Understand the Italian tax identification code (Codice Fiscale), Italian property taxes, capital gains tax and inheritance and gift tax.
Find out who has to pay and how to pay…
This section features information on some of the general taxes that must be paid by residents and/or home owners in Italy. This does not cover income tax.
The main taxes include:
- Property taxes
- VAT (Value Added Tax)
- Capital gains tax
- Inheritance tax
This section also includes information about potential tax relief options, as well as links to further information.
The Codice Fiscale is needed for many administrative matters. Find out what it is and how and where to apply for this Italian tax code…
The Codice Fiscale is a tax identification number used in all interaction with government agencies and public administration in Italy. It is a unique identity code devised from an individual’s name, date and place of birth. It is similar to the National Insurance number (NI) in the UK or the Social Security Number (SSN) in the US.
The Codice Fiscale is issued by the Agenzia delle Entrate (the Italian Revenue Agency) of the Ministry of Economy and Finance of Italy. It is a plastic credit card-sized card with the unique 16 alphanumeric digit code.
Applying for a Codice Fiscale
Application must be made at the local office of the Agenzie delle Entrate.
- To find a local office: Click here
- Valid passport or stay permit (Permesso di Soggiorno)
On making an application, a number will be issued and the card will be sent by post at a later time.
Newborn babies must be issued with a Codice Fiscale within 60 days of birth. A parent must submit the application and supply the birth certificate.
Applying from outside Italy
A Codice Fiscale can also be issued by an Italian Embassy in an applicant’s home country.
Italian Embassies in the following countries:
What the numbers mean
The first fifteen characters define the individual, the sixteenth, an alphabetical character, has control function.
In the following order:
- Three alphabetical characters for the last name
- Three alphabetical characters for the name
- Two numerical characters for the birth year
- An alphabetical character for the birth month
- Two numerical characters for the day of birth and the gender
- Four characters (of which one is alphabetical and three numerical) for the Italian or the foreign state of birth
- One control letter
- Full details from the issuing body, the Agenzia Entrata
Information on who pays what taxes and why in the event of a property being bought in Italy. Includes information on municipal tax and ICI tax and working out the taxable base for the purposes of the registration tax and VAT…
Taxes on the Purchase of an Immoveable Property
On the purchase of an immovable property there is a registration tax (imposta di registro) or alternatively VAT (depending on the seller) as well as the Cadastral and Land Registry taxes (imposte Ipotecarie e Catastali). The payment of such taxes is naturally at the expense of the buyer.
When the seller has a VAT number and operates in the construction industry (for example, a construction firm, a firm which held the planning permission or which restructured or restored the property), the following must be paid on the purchase price indicated in the purchase deed:
- VAT at ten percent (four percent if it is the main or only residence (prima casa))
- Fixed Registration tax: €168.00
- Fixed Land Registry tax: €168.00
- Fixed Cadastral tax: €168.00
In other cases (for example, a purchase from a private individual or a business different from the ones indicated above) the taxes payable are:
- Registration tax: seven percent (or three percent if it is the main or only residence (prima casa))
- Registration tax on the purchase of building land is eight percent
- Registration tax on the purchase of agricultural land is fifteen percent
- Land Registry tax: two percent (or a fixed amount if it is the main or only residence)
- Cadastral tax: one percent (or a fixed amount if it is the main or only residence)
Taxable base for the purposes of the Registration Tax and VAT
In general and apart from exceptions (for example, the purchase of building and agricultural land), the taxable base for the application of the proportional registration tax comes from the cadastral value of the property.
The cadastral value is calculated by multiplying the cadastral income by the following coefficients:
- 126 – for buildings belonging to cadastral groups A, B, C (excluding categories A/10 and C/1)
- 63 – for buildings of the categories A/10 (public and private offices) and D
- 42.84 – for buildings of the categories C (shops and stores) and E
- To see category descriptions: Click here (PDF in Italian)
The taxes (registration, cadastral and land registry) are paid by the buyer to the Notary Public at the signing of the purchase deed and then by the Notary Public to the Inland Revenue at the time of registration of the contract.
For transfers subject to VAT the taxable base is always the price agreed between the parties.
Municipal Tax on Properties
After the purchase of immovable property in Italy, residents and non-residents in Italy are subject to municipal tax on properties (Imposta Comunale sugli Immobili or ICI).
ICI is a local tax which affects all property (land and buildings) situated in Italy and must be paid by the owner, the usufructuary (person who has the right to the use of another’s property) and the owner of other real rights such as use, or residence.
The current tax regulations set out two different obligations: ICI Declaration and Payment of the ICI tax.
