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An Expat Guide to Living in Italy (Updated 2025)

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If you’re a UK citizen living in or planning to move to Italy, it’s essential to understand how your finances will be affected. Italy’s tax system differs significantly from that of the UK, and there are serious consequences for non-compliance.

Alongside our expertise in Retirement and Investment planning and to help you navigate local tax situations and reporting, we’ve partnered with local experts based in Italy who provide on-the-ground insight and support. Our combined knowledge ensures you get practical, compliant, and tax-efficient advice tailored to expat life.

This guide walks you through key areas: residency rules, taxation, pensions (including QROPS and SIPPs), social security contributions, and important expat tax considerations including Italy’s favourable tax regimes for new residents.

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Key Financial Considerations for Expats Living in Italy

Retiring in Italy

To retire in Italy, an elective residence visa is necessary. In 2024, the minimum annual income requirements remain:

• EUR 31,000 for an individual
• EUR 62,000 for a married couple
• EUR 20,000 for each dependent child

This income can be derived from pensions, investments, rental leases or any other income that can be considered passive. Any income deriving from active subordinate or self-employment will not be considered. Italy remains a popular destination for retirees due to its high quality of life, but the cost of living varies significantly by region.

Once in Italy, expats apply for a residence permit (a different application, separate from visa processing). After 5 years of residency, individuals have the right to apply for long-term residency, allowing them to live and travel freely within all 27 EU countries.

Life in Italy as an Expat

Asset Reporting

Once you become an Italian tax resident, you must declare worldwide income and assets, including foreign property, bank accounts, trusts, and investments. Italy participates in the Common Reporting Standard (CRS), making undeclared foreign assets highly likely to be discovered. Penalties for non-compliance can be significant.

Italian Tax Residency

You are considered an Italian tax resident if:
  • You spend more than 183 days per year in Italy (consecutively or not).
  • You have your main centre of vital interests (family, economic) in Italy.
  • You are registered in the Italian resident population register (Anagrafe).

As a resident, you are subject to taxation on worldwide income. Non-residents are taxed only on Italian-source income.

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Italian Taxation & Social Security Contributions

Income Tax (IRPEF)
Italy uses a progressive personal income tax system:
2025 Tax Bands:
  • 23%: Up to €15,000
  • 25%: €15,001 – €28,000
  • 35%: €28,001 – €50,000
  • 43%: Over €50,000
Regional and municipal surcharges of up to 3.33% may apply depending on where you live. Tax returns are typically due by the end of September for the previous tax year.
Capital Gains Tax (CGT)

Capital gains on financial assets are generally taxed at 26%. Gains on the sale of your main residence are usually exempt if held for more than five years.

Tax on UK Investments

UK tax-free wrappers like ISAs are not recognised in Italy, so all income, dividends, and capital gains are taxable unless covered by the Italy-UK Double Tax Treaty.

Social Security Contributions

  • Employees pay approximately 9.19%; employers pay roughly 30%.
  • Self-employed contributions vary but typically range from 24% to 33%.
  • Foreign pensions may be exempt from Italian social security contributions, depending on treaties and status.
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Inheritance and Gift Tax in Italy

Italy levies inheritance and gift tax at rates dependent on the relationship between donor and recipient:

  • Spouses and direct descendants: 4% tax with a €1 million exemption per beneficiary
  • Siblings: 6% tax with €100,000 exemption
  • Others: 8% tax with no exemption
Italy does not enforce forced heirship rules, but careful estate planning is advised to optimise tax outcomes.
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UK Pensions & Retirement in Italy

Defined Contribution (DC) Pensions

Benefits of transferring your UK pension may include:

  • Access to flexible drawdown
  • Currency management (GBP/EUR)
  • Enhanced death benefits and estate planning

Defined Benefit (DB) Pensions

DB pensions offer guaranteed income but less flexibility. Transfers may be worthwhile if you want lump sums or if health or scheme risks are concerns.

Pension Transfer Options

  • Keep it in the UK — possible but may be more complex post-Brexit.
  • QROPS: UK tax-free transfers subject to Italian tax on withdrawals.
  • SIPPs: FCA-regulated, flexible and popular among expats.

Here’s more information on UK Pension Transfers.

Tax on UK Pensions in Italy

  • Italian tax authorities tax foreign pensions as income.
  • The Italy-UK Double Tax Treaty helps prevent double taxation. Furthermore, UK State Pensions cannot be taxed.
  • Lump sum options and rates depend on specific circumstances.
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Italian Expat Tax Incentives and Special Regimes
Italy offers attractive tax regimes for new residents and certain categories of expats, aimed at encouraging high-net-worth individuals and workers to move there:

New Resident Flat Tax Regime (Res Non-Dom)

Individuals who transfer tax residency to Italy can opt for a flat tax of €100,000 per year on all foreign income and assets, regardless of amount, for up to 15 years. This regime is ideal for high-net-worth expats and retirees.
High Net Worth Individuals
High-net-worth individuals not engaged in any business or professional activities in Italy can benefit from favourable tax treatment under the flat tax scheme.
Impatriate Workers Regime
Employees relocating to Italy for work may qualify for a 70% exemption on employment income for five years (extended to 10 years in southern Italy), making it one of the most generous tax incentives for expat workers.
Tax Deductions and Credits:
Various tax deductions and credits exist for dependent family members, home renovations, and energy-efficient improvements, ranging from 30% to 80% of the total amount spent.
Italy-UK Double Tax Treaty
This treaty ensures you avoid double taxation on income, pensions, and investments, providing tax relief and clarity for expats.
Wealth and Investment Considerations
Italy does not have a wealth tax on financial assets but does levy a modest annual tax on real estate holdings abroad (IVIE) and on financial assets held abroad (IVAFE).
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Final Thoughts

Living in Italy as a UK expat offers incredible culture, lifestyle, and cuisine — but Italian tax rules can be complex and require detailed planning. The new resident flat tax and impatriate regimes provide powerful incentives if applied correctly.

Our trusted local partners in Italy provide essential guidance to ensure your financial plans comply with local laws and optimise tax benefits.

Top tips:

  • Declare all worldwide income and assets accurately
  • Consider if the new resident flat tax regime fits your profile
  • Explore impatriate worker incentives if relocating for employment
  • Use a bilingual cross-border financial adviser familiar with Italy-UK issues
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Contact Us

Looking for tailored financial advice for your move to Italy?

Whether you need help with pension transfers, tax compliance, or residency planning — we’re here to support you.

  • Speak with UK-Italy cross-border experts
  • Work with local, bilingual partners based in Italy
  • Get a personalised plan for pensions, taxes, and residency

👉 Contact us today to book your free consultation.