I could give song and verse about why it is a good time to sit in cash based on high valuations in equity markets or Bond prices being low, but my job is about long term financial and tax planning for people who are living in Italy.    Therefore, 99% of the time the answer to the question will always be to invest and not sit in cash. 

That might sound like a simple and quick reply to the question, but there is really only one instance when we would advise someone living in Italy to stay in cash for any period.

Why should I keep my money in cash?

For anyone who needs cash in the short term — for a renovation of their Italian home, an Italian property purchase, or a major life event, money to support income needs or care costs etc — keeping money in cash is sensible, regardless of interest rates or market returns.  Cash is stability, and stability has a value when we have expenses or liabilities, which can be quantified both monetarily and the term over which they need to be paid.

However, for all other long‑term goals — retirement income, future healthcare needs, supporting children or grandchildren — cash is a terrible solution. Over long periods, inflation erodes purchasing power far faster than cash can grow and if you are planning for life in Italy it is no different to anywhere else.

Even when interest rates appear attractive (and sometimes cash rates are better than that offered by the markets, but for very brief periods) they rarely keep pace with rising prices over a decade or more. Markets fluctuate, but over time, they have consistently outperformed cash.

Italian life can be much cheaper, in many ways (food, access to services [beaches, countryside, cultural venues], eating out at restaurants etc) than life in other countries, but it still does not negate the need to invest for your long-term future rather than leaving your money sat in cash.

(At time of writing you can expect to get back, on average, a 2% return from your cash in EU based deposit accounts. If you lock in for any specific term, you may be able to get some higher rates but then you lose the liquidity of your funds)

Because pension systems across Europe – and beyond – follow different tax models, understanding how Italy interprets them is essential for anyone planning their long‑term financial life here.

EET, ETT, or TTE?

Across the world, private pension systems follow a handful of tax models. The three most common are known as EET, ETT and TTE. These refer to how contributions, investment growth and withdrawals are taxed. Many countries, including the UK, use the EET model, where contributions and investment growth are tax incentivised and withdrawals are taxed at standard progressive income tax rates.

Italy, however, uses the ETT model, where contributions into a personal pension ( previdenza complementare) can be eligible for a tax deduction (up to a certain limit), the fund itself is taxed but at the time of the payment of the income a lower income tax rate is applied.

(Only a few countries use the TTE model, where contributions and growth are taxed but withdrawals are exempt).

These differences matter because when someone moves to Italy with a UK pension from the the Italian tax authorities will classify it according to Italian tax law interpretation.  Often, a commercialista is left with the decision of ‘using best logic and guidance from the Agenzia delle Entrate. This is where mismatches can arise: a pension designed under one model does not always fit neatly into another.

The EET model (UK)

The EET model is widely used and easy to understand. It allows individuals to save efficiently during their working life and then pay income tax on withdrawals in retirement. Many people from the UK arrive in Italy with personal pensions/SIPP’s/occupational defined contribution pension schemes etc, and the question becomes how Italy should treat them for taxation purposes?

Since Italy taxes its own pension funds during the accumulation phase, it would not make sense for a foreign pension to benefit from tax‑free growth abroad and then also receive Italy’s preferential tax rate on withdrawals. That would amount to a double taxation benefit, which the Italian system is not likely to provide.

The ETT model

Italy’s own system provides for a 100% tax deduction for contributions to a ‘previdenza complementare’ up to a limit of €5300pa (as at 1 Jan 2026) but then taxes the fund during the accumulation phase.  Italy also taxes withdrawals, although at a reduced rate for long‑term contributors of between 15 and 9% depending on the length of time contributions has been made.

Despite this, private pension participation in Italy remains low compared to the EU average. Limited tax incentives, restricted investment options and relatively high charges have made private pensions less attractive than other forms of long‑term saving. Many Italians prefer property or alternative investments, and the system has never fully encouraged widespread private pension participation.

Ultimately, the interpretation rests with the professional preparing your tax return, but with the ruling on this specific case in 2024, we can be assured that treating UK personal and occupational defined contribution pension income as taxable under standard Italian progressive income tax rates is the correct tax treatment in Italy.  Choosing a different approach may be possible, but it carries the risk of future reassessment by the Agenzia delle Entrate and possible back fines and penalties.

