For U.S. citizens & green card holders
Moving to Italy without losing the plot on tax
Italy will tax you as a resident. The United States will keep taxing you as a citizen. Making the two systems work together is the entire job — and it decides which Italian tax regime is actually worth having.
Is this page for you?
- You are a U.S. citizen or green card holder moving to Italy — or already here
- You work remotely for a U.S. employer, or freelance for U.S. clients
- You are retiring to Italy with a pension, Social Security, an IRA or a 401(k)
- You have kept U.S. bank, brokerage or retirement accounts, or property
- Someone told you about Italy’s “50% tax break for new arrivals” and you want to know whether it is real
If you recognise yourself in any of these, the rest of this page is written for your situation.
The rule that changes everything
The United States is one of the very few countries that taxes its citizens on worldwide income no matter where they live. Italy taxes its residents on worldwide income too. From the year you become an Italian tax resident, you file two returns every year, in two languages, under two sets of rules.
That does not normally mean paying twice. The Italy–U.S. tax treaty, the foreign tax credit and the foreign earned income exclusion exist precisely to prevent double taxation. But the relief is never automatic, and it interacts awkwardly with the Italian incentives you will read about online.
An Italian tax break can be worth nothing to you.
Exempt half your salary in Italy and the United States still taxes that half — while the Italian tax you can credit against your U.S. bill shrinks by the same amount. The saving moves from the Italian Treasury to the IRS.So the right question is never “which Italian regime gives the biggest discount?” It is “which combination leaves the most in my pocket after both returns are filed?”
Step one
When you actually become an Italian tax resident
You are an Italian tax resident for a given year if, for more than 183 days, you were registered with the local population registry (Anagrafe), or had your habitual abode in Italy, or had your centre of personal and economic interests here. Two consequences catch people out.
The whole calendar year goes with it
Italy has no split-year treatment, unlike the UK. Become resident and the entire year is Italian — including the months you spent in Chicago.
Registering at the town hall is enough
People have become Italian tax residents simply by signing up for a residence certificate and a health card, without ever intending to.
The timing of the move is therefore a planning decision in itself. Arriving in July rather than in May can change which country taxes an entire year of income.
The landscape
What ordinary Italian tax looks like in 2026
National income tax (IRPEF) is progressive. From 1 January 2026 the middle band was cut from 35% to 33%.
Regional and municipal surcharges sit on top and typically add 1% to 3%. Self-employed professionals also pay social security to INPS — around 26% of taxable income under the Gestione Separata.
And because you will almost certainly keep assets abroad, three more numbers matter:
Worked example
Why the famous “50% break” often disappears
An employee relocating to Milan on a gross salary of €120,000, before local surcharges.
Ordinary taxation
€43,800
IRPEF due — an effective rate of 36.5%
- Taxable base€120,000
- Exempt portion—
Impatriati regime
€18,000
IRPEF due — an effective rate of 15%
- Taxable base€60,000
- Italian saving€25,800 / yr
That is also exactly how much your U.S. foreign tax credit falls by. The exempted half stays fully taxable in the United States, so depending on filing status, deductions and other income, a substantial part of the Italian saving — sometimes all of it — is recaptured by the IRS.
Figures are illustrative and exclude local surcharges. The structure is the point: this is the calculation that has to be run before you choose a regime, and it is the one most cross-border advice skips.
The options
Five Italian regimes, and what each is really worth to you
The default
Ordinary IRPEF
23% / 33% / 43% plus local surcharges, on worldwide income. No application, no conditions, no expiry.
The simplest to coordinate. Italian tax is high enough that the foreign tax credit usually wipes out your U.S. liability entirely.
Workers & professionals
Impatriati
50% of qualifying employment or professional income exempt — 60% with a minor child — up to €600,000, for five years.
Often the weakest option for a U.S. citizen. The exempt half stays fully taxable at home while your credit shrinks by the same amount.
Self-employed
Regime forfettario
15% substitute tax on a fixed percentage of revenue — 5% for the first five years of a new activity — for revenue under €85,000.
Frequently the strongest combination: the foreign earned income exclusion ($132,900 for 2026) can shelter earned income while Italian tax stays genuinely low.
Retirees
The 7% regime
7% flat on all foreign-source income — pensions, dividends, interest, gains, rents — for up to ten years, in southern towns under 30,000 residents.
Attractive, but low Italian tax means a small credit. How the treaty allocates each pension — federal, state, private, Social Security — must be checked source by source.
High net worth
New-resident lump sum (“non-dom”)
€300,000 a year covering all foreign income, plus €50,000 per family member, for up to fifteen years. No IVIE, no IVAFE, no foreign asset reporting, no Italian inheritance tax on foreign assets.
Whether a lump-sum substitute tax is creditable against U.S. tax is not straightforward. It has to be assessed before opting in, not after.
The eligibility conditions, in short
Impatriati
Not tax resident in Italy for the previous three tax years — six or seven if you keep working for the same employer or group. A commitment to remain resident for at least four years. Work carried out mainly in Italy. A graduate-level qualification, or five years of documented experience.
