In this article we will summarize the tax implications of moving to Italy: we will answer the most common questions and we will see what is the connection between the variuos topics we have seen in the previous articles, such as Tax Residence, Tax Break Impatriati, Tax Break for US Researchers and Professors, US Trust with beneficiaries who lives in Italy, Tax Break for High Net Worth Individuals and how to file Tax returns in Italy and the US.
Remember to visit the page we have specifically dedicated to all clients who have an interest in moving to Italy:
Some of the links could bring you in a post written in Italian: use the tool "Translate" to translate it into English.
Let's start!
QUESTIONS N. 1 (Q1): Suppose I've moved in Italy in the first half of 2025, where should I pay my taxes in 2025?
ANSWER 1 (A1): If you've moved to Italy in the first semester of 2025, and you have lived in Italy since, then you have Tax Residence in Italy. This means that you will have to pay taxes in Italy on the income that have Italian source as well as American source.
Tax Residence is not a straightforward concept, though: please see the following articles on Tax Residence:
Q2: If I have to pay taxes in Italy on US source incomes, should I be double-taxed then? The first time in the US and the second in Italy?
A2: No, the Convention against Double taxation between Italy and the US allows you topay the taxes only once. There are several instruments that can be used to avoid double taxation:
- The Foreign Tax Credit;
- The tax exemption of certain incomes;
- The Foreign Earned Income Exclusion;
See the following link for more information;
Q3: What if I had move in the second half of 2025? Would it be the same?
A3: If you've moved in the second semester of 2025, and you have never be in Italy before during 2025, then you probably won't be qualified as tax resident in Italy for 2025.
If an individual lives in Italy but he/she is qualified as Non-Tax Resident in Italy for that year, then he will have to report and taxes in Italy only the incomes that have Italian sourced, like for example rents from an apartment, or dividends from a brokerage account held in an Italian bank.
No taxation will occur in Italy on the US incomes for 2025 if you are qualified as Non-Tax resident in Italy for that year.
Q4: So, if I move to Italy but I keep working remotely as an employee for the same company in the US, this is US sourced income, correct?
A4: No, this is not correct as it is counterintuitive: if you work in Italy for a Company in the US and you get a W2, this is not US sourced income.
In cases like this, you have to split the year in two parts:
- the first part, from 1 January till the day you've moved to Italy you have worked in the US and thus the income is qualified as "US sourced income".
- the second part of the year, from the day you've moved to Italy until 31 December, you have been physically present in Italy and consequently, the income is qualified as "Italian sourced income" even if the income is paid by a US Employer.
For more information on this, please take a look at the following links:
Q5: Ok, that is clear. So, can I work remotely in Italy as an employee of an American Company?
A5: The answer to this question is: yes and no.
Yes because it's technically possible to work remotely from Italy for an American company as employee, but there are some cons. In particular, there is a "Permanent Establishment" problem for the US Company as having an employee who works in in Italy could trigger a "physical" presence also of the Company in Italy, with some tax obligations also for the US company in Italy.
See more here:
Q6: So it's not possible moving to Italy and work remotely for a Company, correct?
A6: No, it's absolutely possible to work in Italy from remote for a US Company, but it's much better to open a self-employment position and be an independent contractor who make invoice to the US Company.
Q7: This is good news. But in this case, I shall pay Social Security to Italy and I won't be able to continue my contribution to my pension in the US, right?
A7: No, fortunately there is a Social Security Convention between the US and Italy and the US Citizen (or a double citizen, US and Italian) who works for a US Company as a self-employment person in Italy can make an election and pay Social Security in the US instead of paying it in Italy.
With this election you will continue paying Self-Employment Tax (that is not a tax, but is'a payment to Social Security Administration in the US) in America.
You can find other explanation here:
Q8: This is great! But how does it work precisely withe the invoices I will send to the US Company? Shall the US Company pay me in my Italian bank account in euro?
A8: Don't worry, it's very easy: we have a staff who will walk you through the steps of preparing an invoice for the US Company. Your Company can pay you in dollars in your US bank account.
Q9: Is there any tax break I can apply in such cases?
A9: Yes, absolutely! You can apply the Tax Break Impatriati if you have a University Degree and your Job is connected to the degree you have.
This Tax Break is very important as there is an abatament of the taxable income you produce in Italy with your job by 50% for 5 years.
