Reader question: Will Italian citizenship mean I have to pay tax in Italy?

Many of The Local's readers have asked whether obtaining Italian citizenship, and therefore dual nationality, would make them liable to pay taxes in Italy as well as in their home country.

This is a particularly common concern among readers based in the US, where taxation rules are based on citizenship.

But Italian tax and citizenship experts are clear that obtaining Italian citizenship in itself should not affect tax obligations in Italy.

Tax specialist Nicolò Bolla, of Accounting Bolla, says the question of whether Italian citizens need to pay tax to Italy if living overseas is one he is frequently asked.

“The answer is no,” he says. “Italy does not tax its citizens if they are not residents."

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“Italian citizens living overseas do not need to pay tax to Italy just because they hold an Italian passport," he explains.

Unlike in the US, Italian tax rules don't depend on citizenship - but your residency status is all-important.

"A tax resident of Italy (irrespective of their nationality) must pay tax on their worldwide income," Bolla says.

“If you reside in Italy, you must disclose and pay tax on your foreign-earned income sources as well as disclose all the foreign-held assets.”

Under Italian tax law, Bolla explains, you are a tax resident if for more than 183 days of the year:

• You are registered as an Italian resident
• You have an established “place of habitual abode” in Italy
• Your business or “centre of life interests” is based in Italy

He stresses the importance of taking care to find out for sure “whether an individual is a tax resident of Italy or not” as it “may happen that an individual is a tax resident of more than one country at a time.”

“Note that, in many circumstances, double tax treaties might apply, thus reducing any tax due to Italy, as well as mitigating any withholding tax applicable to non Italian residents,” Bolla explains.

So are there any cases in which Italian nationals living abroad do need to pay tax in Italy?

In a blog post on the topic, Bolla explains that Italian nationals overseas would need to pay tax to Italy “if they have income sources originating from Italy; most notably

• Rental income;
• Pensions;
• Employment income;
• Financial income.”

Once tax residence status has been determined, Italian citizens living abroad may need to sign up with with the register of Italians living abroad (AIRE) to ensure they are not incorrectly sent an Italian tax bill, according to the Italian American Citizenship Assistance Program (ITAMCAP).

“Dual citizens might sometimes receive a notice of tax liability from Italy, even if they are living abroad, if their names appear as a listed resident in an Italian city or municipality or if they own property in Italy,” says the company’s website.

And, even if registered with AIRE, “you will still owe any applicable property taxes to the Italian government.”

But “if you spend less than 183 days of the year in Italy and do not own property or other significant assets there, and you are a resident of another country, most likely you will not need to pay any taxes in Italy.”

Please note that The Local cannot advise on individual cases. For further information on how Italian taxation rules may apply in your circumstances, seek advice from the Italian revenue agency (Agenzie delle entrate) or a qualified professional.