Taxation in Italy: everything French nationals need to know

Understanding Taxation in Italy: The Basics for French Nationals

The tax system in Italy is built on a fundamental principle: tax residency. A person is considered an Italian tax resident if they spend at least 183 days per year in Italy (182 in a leap year), maintain their domicile there (the centre of their vital interests), or are registered in the resident population register. This rule is decisive because Italian tax residents are taxed on their worldwide income, while non-residents are only taxed on income sourced in Italy.
For a French national moving to Italy, understanding this shift in tax residency is essential. The Franco-Italian tax treaty prevents double taxation, but applying it correctly requires a precise knowledge of the rules in both countries.

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The Italian Tax System in Detail: IRPEF and Main Taxes

The Italian tax system revolves around several major components. The principal personal income tax is IRPEF (Imposta sul Reddito delle Persone Fisiche), a progressive bracket-based tax that applies to six categories of income:

Employment income

- Income from sole proprietorships or partnerships

- Self-employment income (liberal professions, freelancers)

- Capital income (interest, dividends, capital gains)

- Property and real estate income

- Other specific income provided for by law

IRPEF Tax Brackets

The 2026 IRPEF scale is progressive and rises quickly:

- 23% up to €28,000 of annual income

- 35% from €28,001 to €50,000

- 43% above €50,000

On top of these national rates, regional surtaxes (generally between 1.23% and 3.33%) and municipal surtaxes (up to 0.8%) apply, which can bring the total tax burden to nearly 47% for high earners.

Taxes on Capital and Wealth

Outside the progressive scale, financial income (interest, dividends, capital gains on securities) is generally subject to a flat withholding tax of 26%, representing a form of flat tax on capital income.

For Italian residents holding assets or property abroad, two specific wealth taxes apply:

- IVIE (Imposta sul Valore degli Immobili situati all'Estero): a tax on real estate held abroad, at a rate of 1.06% since 2024 (previously 0.76%). No tax is due if the calculated amount is less than €200.

- IVAFE (Imposta sul Valore delle Attività Finanziarie detenute all'Estero): a tax on financial assets held abroad (bank accounts, securities, life insurance policies), at a general rate of 0.2% of the asset value.

These two taxes are often overlooked by French nationals who move to Italy while retaining their assets in France. It is essential to plan for them in advance with a tax adviser.

The Flat Tax in Italy: An Exceptional Opportunity for New Residents

The Italian flat tax is one of the most attractive tax regimes in Europe for high-net-worth individuals wishing to transfer their tax residency. There are in fact several lump-sum regimes that should be distinguished from one another.

The Flat Tax for New Residents

This regime, often referred to as the Italian-style "non-domiciled residents regime", allows a new resident to pay a fixed annual lump-sum tax on all their foreign-sourced income, regardless of its nature or actual amount. Income from Italian sources remains taxed under the standard rules.

Since the reform of August 2024, the annual lump sum has been increased to €200,000 per year (previously €100,000), with an additional €25,000 per family member. This regime is valid for a maximum period of 15 years. It now primarily targets ultra-high-net-worth individuals with foreign income exceeding €500,000 per year.\n\n> To access this regime, you must have been a non-resident in Italy for at least 9 of the 10 years preceding your move.

See our dedicated guide: Flat tax in Italy – complete guide

The 7% Flat Tax for Foreign Retirees

This is arguably the most advantageous regime for French retirees wishing to settle in Italy. It allows payment of a flat tax of just 7% on all foreign-sourced income (including French retirement pensions) for 9 years.

To qualify, the retiree must settle in a municipality of fewer than 20,000 inhabitants in certain regions of southern Italy (the Mezzogiorno): Sicily, Sardinia, Calabria, Campania, Basilicata, Abruzzo, Molise, or Puglia.