If you move to Italy with a children who is a minor, the abatament of the taxable income is of 60%.
This means saving Italian income taxes by 70-75%, as taxation is progressive.
After the 5 years, you can have another 3 years of extension if you have a children who is still a minor or if you've bought a house in Italy.
In order to apply this tax break, you have to meet some requirements: check them out here:
You can find also information on buying a house in Italy here:
Q10: Well this is great! But how does it work with the US? Do I have the same tax break also in the US?
A10: You cannot apply the same tax break in the US, but there are two ways to avoid or reduce double taxation issues:
1) the first is the Foreign Earned Income Exclusion;
2) the second is the Foreign Tax Credit.
The Foreign Earned Income Exclusion is a US threshold under which you don't pay any US income tax if the following requirements are meet:
a) the individual must be tax resident in another Country (Italy);
b) the incomes are tax exempt in the US if they are income from a job activity, such as employment or self-employment.
So, if you live in Italy and you have a self-employment position with an income that is lower than the Foreign Earned Income Exclusion ($132,900 for 2026 tax year), than you will apply the Tax Break Impatriati but you will have nothing to pay in the US as your income is below the threshold established by the Foreign Earned Income Exclusion.
If your job income is higher than this threshold, you can use the taxes paid in the Italy to reduce taxation in the US: this mechanism is know as Foregn Tax Credit.
Please take a look at these articles:
Q11: What is the timing of the Italian tax Return? Should I file the Italian tax return before or after the US one?
A11: The timing of the tax returns is the following:
1) the first thing you have to do is to file for an extension (Form 4868) of the US tax return, postponing its deadline to October 15.
2) the second thing to do is to file the Italian tax return, that is due by the end of July;
3) the last thing is to file the US tax return, before the October 15 deadline.
In this way you will use the Italian taxes to offset the US taxes and not viceversa.
See more information here:
Q12: Are there other tax breaks I can apply? What if I move to Italy but I don't work?
A12: Sure, there are several tax breaks that can be applied to people who move to Italy. This is a summary;
1) Tax Break Impatriati, the one we have already talked about in Question 9;
2) Tax Break for Researchers and University Professors: this tax break is similar to the Tax Break Impatriati, but it allows an abatement of the taxable income by 90%; so it's even more advantageous than Tax Break Impatriati;
3) Tax Break of 7% for Individuals who have a foreign pension and who move in south of Italy; this tax break applies to people moving in the Regions of South of Italy and who have already a US pension. In this case all foreeign incomes are taxed at a flat tax rate of 7%.
4) Tax Break for High Net Worth Individuals: it consists in paying a flat tax of 300.000 euro that covers all the Italian taxes on US incomes, independently on how big they are.
Please check the detail for every tax break here:
Q13: How can I move to Italy if I don't have Italian Citizenship?
A13: There are two important new Visa application who can be very interesting:
1) The Digital Nomad Visa, that is specifically suited for people who move to Italy and work from remote.
2) The Elective Residence Visa, that is designed for people who don't need to work and can live of passive income, such as pensions, dividends, interests, and capital gains.
You can find a in-deep explanation here:
Q14: So if I have financial investments in the US I have to pay taxes on them in Italy, correct? How much should I pay?
A14: Correct, if you are tax resident in Italy, you must pay taxes in Italy on US interests, dividends and capital gains.
Taxation in Italy on these financial incomes is generally at a flat tax rate of 26%, but there can be some exceptions: for example, interests from Municipal and US Treasury bonds are taxed at a flat tax rate of 12,5%.
Please read these articles to find more details on the taxation of these financial incomes:
Q15: What happen if I have in the US a 401K or an IRA? Are they taxed in Italy in the same way as in the US?
A15: Yes, they are taxed in Italy in a very similar way as in the US.
In particular, there is taxation in Italy only if there is distribution of 401K or IRA. Without distribution there is no taxation.
You can find more in these links:
Q16: Once I move to Italy, is the Italian tax compliance limited to US incomes?
A16: No, you have also to file a Form (Quadro RW) in which you have to report also all of the assets you owns in the US, such us:
- bank accounts;
- deposit accounts;
- brokerage accounts;
- real properties;
- Trusts;
- share of US companies;
- etc.
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Enrico Povolo