Qualifying Recognised Overseas Pension Scheme

For those planning to live outside the UK permanently, transferring a UK pension into a QROPS has been an option for many years. These schemes operate under EU‑aligned rules and are designed for individuals who no longer intend to reside in the UK.

The UK has now introduced (from 2025) an overseas transfer charge of 25% on transfers to QROP’s where the pension holder resides in a different state to the place where the QROP’s is registered.   Malta was used, prior to this ruling, as a way for EU residents to transfer their UK pensions away from the UK due to Malta’s status as an EU member state and it’s double taxation treaties with all other EU member states. (Italy does not have any QROP’s vehicles to which UK pensions can be transferred)  However, given the 25% overseas transfer charge this is not a suitable option for most people.

If there is an overseas tax charge on a transfer to a QROP’s, what can I do instead?

Since Brexit, UK pension providers and UK asset managers should no longer manage monies for non-UK resident individuals due to a loss of licensing and regulatory authority.    Therefore, you may find yourself in a position where

a) you are being refused any investment and /or pension advice

b) asked to transfer your pension to another pension provider who can work with you as an Italian resident

c) and/ or take the pension in one lump sum but NOT in income drawdown

Clearly all the options are unsatisfactory and c) itself could generate a big tax liability in Italy if you have a large lump sum, which becomes taxable in one year.

Bear in mind that the 25% tax free lump sum in the UK, would be taxable in Italy as income tax !  As a smart financial planning tip, it is always best to withdraw this sum before becoming a resident in Italy, if possible.

Therefore, the best advice is to transfer to a UK SIPP which can work with EU residents and will allow you the flexibility that a standard UK domestic SIPP would provide.  You can get access to a wide range of asset managers and low cost model portfolio solutions.   We work with such companies and regularly transfer pensions as a financial planning strategy to ensure you get access to the right advice in Italy based on your other incomes / assets.

Since 2019 Italy has been running a special tax regime of only 7% tax for pensioners (anyone drawing a retirement income) if they relocate to the Southern states of Italy.  (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia – or to certain areas affected by the 2009 or 2016 earthquakes)

The regime pensionati was always limited to towns/ cities, which had less than 20000 registered residents. However, from April 7^th 2026 it is extended to towns /cities with up to 30000 residents, which extends the number of possible towns/cities to which you could locate and more importantly have access to important services such as hospitals, medical services, shopping and sports facilities etc.

According to the Italian statistics agency (ISTAT), the majority of comuni in the southern states in this tax regime have less than 30000 inhabitants.     IN fact, if we look at how many have more than 30000 residents, the numbers are more startling:

Sicilia (Sicily): 30–35

Campania: 30–35

Puglia (Apulia): 25–30

Sardegna (Sardinia): 8–10

Calabria: 7–8

Abruzzo: 8–10

Molise: 0 (Only Campobasso and Termoli are near or above this threshold historically, but often fall under it depending on current census updates)

Important points you need to know!

Whilst this all sounds very exciting, there are conditions to the qualification.

• The pension plan, from which you will draw this income, must have been accumulated from earnings from employment.  (self employment or employed work).
• You WILL NOT qualify if you merely add a lump sum of capital into a pension plan before moving to Italy to try to qualify for the tax regime.
• The income that you draw from your pension will be assessed, and whilst there are no specific guidelines, it will need to be sufficient to support your lifestyle in Italy. This will vary from region to region and depending on who is assessing the application.   When you make the application, it is best to check with your commercialista at the time.
• The 7% tax is calculated each year on your ‘reddito complessivo’ (cumulative income) NOT just the income from your pension. Reddito complessivo in Italy refers to numerous potential income sources, as follows:

• Income from land or building situated outside Italy.
• Income from capital overseas (dividends, interest etc)
• Income from employed work from outside Italy
• Income from self-employed work where it takes place outside Italy from a fixed place of residence. E.g where you are registered for work purposes in the UK
• Income from businesses abroad.
• Capital gains from the sale of shares in non-Italian resident companies.
• Income from asset held outside Italy.
• Business income generated abroad
• Interest from bank accounts and deposit accounts, national savings and investments and other deposit based savings.
• Capital gains arising from the sale of shares in non-listed companies

Qualifying individuals pay a flat 7% substitute tax on all foreign-source income, in place of ordinary progressive income tax rates. You are also exempt from the property wealth tax and wealth taxes on foreign assets and are relieved of the foreign asset monitoring obligations that would otherwise apply.

