Americans moving to or living in Italy may face Italian wealth taxes on assets they hold outside the country, including US property, bank accounts, and investments. Understanding these rules is an important part of planning a move and managing finances across both countries.
Italy’s two main taxes on foreign assets are IVIE, which applies to qualifying real estate held abroad, and IVAFE, which applies to certain foreign financial assets. Whether you owe either tax depends on factors such as your Italian tax residency, the assets you own, and the rules that apply to each asset.
For US citizens, the picture can be more complicated because moving to Italy does not end US federal tax obligations. This means you may need to consider Italian wealth taxes alongside US income-tax filing and foreign financial account reporting requirements.
This guide explains who may be affected, how IVIE and IVAFE work, what Americans should know about US and Italian reporting obligations, and some of the planning considerations to discuss with a qualified cross-border tax professional.
What is Italy’s wealth tax?
Italy does not have one general wealth tax that applies to an individual’s entire net worth. Instead, it has specific taxes on certain assets held outside Italy by people who are Italian tax residents.
The two taxes most relevant to Americans with overseas assets are:
IVIE (Imposta sul Valore degli Immobili situati all’Estero): A tax on qualifying real estate located outside Italy.
IVAFE (Imposta sul Valore delle Attività Finanziarie detenute all’Estero): A tax on certain financial assets held outside Italy.
These taxes are based broadly on the value of qualifying assets rather than only on the income or gains those assets generate. This means that an American living in Italy may have Italian tax obligations relating to a US property or investment account even if the asset produces little or no income.
There is no single minimum net-worth threshold that determines whether someone is subject to both taxes. The rules, exemptions, and reporting requirements differ depending on the type of asset.
Who is subject to Italy’s wealth tax?
VIE and IVAFE generally apply to individuals who are considered tax residents of Italy and who own qualifying assets outside the country.
Italian tax residency is not determined solely by whether you spend more than 183 days in Italy. The rules consider several factors, including your physical presence, residence and domicile under Italian law.
Under rules introduced from 1 January 2024, an individual may be considered a tax resident in Italy if, for the greater part of the tax year, generally at least 183 days, or 184 days in a leap year, one or more of the relevant criteria apply. These include:
- Having their habitual residence in Italy, as defined under the Italian Civil Code.
- Having their domicile in Italy, now defined for tax purposes as the place where their personal and family relationships are primarily based.
- Being physically present in Italy, even if that presence is not continuous. For this test, fractions of days count as full days.
- Being registered in the Italian population register for the greater part of the tax year. This is now a rebuttable presumption, meaning it may be possible to demonstrate that the individual was not actually a tax resident in Italy.
The 2024 reform introduced physical presence as a separate test, clarified the meaning of domicile and changed the legal effect of registration in the population register. The criteria are alternative rather than cumulative, so meeting just one of the relevant tests for the required period can be sufficient to establish Italian tax residence. Meaning you should not assume that spending fewer than 183 days in Italy automatically means you are not an Italian tax resident.
For Americans, this assessment is particularly important because US citizenship generally means continuing US tax filing obligations even after becoming a resident in Italy.
What is the difference between IVIE and IVAFE?
The main difference is the type of asset each tax covers.
| IVIE | IVAFE | |
| What it applies to | Qualifying foreign real estate | Certain foreign financial assets |
| Examples for Americans | US houses, apartments and land | US bank accounts, shares, bonds and investment accounts |
| How it is calculated | Generally by reference to the taxable value of the property | Depends on the type and value of the financial asset |
| Important considerations | Property valuation, ownership share, period held and qualifying foreign taxes | Asset classification, valuation, account thresholds and applicable rates |
The following sections explain how each tax works and what Americans should consider when declaring assets held in the United States.
What is IVIE? Italy’s tax on foreign real estate
IVIE is Italy’s tax on qualifying real estate owned outside Italy by Italian tax residents. For an American living in Italy, this could include a house, apartment, or other property located in the United States.
What Is the IVIE rate?
For the 2025 tax year, the standard IVIE rate is 1.06% of the property’s taxable value.The rate was previously 0.76%.
The taxable value depends on the property’s location and the relevant valuation rules. For US property, the calculation will generally use the purchase cost shown in the purchase documentation. Where that value is unavailable, other valuation rules may apply.
