Italy Non-Resident Tax Guide 2026 — Italian-Source Income

Overview

Non-residents (soggetti non residenti) are subject to Italian tax only on Italian-source income (redditi prodotti in Italia). The definition of Italian-source income is set out in Article 23 of the TUIR (Testo Unico delle Imposte sui Redditi). The tax treatment may be modified by double taxation treaties (convenzioni contro le doppie imposizioni) which Italy has signed with over 100 countries. Where a treaty provides a different treatment, the treaty generally prevails over domestic law.

A person is considered a non-resident if they are not registered in the Anagrafe, do not have their habitual abode in Italy, and do not have their centre of vital interests in Italy for most of the tax year. For companies, non-residence is determined by the location of the registered office, place of effective management, and main business purpose.

Italian-Source Income for Non-Residents

The following categories of income are considered Italian-source when received by a non-resident:

Employment Income (Reddito di Lavoro Dipendente): Income from work performed in Italy. If the work is performed partly in Italy and partly abroad, only the portion attributable to days physically worked in Italy is taxable. Short-term business visitors (less than 183 days in any 12-month period) may be exempt under most treaties if the employer is not Italian.

Self-Employment Income (Reddito di Lavoro Autonomo): Income from professional activities performed in Italy or through a fixed base (stable establishment) in Italy. Occasional services performed in Italy (less than 30 days per year under most treaties) may not be taxable if the non-resident does not have a fixed base in Italy.

Business Income (Reddito d'Impresa): Income attributable to a permanent establishment (stabile organizzazione) in Italy. A permanent establishment includes a branch, office, factory, workshop, construction site lasting more than 12 months, or a dependent agent with authority to conclude contracts in Italy.

Real Estate Income (Reddito Fondiario): Income from real estate located in Italy (both rental income and the deemed income from ownership — the cadastral rent). Rental income from Italian property is always Italian-source, regardless of the landlord's residence.

Dividends (Dividendi): Dividends paid by Italian resident companies are Italian-source. The standard withholding tax is 26%, reduced under most treaties to 15% (portfolio) or 5% (qualified holdings of at least 10-25%).

Interest (Interessi): Interest paid by Italian resident entities. Interest on Italian government bonds (BTP, BOT, CCT) paid to non-residents is generally exempt from Italian tax. Interest on corporate bonds and bank deposits is subject to 26% withholding (reduced under treaties).

Capital Gains (Plusvalenze): Capital gains from the sale of Italian real estate (taxable if sold within 5 years of purchase), gains on the sale of qualified shareholdings in Italian companies, and gains on the sale of derivatives referenced to Italian assets may be Italian-source. Most treaties allocate capital gains on shares to the country of residence, except for real estate gains and gains on shares deriving more than 50% of their value from Italian real estate.

Pensions (Pensioni): Pensions paid by Italian sources to non-residents are subject to Italian IRPEF. Most treaties allocate private pension taxation to the country of residence; government pensions are generally taxable only in the paying state.

Withholding Tax Rates for Non-Residents

Italy applies the following withholding tax rates on payments to non-residents (before treaty relief):

Dividends: 26% standard. Reduced to 15% (portfolio) or 5% (10+% holding) under most treaties. EU Parent-Subsidiary Directive: 0% for qualifying holdings of 10%+ held for at least 12 months (no withholding).

Interest: 26% on corporate bonds and bank deposits. 0% on Italian government bonds (BTP, BOT, CCT) and certain supranational bonds. Reduced rates under treaties (typically 10-15%).

Royalties: 30% standard. Reduced to 5-15% under most treaties (typically 5-10% for copyright, patents, trademarks). EU Interest and Royalties Directive: 0% for qualifying associated companies.

Capital Gains: No withholding — non-residents self-declare and pay tax on Italian-source capital gains (if taxable). Italian government bond gains are typically exempt.

Rental Income: Non-resident landlords may opt for cedolare secca at 21% (or 10% for agreed rent) using an Italian tax representative or file a standard Italian tax return (Modello Redditi PF). If the non-resident does not opt for cedolare secca, IRPEF at progressive rates applies on the higher of actual rent or cadastral rent.

Non-Resident Property Owners

Non-residents who own Italian real estate have specific obligations:

IMU: Non-resident property owners must pay IMU (municipal property tax) on Italian properties, the same as residents. Payment is made using the F24 form with the IMU tax codes. Non-residents may pay IMU through an Italian bank account or through a tax representative.

IVIE Credit: Non-residents do not pay IVIE (Italian wealth tax on foreign real estate) — IVIE applies only to Italian residents with foreign properties. Instead, non-residents may be subject to similar wealth taxes in their country of residence on their Italian properties (e.g., France's IFI, Spain's Patrimonio). Some countries provide a credit for Italian IMU against their local wealth tax.

Rental Income Declaration: Non-residents renting out Italian property must declare the rental income in Italy. This can be done through: (a) a tax representative (rappresentante fiscale) in Italy, (b) direct filing using the Modello Redditi PF (with an Italian tax code), or (c) online through the Agenzia delle Entrate portal using SPID or electronic ID. For short-term rentals (Airbnb), the platform may withhold the 21% tax as sostituto d'imposta.

