Italian capital gains tax is a flat 26% substitute tax on most investment profits, with a reduced 12.5% rate for Italian and white-list government bonds and a 33% rate for crypto-assets starting in 2026.1Agenzia delle Entrate. Glossary If you are an Italian tax resident, Italy taxes gains on assets you hold anywhere in the world. If you are not a resident, only gains from Italian-sourced assets, such as real property located in Italy, fall inside the net. Real estate carries its own rules, and how you report and pay depends on whether an Italian intermediary handles the tax for you or you file it yourself.
Rates by Asset Type
Most financial gains carry the flat 26% substitute tax (“imposta sostitutiva”). That covers shares, corporate bonds, derivatives, ETFs, and similar instruments. The rate is standalone: investment profits do not get folded into your progressive income tax brackets.
Italian government securities receive better treatment. BOTs, BTPs, and other government bonds are taxed at 12.5% on both interest and capital gains. The same 12.5% rate extends to bonds issued by countries on Italy’s white list, which covers nations with adequate tax information-sharing agreements with Italy, including most EU and OECD members.2Dipartimento delle Finanze. The Tax Regime of Interest on Government Bonds
Crypto-assets shift to 33% starting in 2026, up from 26% in prior years. The previous €2,000 annual exemption has been abolished. Every euro of crypto profit is taxable, so even casual traders selling small amounts need to calculate and report gains.
Precious metals held as investments, including gold bullion and coins, are also taxable when sold at a profit.
How Real Estate Is Taxed
Property sales follow a different logic, and many sellers owe nothing. Under Article 67 of the Consolidated Law on Income Tax (TUIR), a gain on real estate is taxable if you sell within five years of buying. After five years, the gain is exempt.
Two exemptions apply even inside the five-year window:
- Primary residence. If you lived in the property as your main home for more than half the time you owned it, the gain is tax-free. You need to have been officially registered as a resident with the local Anagrafe where the property is located.
- Inherited property. Real estate acquired through inheritance is fully exempt from capital gains tax, regardless of when the heir sells.
For donated property, the five-year clock runs from when the donor originally purchased it, not from the date of the gift. A property your parent bought in 2020 and gifted to you in 2024 clears the window in 2025.
Choosing How a Taxable Property Gain Is Paid
When a taxable real estate gain exists, you pick between two routes. The first is to include the gain in your annual tax return, where it is taxed at progressive IRPEF rates: 23% on income up to €28,000, 35% from €28,001 to €50,000, and 43% above €50,000.3Agenzia delle Entrate. Personal Income Tax Rates and Calculation If your other income is low that year, this can produce a lower effective rate.
The second route is a 26% flat substitute tax paid directly to the notary at closing.4Consiglio Nazionale del Notariato. Purchase and Sale Real Estate The notary calculates and remits the tax for you. You have to elect it at closing; miss that moment and the gain defaults into your annual return.
Calculating the Gain
The base formula is the same across asset types: sale price minus adjusted purchase cost. What counts as “adjusted” differs by asset.
For real estate, deductible costs include notary fees, registration taxes, and real estate agent commissions. Capital improvements such as structural renovations or permanent installations reduce the taxable base if you have receipts. Routine maintenance and cosmetic updates generally do not qualify.
For financial instruments, cost basis depends on your reporting regime. Under the administered regime, your bank or broker uses the weighted average cost method to blend multiple purchases of the same security. Under the declaratory regime, LIFO applies: your most recently purchased shares are treated as the first ones sold.
If you hold foreign assets, keep a clear ledger of transaction dates and the exchange rates you used to convert into euros. The Agenzia delle Entrate expects precision, and discrepancies tend to draw scrutiny.
Using Losses to Reduce Tax
A loss on the sale of an investment can offset gains in the same category. If losses exceed gains in a given year, you can carry the excess forward for up to four years. Unused losses expire after that.
You have to claim the loss in the return for the year it occurs. Skip a year, and you cannot go back and use it later. Under the administered regime, your broker tracks and applies losses within the same account automatically. Under the declaratory regime, tracking is your job.
Losses generally do not cross rate categories cleanly. A loss on corporate bonds can offset a gain on shares because both sit under the 26% substitute tax. A loss on government bonds taxed at 12.5% only offsets 26%-rate gains proportionally, not euro-for-euro.
The Two Reporting Regimes
How you report and pay depends on which regime applies.
