A foreign employee in Italy sees tax withheld from every payslip and reasonably assumes the matter ends there. Often it does not. Payroll covers the Italian salary and nothing else: it does not see the savings account at home, the flat you rent out, the shares from a previous employer or the weeks you worked from another country. Professional tax assistance for foreign workers in Italy deals with that part, the one the employer cannot handle for you.

Where payroll stops and professional tax assistance starts

Once you are tax resident, Italy taxes your worldwide income. Your employer withholds tax on what it pays you. Everything else goes into your annual tax return, and filing it is your responsibility:

  • income from abroad, such as rent, dividends, interest and pensions;
  • salary paid by a foreign company of the group, or relating to days worked outside Italy;
  • foreign bank accounts, investments and property, which are reported in section RW of the return even when they produce no income.

An employee whose only income is one Italian salary is generally not required to file a return. The duty arises as soon as there is anything else, and the tax office sends no notice when it does.

Where professional tax assistance makes the difference

Establishing when you became resident

Italian law has no split-year rule: you are resident or non-resident for the whole tax year. Since 2024 the test looks at where you live, where your personal and family relations are and how many days you spend in Italy, and meeting one condition for most of the year is enough. If your home country also considers you resident, the tax treaty settles the conflict, and some treaties do split the year. Getting this wrong means declaring a full year of foreign income that Italy had no right to tax, or the opposite. The rules are explained in Residenza fiscale e redditi esteri: convenzioni e doppia imposizione (in Italian).

Claiming the inbound worker regime

Under the inbound worker regime (regime impatriati) only 50% of your Italian employment income is taxed for five years, up to EUR 600,000 a year, or 40% if you have a minor child. The relief depends on conditions that are verified on documents: three years of tax residence abroad before the move (more for transfers within the same group), a high qualification, and a commitment to stay resident for four years. An adviser checks the conditions before you claim, because relief granted without them is recovered with interest and penalties.

Avoiding double taxation

Income taxed abroad is usually taxable in Italy too. The tax treaty between Italy and the other country decides which of them has the right to tax, and Italy grants a credit for foreign tax only within set limits. The credit can be refused when the foreign income was left out of the Italian return, so the order of the steps matters: declare first, then claim.

Reporting foreign assets

Failing to report foreign assets costs 3% to 15% of their value, and 6% to 30% for assets in blacklisted jurisdictions, whether or not any tax was due on them. On top of the reporting duty there are two annual wealth taxes: 0.2% on foreign financial assets and 1.06% on foreign property.

Without professional tax assistance: the cost of fixing things later

Italian law lets you correct past returns on your own initiative and pay reduced penalties (ravvedimento operoso). The reduction shrinks as time passes, and the option narrows once the tax office has opened an audit.

Residence disputes add a practical problem. They are decided on facts: leases, utility bills, school enrolments, travel records. These documents are easy to collect in the year of the move and hard to reconstruct five years later, in reply to a questionnaire from the tax office.

What to bring to a first meeting

  • Your employment contract and any assignment or secondment letter
  • A calendar of the days spent in each country over the last three years
  • Residence registrations and certificates of tax residence from your previous country
  • Your last foreign tax returns and payslips
  • A list of foreign accounts, investments and property, with year-end values
  • Where your spouse or partner and children live and go to school

These are the documents professional tax assistance starts from. With them an adviser can establish which year your residence in Italy starts, whether the inbound worker regime applies and what your first return must contain.

Professional tax assistance at Ciani Partners

Ciani Partners provides professional tax assistance to individuals on tax residence, international taxation and disputes with the tax authorities in Italy. To discuss your position, contact Avv. Fabio Ciani. For readers who are assessing a move with significant foreign income, see also Regime “res non dom”: applicazione, esclusioni e casi pratici (in Italian).

This article gives general information and does not replace advice on your own position.