An Italian resident with €120,000 of employment income pays about €43,800 in gross tax before deductions: 23% up to €28,000, 33% from €28,000 to €50,000, 43% on the excess. [1] Once the regional and municipal surcharges are added, in some regions the take on the last euro earned goes past 47%. [2]
The same resident, leaving an estate of four million to his children, pays forty thousand on it: 4%, and only on the part above the one million allowance granted to each heir in the direct line. [3] If he sells the house he bought seven years earlier and realises a gain of three hundred thousand, he pays nothing at all. [4]
€43,800 on a year’s work, €40,000 on four million passed to two children, nothing on a property gain. Same country, same tax year, same person.
The exemption for property gains beyond five years is not a reduced rate but an outright exclusion from the charge: in other words, the disposal of a property held for more than five years produces no taxable income, whatever the difference between purchase price and sale price. [4] The threshold is five completed years, however, and at exactly five years the gain is still taxable. Building land falls outside the exemption in every case, as do properties that have benefited from the Superbonus relief, for which the relevant period has been extended to ten years. [5]
On inheritance tax the rates have stood unchanged at 4% for a spouse and relatives in the direct line, 6% for brothers and sisters and 8% for unrelated beneficiaries, with an allowance of one million euro for each beneficiary in the direct line and one hundred thousand for siblings. [3] A family with a spouse and two children therefore has three million of exemption before the tax begins to bite, and it bites at 4% whatever the excess. In the countries most foreign residents in Sardinia come from, the top rates in the direct line range between 30% and 45%, and go above 60% between people who are not related.
Investment income sits outside that progression: interest, dividends and gains on securities bear a substitute tax of 26%, reduced to 12.5% on government bonds. [6] That is not a low rate in absolute terms, but it is a flat one. It does not go into the tax return to be added to other income, and it does not push total income towards the band above.
Italy has no tax on total net wealth of the kind Spain and Norway apply. It does have annual charges on particular classes of asset: IMU on real estate, at a basic rate of 0.86% on the revalued cadastral value, which municipalities may raise to 1.06% or reduce to nothing, [7] and stamp duty on financial products at 0.2% of their value each year, with a fixed charge of €34.20 on the current accounts of individuals whose average balance is above five thousand euro. [8]
IMU does not reach the main residence, meaning the property where the owner is both entered in the municipal population register and habitually resident. [7] That is where a substantial effect arises for anyone weighing up a move to Sardinia: for as long as the owner stays non-resident the Sardinian house is a second home and IMU falls due every year, whereas the same house, once it has become the habitual residence, leaves the charge altogether. On a property of any real value on the coast, this is a sum that foreign owners have often paid for years without once asking whether it was owed.
For anyone deciding whether to stay, what separates this treatment from the regimes designed to attract new residents is that it carries neither conditions nor an expiry date. The substitute tax on foreign pensions runs for ten tax years, the one on foreign income for fifteen, the relief for returning workers for five. The 4% on inheritances and the five-year exemption on property gains are ordinary law, and there is nobody you have to apply to for them.
None of the rules set out so far belongs to Sardinia. They apply at Porto Cervo exactly as they apply at Cortina, and anyone who presents the five-year exemption to you as an advantage of the island is telling you something untrue. What changes here is the size of the base those rules operate on, and in particular the cadastral values used to calculate IMU and the land registry taxes: the same rate applied to a lower cadastral income yields a lower tax, every year, for as long as the property is held.
On income the rates stay high, and anyone who brings to Italy not only the capital but also the activity that produces it lands in the severe half of the system. Italian residence also draws foreign wealth into Italian taxation, through an annual reporting obligation and through taxes on the value of real estate and financial assets held outside the country, at 1.06% and 0.2% respectively. [9] And the 4% is the Italian tax, not necessarily the only one. The charge follows the residence of the deceased, but the country of origin may tax the same succession by reference to where the heir lives or to the nationality of the deceased, and Italy has concluded very few treaties in this field. The credit allowed by domestic law covers foreign tax only where it relates to assets situated in that country, [10] so a house in Gallura taxed in Germany because the son lives in Munich produces no credit in Italy at all.
An example with real figures. A foreign pension of €80,000 bears about €26,600 of tax at ordinary rates and €5,600 under the 7% substitute tax: a difference of twenty-one thousand euro a year, a little over two hundred thousand across the ten tax years for which that regime runs.
The same person, with an estate of five million intended for a spouse and two children, has three million of allowances and pays inheritance tax on the remaining two million: eighty thousand euro, once. Where rates in the direct line range between 30% and 45% and the allowances are of a different order of magnitude, the tax on the same estate is counted in hundreds of thousands.
Four pieces of information are needed before advice on this can be worth anything: the total value of the estate, the properties with their respective purchase dates, the degree of relationship of the heirs, and the country where they live. On that basis I prepare a written statement setting out the Italian tax that would fall due today, the tax that would fall due after a transfer of residence, and whether the country where the heirs live could tax the same succession as well. It is a defined piece of work, with the fee agreed before it begins. Send me a message.
Sources
[1] Article 11(1) of the Italian Income Tax Code (Testo unico delle imposte sui redditi, “TUIR”), as amended by Article 1(3) and (4) of Law 199 of 30 December 2025, which reduced the second-band rate from 35% to 33% with effect from the 2026 tax year.
[2] Regional surcharge on personal income tax, which varies from region to region, and municipal surcharge of up to 0.9%.
[3] Legislative Decree 346 of 31 October 1990, as amended by Legislative Decree 139/2024 and consolidated in the single text enacted by Legislative Decree 123/2025.
[4] Article 67(1)(b) TUIR.
[5] Law 213 of 30 December 2023, as regards properties subject to the works referred to in Article 119 of Decree-Law 34/2020.
[6] Article 5 of Legislative Decree 461 of 21 November 1997 and Article 3 of Decree-Law 66 of 24 April 2014.
[7] Article 1(739) and following of Law 160 of 27 December 2019; the exemption for the main residence is at subsection 740.
[8] Article 13(2-ter) of the tariff annexed to Presidential Decree 642 of 26 October 1972.
[9] Article 19 of Decree-Law 201 of 6 December 2011, under which IVIE was raised to 1.06% by Law 213/2023 and IVAFE stands at 0.2%, and Article 4 of Decree-Law 167 of 28 June 1990 on reporting.
[10] Article 26(1)(b) of the consolidated text on inheritance and gift tax.
Agostino Galizia is a chartered accountant and statutory auditor in Cagliari, Sardinia, and a partner of Galizia & Pinna Associati. He is registered with the Ordine dei Dottori Commercialisti ed Esperti Contabili di Cagliari (no. 1330/A) and with the Italian register of statutory auditors (no. 80487).
This article contains general information on Italian law as it stands at the date of publication. It is not advice on any particular case and should not be relied on as such.
