To File or Not to File
The answer is most probably yes as the reader will desume from reading the instructions from the Italian tax return. Exemptions and Obligations are contained on page 3 onward of the Instructions for Compilation of the Annual Italian Tax Return (2025 return for reporting FY 2024 income and assets). The rules are complex and there are many exceptions and derogations.
The rules can be summarized as follows, but with the caveat that one needs to check, starting from an analysis of whether or not you were tax resident in Italy for the particular year, very carefully before deciding not to file a tax return. The penalties (which can include criminal penalties in serious cases) for failure to file an annual tax return can be steep, if a return was actually due. Limitation periods are extended if a return is not filed by the due date.
In summary you may be exempt from filing a return if you meet the following conditions.
Exemptions From Filing
Tax is Below Threshold
As a general rule you do not to file a tax return if the total tax due is less than Euro 10,33 unless you are carrying on a business activity requiring compliance with Italian statutory accounting regulations. . It is perhaps ironic that the general rule, requires the taxpayer to calculate the tax and that usually means slotting the relevant income into the tax return software to check the result.
Income From Land and Buildings
Income from land and buildings which is not rented out usually does not need to be reported if you pay IMU on the property and that is your only source of income. Also, if your only source of income is the official land registry yield (rendita catastale) from Italian land and buildings is less than Euro 500 in any year then you will be exempt from the obligation to file a return unless you also have rental income You will still need to file even if you are subject to withholding of tax on rental income by the real estate agent or platform.
Employment Income
If your only source of income derives from employment or similar, i.e.. you are hired on an definite or indefinite term contract with an Italian registered business which has withheld tax via the payroll, unless:
- you had more than one employer during the year or were paid from more than one source;
- the amount of tax withheld by the Italian employer is not correct (and the Tax Agency make it clear that it is up to the recipient of the income to check that tax has been properly withheld). This can be due to:
- tax not having been correctly calculated via the payroll – this may be due to a simple mistake or miscommunication between you and your employer.
- an employer which has not given effect to an applicable tax deduction or tax relief – e.g. the Impatriates Relief reduction in taxable income for new residents. You should consider making a formal written request to your employer to give effect to this relief via the payroll if you have not already so.
You do not need to file if you are in receipt of taxable employment income, which is paid by an Italian employer, who has withheld tax at source, and the total income is less than Euro 8,500 (or 7,500 where you have income from land which is less than Euro 500). These limits are applied pro rata if you have worked less than 365 days in the year.
Pension Income
You do not need to file if you are in receipt of taxable pension income, which is paid by an Italian pension provider who has withheld tax at source and the total income is less than Euro 8,500 (or 7,500 where you have income from land which is less than Euro 500.) These limits are applied pro rata if you are in receipt of the pension income for ess than 365 days in the year.
Exempt Income
Examples include
- pensions paid by INAIL (the Italian Institute for Insurance Against Accidents at Work) exclusively for permanent disability or death;
- certain scholarships, war pensions, ordinary special pensions paid to military personnel;
- pensions, allowances by the Ministry of the Interior to blind civilians, deaf people, and civilian invalids, subsidies for Hansen’s disease sufferers, social welfare pensions.
Other Exempt Income
There are a number of specific exemptions for alimony receipts, non professional musicians and sportsmen .
When Might I Want to File
You may want to file (providing the costs of a professional tax preparation service can be justified) if:
- you have tax deductible items or tax credits which have not been captured through the payroll . Tax credits for dependent family members are typically taken through the payroll, and Italian healthcare and pharmacy costs can be captured at the point of sale and shown in your Cassetta Fiscale if you are registered for Italian healthcare and have an Italian health card (Tessera Sanitaria). However other expenses (including medical expenses incurred abroad) may not have been and so you should claim them (providing they are documented properly in line with the rules) in a tax return;
- You want to reduce the limitation period for assessment. the Italian Tax Agency generally have 6 years from the relevant income year to assess further taxes, if a return has been filed. in the case of a failure to file a return 8dichiarazione omessa) the limitation period is extend to eight years.