Different valuation rules can apply to properties in EU and EEA countries, so the method used for a US property can differ for European property.
How is IVIE calculated?
The calculation takes into account the property’s taxable value, your ownership share, and the period during which you owned it during the tax year.
For example, if you own 100% of a US property with a taxable value of €300,000 for the full year, a simplified calculation at 1.06% would be:
| Calculation | Amount |
| Taxable property value | €300,000 |
| IVIE rate | 1.06% |
| IVIE before applicable relief | €3,180 |
This is an illustrative calculation, not a determination of the amount payable. The actual liability may differ depending on the valuation rules, ownership arrangements, period of ownership, and any available relief.
Can US property taxes reduce IVIE?
In certain circumstances, foreign property taxes paid on the same property may be taken into account when calculating the Italian IVIE liability.
However, not every tax connected with a property will necessarily qualify. The nature of the tax, the property concerned, and the applicable Italian rules all matter.
For this reason, do not assume that all US property taxes can simply be deducted from IVIE. Keep records of the taxes paid and ask an Italian tax professional to confirm whether they qualify for relief.
Is there a minimum IVIE payment threshold?
A payment threshold applies where the calculated annual IVIE amount does not exceed €200, subject to the applicable calculation rules.
This is not a general exemption for anyone whose property is worth less than a particular amount. It is a threshold based on the tax calculated, and ownership share and the period of ownership can affect the result.
Importantly, a payment exemption does not necessarily remove the obligation to report the property. Reporting requirements should be considered separately from whether tax is payable.
What is IVAFE? Italy’s tax on foreign financial assets
IVAFE applies to certain financial assets held outside Italy by Italian tax residents.
For Americans living in Italy, potentially relevant assets may include:
- US bank and savings accounts.
- Shares and other securities held in foreign investment accounts.
- Certain brokerage and investment portfolios.
- Bonds and other qualifying financial instruments.
The precise treatment depends on the legal and tax classification of the asset. Not every account, investment, or retirement arrangement is necessarily treated in the same way.
What is the IVAFE rate?
For the 2025 tax year, the standard IVAFE rate on qualifying financial assets is generally 0.2%.
A higher rate of 0.4% may apply to certain financial products held in jurisdictions subject to preferential tax regimes. Whether this applies depends on the asset and the relevant rules.
For many financial assets, the tax is calculated by reference to their value at the end of the tax year or the period of ownership, as applicable.
For example, if an eligible investment portfolio has a taxable value of €100,000 and the standard 0.2% rate applies:
| Calculation | Amount |
| Taxable investment value | €100,000 |
| IVAFE rate | 0.2% |
| IVAFE before applicable relief | €200 |
This is a simplified example. The correct valuation date and taxable base depend on the type of financial asset.
IVAFE on foreign bank accounts
Foreign bank accounts are subject to a different calculation from many other financial assets.
A fixed annual charge of €34.20 generally applies to qualifying foreign bank accounts, adjusted where appropriate for the ownership share and the period during which the account was held.
The charge generally does not apply where the average annual balance of the relevant accounts held with the same financial institution does not exceed €5,000.
This account-specific treatment is important because the standard 0.2% calculation should not automatically be applied to every foreign bank account.
Does IVAFE apply to US retirement accounts?
US retirement accounts need particular attention. The Italian treatment of a 401(k), IRA, Roth IRA, or other retirement account can depend on the structure of the arrangement, the assets held within it, and the relevant Italian tax rules.
It would be unsafe to assume that all US retirement accounts are automatically exempt from IVAFE, or that they are all treated like ordinary brokerage accounts.
Americans moving to Italy should review their retirement arrangements before becoming Italian tax residents wherever possible. The same review should consider how distributions, contributions, and investment income may be treated in both countries.
Reporting obligations for foreign assets
Americans living in Italy may have reporting obligations in both Italy and the US. It is important to understand that filing a tax return, reporting foreign assets, and paying tax are separate matters.
You may have to report an asset even if no IVIE or IVAFE is ultimately payable.
Italian reporting: Quadro RW and Quadro W
Foreign assets that must be reported to the Italian tax authorities are generally reported through the relevant sections of the Italian tax return.
These include:
- Quadro RW in the Redditi Persone Fisiche return.
- Quadro W in the Modello 730, where applicable.
