (tax on foreign held assets) and 0.76% (tax on foreign real estate) have been introduced in the Italian tax system. Every Italian tax resident who owns assets overseas is required to disclose the value on December 31st of each year via the tax return submission. This requirement meets two goals:

  1. Provide Anti money laundering disclosure
  2. Pay wealth tax

If you are thinking that this is a discriminatory practice against the free movement of capital, and economic freedom, you must bear in mind that this is an attempt to equalize the tax treatment of Italian held financial assets (who pay a 0.2% stamp duty), and the anti money laundering requirements are fulfilled by the Italian financial intermediary.

If you own assets overseas you are then required to DISCLOSE them to the tax office, as well as pay WEALTH TAX.

Italian wealth tax
Italian wealth tax

IVAFE – Wealth tax on financial assets

If you own any financial assets, you are required to pay a 0.2% wealth tax on its value on December 31st. Bank accounts are the exception as they are charged with a flat € 34.20 for each bank account having an average value above € 5,000 or a peak exceeding € 15,000; any value below that is non-reportable.

The foreign financial assets to be disclosed are:

  • Bank accounts
  • Investment portfolio
  • Artwork
  • Registered boats and yachts
  • Shares held in private companies
  • Private pension funds

Note that the pension funds do not attract any tax, thus they only need to be reported, with no taxation levied on its value at year end.

IVIE – Wealth tax on foreign real estate

Ownership of foreign real estate becomes taxable in Italy at 0.76% rate, which is the basic rate payable for IMU. The common questions about this topic is: On which value should I pay IVIE on?

The answer is rather simple, you should disclose the same value used for tax purposes in the foreign jurisdiction, or the purchase cost, and finally the market value.

You can pick the lowest among the three to minimize your tax liability, and you can also deduct any foreign property tax paid against the same value.

In various instances you are not required to pay any further tax, since you already paid it overseas

Fines and penalties

The system is enforced via harsh penalties on the taxpayer who fails to disclose his/her assets. The fine ranges from 3% to 15% of the asset value for each year the asset was not disclosed in the RW form, this is increased to 6% to 30% if the asset is held in black listed countries.

It is therefore crucial to file your tax return in time, and to disclose your foreign held assets. If you lodged a tax return, forgetting to disclose your assets, you are still liable to pay such tax.

An option is to self assess your omission by paying a reduced fine as low as 1/9 of the minimum fine imposed by the tax code.

At this stage you are wondering: how does the Italian tax office know about my foreign activities? Well, the different tax jurisdiction cooperate on information exchange protocol, thus exchanging information about foreign assets in compliance with:

  • Common Reporting Standard (CRS)
  • DAC 6 in Europe
  • FATCA 
  • Double Tax treaty provision of information exchange

The tax office has 7 years to audit you, therefore the wisest thing you can do is to keep your tax affairs in order and be compliant with the law.

Share this post:


Related Posts

2 People signing contracts | Open a Company in Italy

How to open a Company in Italy in 2022

Who Can Open a Company in Italy To conduct business in Italy there are several different options available. This is thanks to many reforms that encourage the streamlining and simplification of procedures required to start and operate businesses in Italy. Any person may conduct business either as an individual in Italy, or through the setting

Retire in Calabria in Italy

Italy’s southern region of Calabria is the toe of the Italian boot, a peninsula surrounded by the incredible Tyrrhenian Sea on the west coast, the Ionian Sea on the east, and separated from Sicily by the small Strait of Messina, itself steeped in both history and myth. Who Qualifies to Retire in Calabria, Italy While

Freelance with a calculator | Freelance Visas in Italy

Freelance Visas in Italy

Obtaining a Self-Employment Visa in Italy Getting your hands on a freelance visa (Visa for Self-Employment), as a non-EU citizen, is difficult. Not only does the Consulate ask that you have some form of “employment” lined up before arriving in Italy (often a perplexing situation), but you have to go through some additional processes that,

Gran Sasso in Abruzzo Italy | Retire in Abruzzo

Retire in Abruzzo in Italy

Abruzzo is in the center of Italy, a mere 31 miles from Rome, though historically it has been considered a part of southern Italy both politically and culturally. Its eastern coast is bordered by the Adriatic Sea, with Le Marche to the north, Lazio to the west, and Molise to the south. Living in Abruzzo

San Pietro Square | Requirements for Residency in Italy

Requirements for residency in Italy: all you need to know

Requirements for EU Citizens and Non-EU Citizens All citizens of the European Union have the right to move and reside freely in Italy or within the territory of another Member State other than that of which he/she is a national. Different formalities are required depending on the length of stay (exceeding three months or shorter

Scroll to Top

Join us for

Joing our mailing and receive at your mailbox our amazing real estate opportunities, services updates and the latest news.