- You want to get “into the system” An annual Italian tax return is taken a basis for all kinds of matters – such as access to (free) healthcare/schooling, welfare benefits, credit /loan finance and financial leasing contracts etc.)
Filing an annual tax return in the Italian context is very much considered a “civic duty”
Exemptions From Filing
Tax is Below Threshold
As a general rule you do not to file a tax return if the total tax due is less than Euro 10,33. It is perhaps ironic that the general rule, requires the taxpayer to calculate the tax and that usually means slotting the relevant income into the tax return software to check the result.
Employment Income
If your only source of income derives from employment, i.e.. you are hired on an definite or indefinite term contract with an Italian registered business which has withheld tax via the payroll, your do not need to report the income unless:
- you had more than one employer during the year or were paid from more than one source;
- the amount of tax withheld by the Italian employer is not correct (and the Tax Agency make it clear that it is up to the recipient of the income to check that tax has been properly withheld). This can be due to:
- tax not having been correctly calculated via the payroll – this may be due to a simple mistake or miscommunication between you and your employer.
- an employer which has not given effect to an applicable tax deduction or tax relief – e.g. the Impatriates Relief reduction in taxable income for new residents. You should consider making a formal written request to your employer to give effect to this relief via the payroll if you have not already so.
Income From Land and Buildings
Income from land and buildings usually does not need to be reported if you pay IMU on the property and that is your only source of income. Also, if your only source of income is from Italian land and buildings and the income is less than Euro 500 in any tax year then you will be exempt from the obligation to file a return. If you have rental income, a return will be required to report the income and this, even if you are subject to withholding of tax on rents by the real estate agent or platform. See this post for
Pension Income
You do not need to file if you are in receipt of taxable pension income, which is paid by an Italian pension provider and the total income is less than Euro 8,500 (or 7,500 where you have income from land which is less than Euro 500.)
When Do I Absolutely Need to File
Income
You under a legal obligation to file a return if:
1. You are Italian tax resident and have items of income which are not tax exempt as above. This might include:
- the land registry official yield (rendita catastale – where IMU has not been paid) and rental income from land and buildings regardless of whether the property is in Italy, or situated abroad;
- income from employment or self employment, regardless of where you work;
- pension income regardless of where the pension provider is based;
- income and gains from financial investments regardless of where they are located;
- dividends, other distributions and gains from private limited companies, partnerships and other entitles
- royalties and other receipts from the use of intellectual property
- other sources of income that are liable to Italian tax.
2. You are not Italian tax resident and have items of income which are not tax exempt above, where the relevant income is considered to have an Italian source under the relevant legislation. This might include
- income from land and buildings (rent),situated in Italy and regardless of whether the income is subject to tax
- income from employment or self employment, where the services are provided from Italian soil. and regardless of whether the income is subject to tax abroad
- income and gains from financial investments in Italian government bonds or investments made via an Italian financial intermediary (although if these are subject to final withholding tax there will likely no obligation to file a return.
- income from the leasing of plant and machinery in Italy
- royalty income paid by an Italian resident.
- dividends, other distributions and gains from private limited companies, partnerships and other entitles, situated in Italy (which are not subject to final withholding tax)
- royalties and other receipts from the use of intellectual property
- other Italian sources of income that are liable to Italian tax
The above tax treatment is subject to the operation of an applicable double tax treaty (DTA) and Italy’s foreign tax credit rules.
Foreign Asset Reporting and Wealth Tax
If you are Italian tax resident and you own foreign (non Italian) e.g. real estate, financial assets, individual retirement accounts, bank accounts, cryptocurrencies and valuables, you must, as a general rule, report these by filing a section of the Italian tax return (the Section RW) listing opening and closing values. Wealth tax (broadly equivalent to the tax you would pay if you owned Italian real estate or invested via an Italian bank or other intermediary here may also be due. See this article for more information on the rules, rates and thresholds.
The obligation to report foreign assets and account for the wealth tax due, applies regardless of whether or not your have any reportable/taxable income sources.
More Information
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