Regime Amministrato
Hold investments through an Italian bank or broker and you likely default into this regime. Your intermediary calculates each gain or loss, withholds the substitute tax, and remits it. You do not report those gains on your annual return, and assets inside that account are exempt from foreign monitoring obligations. Most Italian retail investors use this route because it takes almost no effort.
Regime Dichiarativo
If you manage investments yourself, use a foreign broker, or hold assets outside the Italian banking system, you fall into the declaratory regime. You calculate your own gains and losses, report them in Quadro RT of the Modello Redditi Persone Fisiche, and pay the tax yourself.5Agenzia delle Entrate. How and When to File a Tax Return
You can switch regimes by submitting a written request to your intermediary by December 31. The new regime takes effect January 1.
Filing and Payment Deadlines
The Modello Redditi PF is due by October 31 of the year following the tax year. Non-residents who cannot file electronically have until November 30 to submit by registered post. The tax balance itself is due by June 30 of the following year, paid through the F24 form.5Agenzia delle Entrate. How and When to File a Tax Return Late payments and filing errors carry penalties that scale with the delay, though the “ravvedimento operoso” voluntary compliance program reduces those penalties if you correct the issue before the tax authority contacts you.
Foreign Assets: Quadro RW and Wealth Taxes
If you are an Italian tax resident with any financial assets or property outside Italy, a separate monitoring requirement applies. Foreign holdings must be reported in Quadro RW of the Modello Redditi PF (or Quadro W on the simpler Modello 730). This is a disclosure obligation, independent of whether any tax is due on the assets.
The scope covers foreign bank accounts, brokerage accounts, shares in non-Italian companies, real estate abroad, crypto held on foreign exchanges, and precious metals stored abroad. Foreign bank accounts specifically must be reported if the maximum balance exceeded €15,000 at any point during the year, or if the average annual balance exceeded €5,000.
Penalties are steep. For assets in countries with adequate information-sharing, fines run from 3% to 15% of the undeclared value per year of omission. For assets in non-cooperative jurisdictions, the range doubles to 6% to 30%, and the tax authority presumes undeclared amounts represent taxable income unless you prove otherwise.
Two wealth taxes are calculated on the same Quadro RW:
- IVIE. Foreign real estate is taxed at 1.06% of value annually. No IVIE is due if the calculated amount is below €200; above that threshold the full amount applies.6PwC. Italy – Individual – Other Taxes
- IVAFE. Securities, investment accounts, and crypto held outside Italy are taxed at 0.2% of market value as of December 31, doubling to 0.4% for assets in non-cooperative jurisdictions. Foreign bank accounts with an average balance above €5,000 carry a flat €34.20 per account instead of a percentage.7PwC. Italy – Individual – Other Taxes
Assets held through an Italian intermediary under the administered regime are generally exempt from both monitoring and wealth tax, because the intermediary handles everything domestically. Move to a foreign broker or hold assets in your own name abroad and both obligations kick in.
If You Are a US Taxpayer
Americans with Italian assets or living in Italy face reporting on both sides. The US-Italy tax treaty prevents full double taxation, but the overlap requires care.
Under Article 13 of the treaty, gains from Italian real estate can be taxed by Italy, and the US taxes them as well because it taxes citizens on worldwide income.8U.S. Department of the Treasury. Convention Between the Government of the United States of America and the Government of the Italian Republic for the Avoidance of Double Taxation For most financial assets not connected to an Italian business, gains are taxable only in the country where the seller resides.9U.S. Congress. Treaty Document 106-11 – Tax Convention With Italy A US resident selling Italian government bonds generally owes tax only to the US; a US citizen living in Italy selling Italian real estate could owe both countries.
When both countries tax the same gain, Form 1116 lets you credit the Italian tax against your US liability. Convert Italian taxes into US dollars at the exchange rate on the date you paid them.10Internal Revenue Service. Instructions for Form 1116 If total foreign taxes are $300 or less ($600 married filing jointly) and all foreign income is passive, you can claim the credit without filing Form 1116.
Two separate US disclosures apply on top of the tax. If the combined value of your foreign financial accounts exceeded $10,000 at any point during the year, file FinCEN Form 114 (the FBAR) by April 15, with an automatic extension to October 15, electronically through FinCEN.11Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR) Form 8938 applies at higher thresholds: $50,000 on the last day of the year or $75,000 at any point for single filers in the US, and $200,000/$300,000 for single filers living abroad, with double those amounts for married couples filing jointly.12Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets? Form 8938 is filed with your tax return. You may need both.
Whether an Italian account produced any income has no bearing on these disclosures. An empty account that briefly crossed the $10,000 aggregate threshold still triggers an FBAR.