October 21, 2025
Moving to Italy is an experience saturated with details, of which the Italy wealth tax is just one of many. Between building your relocation team and navigating the more sprawling challenges associated with adjusting to the Italian language and culture, it’s helpful to think of it all as a puzzle. Determining where all of these pieces align is an inevitable challenge for everyone, but it is also part of the journey.
The Italy Wealth Tax Consideration
Since the U.S. does not have a wealth tax, it’s natural to want to learn more about how the wealth tax in Italy works. Common questions in this vein include the following.
“Does Italy have a wealth tax?”
Yes. There are two types, the Imposta sul Valore degli Immobili situati all’Estero, IVIE, which applies to foreign real estate at a rate of 1.06%, and the Imposta sul valore delle attività finanziarie detenute all’estero, IVAFE, which applies to foreign financial assets at a rate of 0.2%.
“Do U.S. citizens pay Italy’s wealth tax?”
Yes, in some cases – we’ll get into this more below, including suggestions for how to digest the fact that you may be required to pay the additional tax – and the perhaps surprising idea that doing so shouldn’t detract from your dream of living in Italy long-term, if that’s what you want.
A Brief Aside
As a wealth management firm offering exclusively holistic cross-border services, we assess Italy’s wealth taxes in the context of the long-term financial plan that we create for our clients, taking into account every aspect of your daily life and the details of your future goals and legacy planning.
Making the Move to Italy
Ahh, Bella Italia. The destination that really sells itself, right? I’m going to make a bold assumption that most of you considering moving or retiring to Italy have at least visited, and in many ways, never left.
Well, if Italy is your dream destination, do not let the Italy wealth taxes (IVIE and IVAF) be the reason why you choose not to move here. I’ve known people who delay their move by wondering whether Italy will end its wealth tax, and to me, this is a classic example of missing the forest for the trees. If you want to move to Italy, do it – but take care to plan ahead.
Before we get into some of the details about IVIE and IVAF, let us consider the larger picture of Italy’s tax framework and its broader implications.
IPREF - Italy’s Progressive Tax System
Italy operates on a progressive tax system similar to the United States. Simply put, the more income that you earn, the higher your tax bracket.
However, unlike the United States, Italy’s tax brackets notch up in a much steeper fashion. For instance, as of September 2025, if your combined income is greater than 50,000 EUR, you will already find yourself at a 43% rate, the highest ladder on the progressive tax system in Italy.
For reference, the highest U.S. tax bracket is 37% and doesn’t kick in until you’ve hit or exceeded $609,351.
For Many of Our Clients, U.S. Retirees and Pensioners, This is a Major Concern
Why? Because at the end of the day, when you aggregate all your sources of “income” as defined by Italian law and governed by the U.S.-Italy double-taxation treaty, it’s pretty common to find yourself in this higher tax rate.
Additionally, many Americans are taken aback at what qualifies as taxable income in Italy, for example:
distributions from your traditional IRAs (as well as Roth IRAs, with some slight nuances)
Social Security income or other pensions.
All of a sudden, financial planning for Italy takes on an entirely new dimension – and the stakes feel higher.
At face value, it can seem like hard-earned retirement income gets chopped in half by Italy, a highly unpleasant scenario. Fortunately, this will likely not come to pass – if you plan in advance.
What about Italy’s “special” tax regimes?
While it’s true that Italy offers a variety of “special tax regimes” and tax incentives for U.S. nationals who intend to make Italy their fiscal residence, their application has some key limitations.
Some of the most common applications of the special tax regime for our clients are the 7% regime or the 200,000 EUR flat-tax regime. However, the 7% regime requires you to move to a smaller town in Southern Italy (think Sicilia or Puglia), while the flat-tax regime necessitates being in a financial position to comfortably write a check for 200K EUR each year and call it a day.
When crafting financial plans for our clients moving to Italy, the 7% special tax regime is particularly valuable in many circumstances. This is especially true for those individuals who need to restructure their existing financial portfolios to be optimized for Italy’s progressive tax framework.
Read more about Italy’s progressive tax framework.
Understanding Italy’s Wealth Taxes
For U.S. nationals establishing residency in Italy, two specific wealth taxes often come into focus: IVIE (Imposta sul Valore degli Immobili situati all’Estero, or tax on foreign real estate) and IVAFE (Imposta sul Valore delle Attività Finanziarie detenute all’Estero, or tax on foreign financial assets).
While both frequently spark concern at the outset, a deeper look shows that these taxes are relatively modest in scope and are most successfully navigated when managed as components comprising an overarching cross-border financial plan rather than as standalone obstacles.
