Tax system in Italy
Italy taxes residents on worldwide income and non-residents on Italian-source income. For individuals, the core system is IRPEF plus regional and municipal surtaxes, so the effective bill is usually higher than the national bracket alone suggests.
Companies face 24% IRES and generally 3.9% IRAP, with higher IRAP for certain financial entities. Italy also levies VAT, payroll social security, withholding taxes and sector-specific taxes such as the 3% digital services tax for very large providers.
Italy does not have a broad domestic net wealth tax, but residents still face IVIE and IVAFE on foreign real estate and foreign financial assets. Inheritance and gift transfers are taxed, and the 2026 Budget Law kept tightening some rules around dividends, capital gains and new-resident planning.
Tax rates at a glance
- Income tax
- 23% - 43%Progressive
- Wealth tax
- 0% (IVIE / IVAFE on foreign assets)
- Inheritance tax
- 4% / 6% / 8%
- Capital gains tax
- 26%
- Corporate tax
- 24% + 3.9%
- Dividend tax
- 26%
- VAT
- 22%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
ExpatsFoundersInvestorsHigh earnersHolding companies
Watch out for
- Italy is not a flat-tax country for ordinary residents. Regional and municipal surtaxes, plus social security, often change the real take-home rate materially.
- The 2026 Budget Law increased the flat tax for new residents to EUR 300,000 from 1 January 2026, with family members generally at EUR 50,000.
- Crypto gains were also tightened from 2026, with the standard flat tax rising to 33% in most cases.
- VAT, payroll social security, municipal taxes and sector-specific levies still matter even when a page headline looks low.
Frequently asked questions
Is Italy a high-tax country?
Yes. Italy has progressive personal income tax, local surtaxes, social security, 24% corporate tax, 22% VAT and additional taxes on foreign assets.
Does Italy have a wealth tax?
Italy does not have a general net wealth tax, but it does tax foreign real estate through IVIE and foreign financial assets through IVAFE.
What should expats and founders check first?
Check tax residence, payroll social security, regional and municipal surtaxes, dividend and capital gains withholding, IVIE and IVAFE, and whether your activity also triggers VAT or corporate tax.