Depending on the circumstances, reportable assets may include foreign real estate, bank accounts, investment accounts and other qualifying financial assets.
There is an exemption from certain reporting obligations for foreign bank accounts where the aggregate maximum balance does not exceed €15,000 during the year. However, this does not mean every account below that figure is automatically exempt from all Italian reporting or tax obligations. For example, an account may still need to be considered where IVAFE is due.
The reporting position depends on the type of asset and the applicable rules. It is important to distinguish between the obligation to disclose an asset and the obligation to pay tax on it.
US reporting requirements for American expats in Italy
American expats in Italy must also continue filing US taxes while living in Italy, reporting their worldwide income on form 1040. If they are subject to Italian income taxes, they can file IRS Form 1116 to claim US tax credits to avoid double taxation on the same income. Furthermore, they may have to file:
- FBAR: Along with filing your US annual tax return, expats must report foreign bank accounts if your total balances exceed $10,000 in aggregate at any time during a year, using the Foreign Bank Account Report.
- FATCA: FATCA (the Foreign Account Tax Compliance Act) requires reporting your non-US registered financial assets if their total value exceeds $200,000 for single filers at the end of the year or $300,000 at any time during a year.
Tax treaties and double taxation
Italy and the US have a tax treaty to prevent double taxation, but it primarily covers income taxes rather than wealth taxes. However, American expats can often claim foreign tax credits on their US tax returns for certain taxes paid in Italy, including those on income earned from foreign assets. Unfortunately, wealth taxes like IVIE and IVAFE are not directly creditable under US tax law, which may result in a higher overall tax burden.
You can read the US-Italy Tax Treaty on the IRS website.
Strategies for managing Italy’s wealth tax
Evaluate your tax residency
If your time in Italy is limited, you may be able to avoid becoming a tax resident and, consequently, avoid the wealth tax. Carefully consider how long you stay in Italy and where your primary economic interests lie.
Restructure your assets
- Real estate: Consider transferring ownership of foreign properties to family members or holding them through foreign entities that may not be subject to IVIE.
- Financial assets: Consolidate accounts or restructure investments to minimize the IVAFE liability. For example, some expats move assets to Italian accounts to avoid the foreign asset tax altogether.
Leverage foreign tax credits
If you pay property taxes or other levies in the US on foreign-held assets, you may be able to apply for foreign tax credits to reduce your IVIE (Italian wealth tax on foreign property) liability. Italy allows residents to claim credits for foreign taxes paid, which can lower your overall tax burden. To claim this, report the foreign taxes on your Italian tax return. The credit offsets some of your IVIE liability, but it’s typically limited to the amount of IVIE owed. Consult a reputable cross-border tax professional to ensure you’re maximizing this benefit.
Italy’s flat-tax regime for new residents
Italy offers an optional special tax regime for certain individuals transferring their tax residency to Italy. Often referred to as the new-resident flat-tax regime, it is designed primarily for people with substantial foreign-source income.
The regime is governed by Article 24-bis of the Italian Income Tax Code. It allows eligible individuals to pay an annual alternative flat-rate tax on qualifying foreign-source income instead of applying ordinary Italian income-tax rules to that income.
It is important to understand that this is not a flat tax on all foreign assets. It does not automatically exempt every type of income, asset, or reporting obligation.
Who can qualify?
Broadly, applicants must not have been tax residents in Italy for at least nine of the ten tax years preceding the start of the regime.
The regime is optional and subject to specific eligibility and election requirements. Individuals should obtain professional advice to establish whether they qualify and whether the regime is financially beneficial.
How much is the flat tax?
The annual flat tax amount depends on when the individual transfers tax residency to Italy.
| Relevant transfer period | Annual Flat tax for the main applicant |
| Before 11 August 2024 | €100,000 |
| 11 August 2024 to 31 December 2025 | €200,000 |
| From 1 January 2026 | €300,000 |
Additional annual amounts may apply for qualifying family members included in the regime. The amount increased from €25,000 to €50,000 for qualifying transfers from 1 January 2026.
The regime can generally be used for up to 15 years, subject to the relevant conditions.
Does the flat-tax regime exempt IVIE and IVAFE?
One potential benefit is that qualifying foreign assets may receive exemptions from IVIE and IVAFE while the individual is covered by the regime.