Succession and Inheritance: Non-residents who inherit Italian real estate must file the Italian inheritance tax return (dichiarazione di successione) within 12 months of the death. The inheritance tax is calculated at the applicable rate (4% for spouse/children with €1M exemption, 6% for siblings, 8% for others).

Non-Resident Companies

Non-resident companies operating in Italy may do so through: (a) a permanent establishment (PE) in Italy — subject to IRES (24%) and IRAP (3.9%) on profits attributable to the PE, (b) a subsidiary (Italian company) — fully subject to Italian corporate tax, or (c) directly from abroad — subject to withholding taxes on Italian-source income without having a physical presence in Italy.

Permanent Establishment Definition: A PE exists if the non-resident company has a fixed place of business in Italy (office, factory, branch, construction site lasting more than 12 months) or a dependent agent in Italy who habitually concludes contracts. Italy follows the OECD Model Tax Convention definition, updated by BEPS (Base Erosion and Profit Shifting) recommendations. The PE must register for an Italian VAT number (partita IVA) and file annual tax returns.

Branch Taxation: A branch (sede secondaria) of a foreign company is treated as a PE and must register with the Italian Companies Register (Registro delle Imprese), obtain a partita IVA, and file annual tax returns (Modello Redditi SC). The branch is taxed on profits attributable to the Italian operations. Repatriation of branch profits to the head office is subject to a branch profit remittance tax of 26% (reduced under treaties), unless the profits are reinvested in Italy.

Tax Compliance for Non-Residents

Tax Code (Codice Fiscale): Non-residents who own Italian property, receive Italian income, or file Italian tax returns must obtain an Italian tax code (codice fiscale). This can be requested at an Italian consulate abroad or directly at an Agenzia delle Entrate office in Italy.

Tax Representative: Non-residents without a residence or registered office in an EU/EEA country must appoint a tax representative (rappresentante fiscale) in Italy for VAT purposes if they engage in taxable transactions in Italy. For direct tax (IRPEF, IRES) purposes, a tax representative is optional but recommended for ease of compliance.

Filing Obligations: Non-residents with Italian-source income must file the appropriate Italian tax return: Modello Redditi PF (individuals), Modello Redditi SC (companies), or Modello Redditi SP (partnerships). The deadline is 30 November of the year following the tax year. Payments are made using the F24 form.

Treaty Relief: To claim reduced withholding tax rates under a tax treaty, the non-resident must submit a Modello 58 Mod (affidavit) or the relevant treaty relief certificate to the Italian withholding agent (bank, company, intermediary). Some treaties require prior approval from the Italian tax authorities (ruling procedure). Failure to submit proper documentation results in the standard 26% withholding being applied.

FAQs

Can a non-resident buy property in Italy?

Yes, non-residents can buy property in Italy with no restrictions (except for certain reciprocal restrictions for nationals of some non-EU countries, which are rarely applied in practice). The purchase is subject to the same taxes as for residents: registration tax 2% (primary residence for EU residents) or 9% (secondary residence), or IVA at 4-22% if purchased from a VAT-registered company. Non-EU buyers may need a permit to purchase (nulla osta) if the property is in certain border areas or military zones. The purchase is executed before an Italian notary (Notaio). Inheritance and gift tax rules apply equally to non-residents for Italian-situated assets.

Do I need an Italian bank account to pay Italian taxes?

Not strictly. You can pay Italian taxes using the F24 form through any bank that offers F24 payment services (including some foreign banks with Italian branches). However, having an Italian bank account (conto corrente) makes payment much easier. Most non-resident property owners open an Italian bank account for IMU and other tax payments. You can also pay taxes through a tax representative or commercialista who will handle the F24 payments on your behalf. Some municipalities accept IMU payments through postal giro (bollettino postale) or online payment platforms. For VAT payments, a foreign bank account can be used if it supports SEPA payments.

How do tax treaties affect Italian taxation?

Tax treaties override domestic Italian law where they provide more favourable treatment. The key treaty benefits for non-residents include: reduced withholding rates on dividends (typically 15% portfolio, 5% qualified), interest (typically 10%), and royalties (typically 5-10%); exemption from Italian tax on certain types of income (e.g., short-term business visitors exempt from Italian employment tax if the employer is not Italian; private pensions taxable only in the country of residence); tie-breaker rules to determine tax residence when an individual is resident in both countries under domestic law; and mutual agreement procedure (MAP) to resolve disputes. Italy follows the OECD Model Tax Convention. The most commonly invoked treaties are those with the UK, US, France, Germany, Switzerland, and other major economies.

Disclaimer

This guide is for informational purposes only and does not constitute tax advice. Non-resident taxation is highly complex and depends on individual circumstances and treaty provisions. Consult a qualified commercialista or cross-border tax advisor for advice specific to your situation.