By comparison, a French retiree living in France on an annual pension of €30,000 would pay approximately 14% in income tax in France. At 7% in Italy on the same basis, the saving is substantial. Learn more about retirement in Italy

The Impatriate Regime ("impatriati"): For Working Professionals Moving to Italy

The impatriate regime (rientro dei cervelli in Italian) is designed for employed or self-employed workers who transfer their tax residency to Italy. It is not strictly a flat tax, but rather a significant tax allowance on employment or professional income generated in Italy.

Conditions and benefits since 1 January 2024:

- A 50% reduction on taxable activity income in Italy (meaning only half of income is taxed)

- Increased to 60% for individuals with at least one minor child or who adopt a child

- Eligible income capped at €600,000 per year

- Duration of 5 years, extendable by 3 years if conditions are met (minor child, acquisition of primary residence)

For arrivals between 2020 and 2023, the conditions were even more favourable: a 70% exemption (or even 90% in certain southern regions) on activity income in Italy.

This regime is particularly attractive for cross-border workers, remote workers, and entrepreneurs who wish to enjoy the Italian lifestyle while benefiting from a reduced tax burden.

Inheritance Tax in Italy: A Little-Known Advantage

Italian inheritance tax is significantly more favourable than in France, providing an additional fiscal argument for families considering a move to Italy.\n\nItalian inheritance tax rates:

- 4% in direct line (children, spouses) with an allowance of €1 million per heir

- 6% for siblings with an allowance of €100,000 per heir

- 8% for indirect-line heirs (with no specific allowance)

By comparison, in France, the marginal inheritance tax rate between parents and children can reach 45% above €1.8 million (after the €100,000 allowance per child). The difference is considerable for large estates.

Italian Taxation for French Nationals: Key Points to Watch

While Italian taxation for French nationals offers many opportunities, it also contains pitfalls that only an expert can help you avoid.

Tax Residency: A Complete Shift

Once you become an Italian tax resident, you must declare and potentially pay tax in Italy on all your worldwide income, including your French rental income, dividends from French companies, and savings income. The Franco-Italian tax treaty governs cases of double taxation, but its practical application is complex.

The Codice Fiscale: Your Key to Life in Italy

Before undertaking any tax or administrative procedure in Italy, you will need your Italian tax identification number (codice fiscale). This number is mandatory for opening a bank account, signing a rental or property purchase agreement, or accessing public services. How to obtain your tax identification number

French Assets Remain Within Reach of the Italian Tax Authorities

A French national who has become an Italian tax resident must declare their financial and real estate assets held in France via the RW form of the Italian tax return. IVIE and IVAFE then apply to these assets, although tax credits can partially offset the double taxation.

Taxes in Italy vs France: A Quick Comparison

Here are the key points of comparison between the two tax systems, for an upper-middle-income French national (income €60,000/year, assets €500,000):

- Marginal income tax rate: 43% in Italy (+ surtaxes) vs 41% in France (+ CSG/CRDS) — comparable rates outside special regimes

- Flat tax on capital income: 26% in Italy vs 30% (PFU) in France — slightly more favourable in Italy

- Inheritance tax in direct line: 4% with a €1M allowance per child in Italy vs up to 45% with a €100,000 allowance in France — very favourable in Italy

- Wealth tax: ISF abolished in France (residual IFI on real estate), IVIE/IVAFE in Italy on foreign assets — varies depending on individual circumstances

- Special regimes: lump-sum flat tax, 7% for retirees, impatriate regime in Italy — no equivalent in France

For a deeper look at these comparisons, see our dedicated article on taxes in Italy.

Our Resources and Services for Your Taxation in Italy

Allerenitalie.com has been supporting French-speaking individuals with all their tax matters in Italy for over 10 years. Whether you are an employee, self-employed, a property investor, or a future retiree, our bilingual experts offer:

- A personalised analysis of your Franco-Italian tax situation

- Guidance on tax optimisation (choosing the most advantageous regime)

- Management of your tax filing obligations in Italy

- Free webinars on Italian taxation

Also explore our related guides on real estate in Italy, living in Italy, and working in Italy."]