When do I need to start paying Italian taxes?

Question: "We lease an apartment here in Italy and come over a couple of times a year. Since we pay taxes in America, we are unsure if we can apply for an Italian driver’s license or health card, or apply for residency permits. My question is, what would trigger the need to file an Italian tax return?"

As Italy’s revenue office (Agenzie delle entrate) explains, the requirement to pay income tax in Italy is triggered if and when you become a 'tax resident' in Italy. 

The revenue office website says you’re considered a tax resident in Italy if, for at least 183 days a year, you:

• Are registered with Italy’s national population registry office (known as the Ufficio Anagrafe) or
• Have your “place of residence or habitual residence” in Italy.

Essentially, spending more than six months of the year in Italy means that the Italian tax authorities can view Italy as your primary place of residence.

If you’ve chosen to officially move to Italy, have navigated any visa requirements, and are now successfully registered as a resident with your local municipality, then it’s simple enough: you’ll now need to be prepared to pay taxes in Italy on all income made anywhere in the world.

The tax requirement probably won’t apply if you’re spending less than half of your time at a second home in Italy. This should be the case if you’re a non-EU national subject to the 90-day rule when visiting Italy and other European countries.

READ ALSO: Can second-home owners get an Italian residency permit?

But if you do live in Italy most of the time, or if Italy is where you have most of your business or other interests, you could also be viewed as an Italian tax resident even if you are not legally registered as a resident with the Ufficio Anagrafe.

And, even if you’re not considered an Italian tax resident, be aware that you may still have to pay Italian taxes on any income generated in Italy.

Those who buy a property in Italy are also liable for certain local taxes, regardless of their residency status. You can see more information about these taxes in a separate article.

It’s also important to note that many countries, including the US, have double taxation treaties with Italy which set out the rules on which country should levy certain taxes. These are intended to prevent you from being taxed twice on the same income.

Agreements between Italy and other countries may affect whether you pay tax on certain sources of income, such as pensions, in Italy or in your home country.

Becoming a tax resident

Tax obligations will be one of the most important considerations for anyone deciding whether or not to take up Italian residency. 

The main thing you’ll need to be aware of is that becoming officially resident means filing annual tax returns with the Italian authorities, even if all your income comes from your home country or elsewhere.

Once you are a taxpayer in Italy, you will have the right to register with the Italian healthcare system. Depending on your circumstances however, doing so may not be free.

Please note that The Local is unable to advise on individual cases. For more details on how the Italian tax rules may apply in your circumstances, seek independent advice from a qualified tax professional.

You can also find more information about Italy’s income taxes on the Italian revenue agency's website (in English).