Regime forfettario
Revenue under €85,000, employment or pension income under €35,000, staff costs under €20,000. It cannot be combined with the impatriati regime.
7% regime for pensioners
No Italian tax residence in the previous five years, a foreign pension, and residence in a municipality under 30,000 inhabitants in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia or Sicily.
New-resident lump sum
Not tax resident in Italy in at least nine of the previous ten years.
What goes wrong
The five mistakes we see most
Choosing impatriati on the Italian number alone
It is the most advertised incentive and, for a U.S. passport holder, frequently the least valuable. The comparison has to be run on both returns together.
Registering residence before the year has been planned
A signature at the town hall in February can hand Italy the taxing rights over income you earned in January of the same year, before you had ever set foot here.
Mixing the exclusion and the credit carelessly
You cannot claim a foreign tax credit on income you have excluded, and revoking the exclusion locks you out of it for five years. The choice has to be made with a decade in view, not one filing season.
Underestimating the reporting layer
The same U.S. brokerage account can appear in an Italian quadro RW, an FBAR and a Form 8938 in the same year. Italian penalties for unreported foreign assets run from 3% to 15% of the value — 6% to 30% outside the EU — and apply even when no tax was owed.
Buying the wrong investments once you are here
European funds and ETFs sold by Italian banks are almost always PFICs, with punitive U.S. treatment. In the other direction, 401(k)s, IRAs, HSAs and 529 plans have no clean Italian equivalent, and their Italian treatment cannot be assumed.
A sixth, for those already here: if you have not been filing your U.S. returns while abroad, the IRS streamlined procedures may still be open to you. They are considerably cheaper to use before a problem finds you.
Your year
Two calendars, one set of numbers
Italy
- 30 JuneBalance for the previous year and first advance payment fall due.
- AutumnThe annual return is filed, including foreign asset reporting in quadro RW.
- 30 NovemberSecond advance payment.
United States
- 15 AprilReturn due — automatically extended to 15 June for citizens living abroad. FBAR due, auto-extended to October.
- 15 OctoberFinal extended deadline on request, and the FBAR cut-off.
The two returns have to tell the same story. When they don’t, it is almost always because they were prepared by two people who never spoke to each other.
Working together
What we actually do
We are a Milan and Monza firm of dottori commercialisti and statutory auditors. Antonio Malavasi is also registered with the New York State Society of Certified Public Accountants — we speak both systems, and we do not hand you off at the border.
- Pre-move planning: both tax systems modelled side by side before you set a dateFixed fee after the free call
- Regime selection and application — impatriati, forfettario, 7%, new residentsFixed fee after the free call
- Annual Italian return, including foreign asset reporting (quadro RW, IVIE, IVAFE)Fixed fee after the free call
- Setting up as self-employed: Partita IVA, INPS registration, e-invoicingFixed fee after the free call
- Coordination with your U.S. CPA — or an introduction to oursFixed fee after the free call
- Company formation and payroll for those arriving with a businessFixed fee after the free call
Every engagement is confirmed in a written engagement letter, with the fee agreed in advance, before any work starts.
Questions we are asked most
Will I pay tax twice?
Usually not. The Italy–U.S. treaty and the foreign tax credit are designed to prevent it. But you will always file twice, and the relief has to be claimed correctly — it is not applied for you.
Can I keep the impatriati regime and my U.S. exclusion?
The two do not sit well together. The foreign earned income exclusion and the Italian exemption reduce the same income from opposite directions, and the interaction usually leaves less than expected. It needs to be modelled on your actual numbers.
I already live in Italy and have not filed in the U.S. What now?
The IRS streamlined filing compliance procedures exist for exactly this situation, provided the failure was not wilful. The sooner it is addressed, the simpler and cheaper it is.
Do I have to report my U.S. accounts to Italy?
Yes. Italian residents report foreign financial assets in quadro RW of the annual return, and pay IVAFE on them. This is separate from, and additional to, your FBAR and FATCA obligations.
Is my 401(k) or IRA taxed in Italy?
The treatment of U.S. retirement accounts under Italian law is not uniform and depends on the type of plan and how distributions are structured. It is one of the points we look at first, because the answer can change where you should live.
How much does it cost to work with you?
The first 15-minute video call is free and is a real conversation, not a sales pitch. After it, we quote a fixed fee for the work your situation actually requires, and confirm it in writing before anything starts.
Next step
Fifteen minutes will tell you where you stand
Long enough to know whether your situation is straightforward or complicated, and what it would take to handle it properly. In English or in Italian, at no cost.
Book your free callMilan, Via Corridoni 41 · Monza, Via Camperio 8
info@studio-commercialisti.it · 02 4004 4318 · 039 940 2698
Go deeper
This page is general information based on Italian and U.S. rules in force in August 2026, and is not advice on any specific situation. Tax outcomes depend on individual circumstances and the rules change frequently. Last reviewed: August 2026.