Anyone who becomes the holder of one of the above mentioned rights must submit a declaration to the Municipality (Comune) where the building is situated, on the appropriate form.
Payment of the ICI tax
ICI must be paid to the Comune where the building is situated and levied at a rate dependent on the re-evaluated cadastral income. The rate, which varies from one Comune to another, is established locally, each year, by a resolution of the Comune.
ICI must be paid for the current year and the tax may be paid at the Post Office with a postal payment form (bolletino postale) or by form “F24” in accordance with the following timescales:
- 30 June: the taxpayer may choose to make a partial payment (calculated on the basis of the ownership of the asset for the period from 01 January to 30 June) or to make the full payment immediately (relative to the ownership of the asset for the period from 01 January to 31 December)
- 20 December: where a partial payment was made in June, the balance must be paid and is calculated according to the difference between the total amount of the tax for the whole year and the partial payment made in June.
The first payment of ICI (for example the first payment after buying a property) must be made in accordance with the above deadlines and is equal to the accrued tax from the date of acquisition of the assets until 30 June or 31 December.
- Italian Revenue Agency: L’Agenzia delle Entrate (in Italian)
- See also Angloinfo INFOrmation Page, Personal Taxation – Income Tax, Capital Gains & Inheritance Tax – in Italy
Tax law is complex and every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Italian tax law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.
Understand how income from capital is taxed in Italy…
Income from capital is the proceeds received from the investment of capital.
The taxation system varies depending on the different types of income. In the majority of cases the proceeds of financial activity are not declared on the tax return but are subject to a withholding tax of 12.5 percent or 27 percent.
Alternatively, an investor can opt for a regime of managed saving (risparmio gestito) or organised saving (risparmio amministrato). In such cases it is the bank or the authorised intermediary who carries out the payment of the taxes due.
For residents interest on a bank account or post office account and the interest on bonds and similar instruments with an expiry of less than 18 months is subject to a withholding tax of 27 percent. Interest on bonds and similar instruments with an expiry after 18 months are subject to a substitute tax of 12.5 percent.
For non-residents there are specific cases of exemption. Such exemptions apply when the income is received by people resident in countries with which conventions are in force to avoid double taxation and which allow an adequate exchange of information. The interest on bank accounts or post office accounts of non-residents is excluded from taxation.
Dividends paid out by a limited company to shareholders are subject to different taxation regimes depending on the type of shareholding (qualifying or non-qualifying) and on the entity paying out the dividend (quoted or non-quoted company).
Qualifying shareholdings are those above a minimum percentage of the share capital, which varies from 3 percent to 25 percent, depending on the type of company. Non-qualifying shareholdings are percentages of share capital lower than the above-mentioned.
Dividends received from a qualifying shareholding in a resident company are subject to taxation on 40 percent of their amount and they must be declared in the person’s income tax return.
Dividends from non-qualifying shareholdings are subject to a withholding tax of 12.5 percent.
For non-residents, in general, there is a withholding tax of 27 percent but the earner has the right to reimbursement of up to four ninths of the deduction of the tax paid abroad on the same income.
For income paid to savings shareholders (azionisti di risparmio) (a different category from the ordinary shareholders with limited powers to participate in the meetings) there is a withholding tax of 12.5 percent.
The capital gain from the transfer of qualifying shareholdings is taxable to the extent of 40 percent and must be declared in the tax return.
The capital gain from the transfer of non-qualifying shareholdings is subject to a substitute tax of 12.5 percent.
Other types of capital gain are subject to a substitution tax of 12.5 percent.
There are special rules for shareholdings in companies resident in countries with privileged tax systems.
There are exclusions and exemptions for non-residents if they satisfy specific subjective and objective conditions.
Understand the system for inheritance and gift taxation in Italy…
There is no longer any tax on inherited property, regardless of its value and the relationship between the deceased and the heirs.
On immovable property and real property rights, the cadastral tax (imposta catastale) and land registry tax (imposta ipotecaria) must be paid at the rates of one percent and two percent, respectively, of the cadastral value of the property or the real property rights included in the inheritance.
If one of the beneficiaries satisfies the conditions for the main or only residence (prima casa), the cadastral and land registry taxes due on an inheritance or a gift are a fixed amount of €168 each.
In relation to gifts, the rules vary depending on the degree of kinship and the value of the gift. There are no taxes payable on gifts in favour of a spouse, descendants or other relatives up to the fourth degree.
Gifts in favour of persons other than those mentioned above are subject to taxes on the transfer if the value of the share due to each beneficiary is greater than €180,759.91. In this case registration tax is applied to the part that exceeds this value for the corresponding deed of transfer.
- Italian Ministry of Finance & Economy: Ministerio dell’Economia e della Finanze (in Italian)