Planning to move to Italy? Learn more about Liberty Atlantic’s holistic approach to cross-border financial planning by scheduling a complimentary first call.
IVIE (Imposta sul valore degli immobili situati all’estero)
IVIE applies to real estate located outside of Italy and owned by Italian tax residents. Practically speaking, this means that if you maintain a property in the U.S., e.g., a family home, vacation house, or investment property, you must account for IVIE in your Italian tax return.
As of 2024, the annual tax is 1.06% of the property’s value, generally based on the original purchase cost or another determinable value rather than fluctuating market estimates.
One key callout here: This is an excellent example of when zooming out and viewing the Italian wealth taxes as a component of broader cross-border tax planning can bolster your overall financial position.
"Cross-border tax planning emphasizes reducing or eliminating double taxation," says Nicolas Castillo, founder of Rook CPAs, "So when we're talking about real estate, the Italian property wealth tax, IVIE, can be reduced by U.S. property taxes paid on that property, making the concept of Italian wealth tax much less spooky.
IVAFE (Imposta sul valore delle attività finanziarie detenute all’estero)
In contrast, IVAFE applies to foreign-held financial assets such as:
bank accounts
securities
investment funds, and
retirement portfolios.
Once you become an Italian tax resident, these assets fall under IVAFE, currently levied at 0.2% of the year-end balance. Again, while this can sound like an extra layer of taxation, the real-world burden is usually modest in proportion to overall wealth, especially when planned for in advance.
Related reading: High-Net-Worth Tax Planning Strategies for Americans in Europe
Is It Worth It to Pay the Wealth Tax in Italy?
As noted at the outset of this article, Italy’s wealth taxes are just two obstacles among the many Americans must successfully navigate when planning to live long-term in Italy. However, from a financial planning perspective, IVIE and IVAFE rarely drive the core strategy themselves.
IVIE and IVAFE do need to be carefully factored into broader wealth management decisions. For example, it may benefit U.S. nationals (including U.S.-Italian dual citizens) to review how property is titled, whether certain assets are held in tax-advantaged structures, and how treaty provisions between the U.S. and Italy may mitigate exposure.
When integrated properly, these taxes become just one more element in a well-coordinated cross-border financial plan, ensuring compliance in Italy without compromising long-term growth or global diversification goals.
The Bigger Picture of Italy’s Wealth Tax
When you take a bird's-eye view of your situation, will tax rates of 1.06% for real estate and 0.2% for financial assets truly sway your decision?
Well, let’s step back and look at this holistically: When taken into context, namely, compared to Italy’s steep progressive tax regime, these taxes are comparatively low. Additionally, credits for taxes already paid to the United States often further reduce the amount owed.
There is also a limited scope to IVIE and IVAFE, as it only applies to specific asset categories, primarily real estate and financial assets outside of Italy, which can also be restructured as needed. Pension accounts and certain deferred assets are frequently exempt.
While IVIE and IVAFE are important for compliance, they are not existential threats or outsized costs for U.S. nationals who move to or become tax resident in Italy.
In other words, when properly managed, these wealth taxes are just a small piece of the total financial planning picture. And I, for one, would argue that the joy living in Italy brings can feel truly incalculable some days.
Italy Wealth Tax – FAQs
What is “wealth tax” in Italian?
Italy has two types of wealth tax. The Imposta sul Valore degli Immobili situati all’Estero, IVIE, which applies to foreign real estate, and the Imposta sul valore delle attività finanziarie detenute all’estero, IVAFE, which applies to foreign financial assets.
Is the quality of life in Italy worth the wealth tax?
Yes, for most Americans, the quality of life in Italy far outweighs the cost of the wealth taxes. Even with IVIE and IVAFE, many expats find their overall cost of living 30–40% lower than in major U.S. cities, alongside access to universal healthcare and longer life expectancy (Italy ranks among the top 20 globally, while the U.S. barely cracks the top 50). For those seeking balance, culture, and everyday well-being, the trade-off is more than worth it.
References
Federal income tax rates and brackets | Internal Revenue Service
Italian Lawyers - Studio Legale Metta - Legal Tradition Since 1887
Disclaimer
This material is purely intended to be general and educational in nature, and should not be construed as specifically-tailored investment, financial planning, tax, legal, or other professional advice. Information and data contained herein is as-of the date of publication, and may be subject to change in the future without notice. Any investment performance referenced is purely past performance, which is no guarantee of any future performance. Nothing contained herein should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or other financial product or investment strategy. All investment, tax, and financial planning strategies involve risk that you should be prepared to bear. You are highly encouraged to consult with professionals of your choosing before taking any action based on this material.
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