However, the exemption is subject to the regime’s rules and should not be interpreted as a blanket exemption for every foreign asset or every reporting requirement.
It is also important to remember that US citizens remain subject to US federal tax and reporting obligations even if they elect the Italian flat-tax regime.
The regime can be attractive for some high-net-worth individuals, but the annual charge is substantial. It should be compared against the ordinary Italian tax treatment of the individual’s income and assets before any decision is made..
Italy wealth tax FAQs
What assets are subject to IVIE and IVAFE in Italy?
IVIE applies to qualifying real estate located outside Italy and owned by Italian tax residents. IVAFE applies to certain foreign financial assets, including qualifying bank accounts, shares, bonds, and investment holdings. The precise treatment depends on the asset and the relevant rules.
When does an American become an Italian tax resident?
Italian tax residency is determined under specific legal tests. These include physical presence in Italy for the greater part of the tax year, civil-law residence, domicile, and registration in the Italian population register. Spending more than 183 days in Italy can be an important factor, but it is not the only test.
What is the IVIE rate for US property?
For the 2025 tax year, the standard IVIE rate is 1.06% of the property’s taxable value. The calculation may be affected by valuation rules, ownership share, the period of ownership, and qualifying foreign property taxes.
Is there a minimum property value before IVIE applies?
There is no general minimum property-value threshold. However, a payment threshold applies where the calculated annual IVIE amount does not exceed €200, subject to the applicable rules. Reporting obligations may still need to be considered even when no tax is payable.
Does IVAFE apply to US bank accounts?
IVAFE can apply to qualifying foreign bank accounts held by Italian tax residents. A fixed annual charge of €34.20 generally applies, with an exemption where the average annual balance of relevant accounts held with the same financial institution does not exceed €5,000. Other foreign financial assets are generally subject to different calculation rules.
Does IVAFE apply to US brokerage accounts?
IVAFE may apply to qualifying financial assets held in US brokerage accounts. The tax treatment depends on the underlying assets and how they are classified under Italian rules. A professional review is advisable, particularly where an account contains several types of investments.
Are US retirement accounts exempt from IVAFE?
Not necessarily. The Italian treatment of 401(k)s, IRAs, Roth IRAs, and other retirement arrangements can depend on the specific structure and assets involved. It is important to review these accounts individually rather than assuming that all US retirement accounts are exempt.
Can US property taxes reduce Italian IVIE?
Certain foreign property taxes paid on the same property may reduce an IVIE liability, subject to Italian rules and limitations. Not every US tax connected with a property will qualify, so the type of tax and supporting documentation should be reviewed.
Do Americans still have to file US tax returns after moving to Italy?
Generally, yes. US citizens normally remain subject to US federal income-tax filing requirements on their worldwide income, even when living abroad. They may also have separate reporting obligations, including FBAR and FATCA reporting, depending on their financial accounts and assets.
Does Italy’s flat-tax regime exempt Americans from IVIE and IVAFE?
Eligible individuals who elect Italy’s new-resident flat-tax regime may qualify for exemptions from IVIE and IVAFE on certain foreign assets. The exemptions are subject to specific conditions and do not mean that all foreign income, assets, or reporting obligations are automatically exempt.
Do I need to report foreign assets if I do not owe IVIE or IVAFE?
Possibly. Italian asset reporting requirements are separate from the calculation of IVIE and IVAFE. You may need to report a foreign asset even where no tax is payable. The reporting requirements depend on the type of asset, its value, and any applicable exemptions.
Consult tax and financial planning professionals
Italy’s wealth taxes are an important consideration for Americans planning a move to Italy, as well as those already living there with property, investments, or financial accounts in the United States or elsewhere.
Understanding IVIE and IVAFE is only one part of the picture. You also need to consider Italian tax residency, US federal tax obligations, foreign account reporting, investment structures and the interaction between the two countries’ tax systems.
The right planning approach depends on your personal circumstances, the assets you own and your long-term plans. Advice from professionals who understand both US and Italian rules can help you identify potential liabilities, meet reporting requirements and make informed decisions about your finances.
If you have questions about financial planning as an American living in Italy or are preparing to move, get in touch with our team to discuss your circumstances.
This article is for informational purposes only; it is not intended to offer advice or guidance on legal, tax, or investment matters. Such advice can be given only with full understanding of a person’s specific situation.