In addition, if you do not have assets in ISA’s you may be able to ‘bed and breakfast’ assets in your portfolio before becoming resident in Italy, to reduce capital gains tax liabilities.

You may also be able to make better use of accumulation style investments rather than income distributing to reduce your tax liabilities even further.   Why pay even 7 % tax if you can pay zero?

(You pay 7% on capital gains and income ‘realised’ in a portfolio – not just used as income, and so an actively managed portfolio may produce realised, and hence,  taxable ‘Italian income’ even if you are not using it for living expenses!!)

If you are a business owner who is looking to retire or sell your business, then you might be able to use the tax regime to reduce your potential tax liabilities.

These are just a few of the possible financial planning considerations that you may need to make.

You will need to plan to get the best benefits from your 7% tax regime tax residency before, during the transition year to Italy and your Italian tax residency itself.

One of the questions I am asked regularly is how income from property held overseas is taxed in Italy. Many people wonder whether rental income is exempt from Italian tax because tax has already been paid abroad, and whether it is treated in the same way as rental income from Italian property.

To be absolutely clear, if you are an Italian tax resident, you must declare and pay Italian tax on the net profit from rental income on properties held overseas. The arrangement is reciprocal: if you were resident in another country and owned rental property in Italy, you would also be required to declare that income there.

Italian tax law states that the net profit, after allowable expenses, from property overseas must be declared in your annual Italian tax return. This net profit is added to your other income for the year and taxed at your applicable income tax rate. In addition to income tax, IVIE — the tax on foreign real estate — applies. IVIE is calculated as a percentage (currently 1.06% [2026]) of the property’s value (purchase value if outside the EU and cadastrale value equivalent if inside the EU) as defined by the rules of the country where the property is located. Even if tax has been paid in the country of origin, you are still required to declare the income in Italy, and annual declarations must be made regardless of foreign tax paid.

It is important to understand that all rental income from overseas property must be declared in Italy if you are an Italian tax resident, and what you declare is the net income after expenses rather than the gross amount. The net figure is then added to your other income and taxed at your applicable IRPEF rate. IVIE also applies to foreign property, and declaring the income and expenses in the country of origin can help reduce the taxable amount in Italy. Lower expenses result in a higher net profit and therefore higher Italian tax, while higher expenses reduce the net profit and may lower your Italian tax liability.

Depending on your goals, owning property overseas can work in different ways. If you have high expenses, the property may function well as a long‑term capital appreciation investment with little taxable income. If you have low expenses and high net income, particularly if you rely on the rental income in retirement, you may find yourself taxed at higher IRPEF rates in Italy.

During the course of my many conversations, one particular issue comes up all too frequently, and I felt I just had to write about it.

What am I talking about? I am referring to the basic bank accounts that people use in Italy — those accounts that were probably set up when you first moved here, perhaps because the person you were buying a house from suggested opening an account at the same branch to make life easier, or because you were referred to the local bank simply because “everyone uses it”, or because someone knew someone who could open an account for you even before you were officially resident.

Unfortunately, many of us are still being charged extremely high bank fees for very little service. Some of the traditional banks remain among the most expensive, and yet they are still widely used by foreigners who opened their accounts years ago and never revisited the issue. I continue to meet people who are paying unnecessary quarterly fees, high commissions on simple transfers, and additional charges for cash withdrawals or currency conversions. In some cases, the total annual cost can be surprisingly high.

Personally, I use two banks: one for personal use and one for business. My personal account is with Fineco, which remains one of the most efficient and user‑friendly online banks in Italy. It is fully digital, easy to use, and offers a very good app. Customer service is responsive, and the account has no standard maintenance fees if you meet basic usage conditions. Withdrawals from cash machines across Italy are free, and domestic transfers cost nothing. For basic banking, it works extremely well.

My business account is with Banca Intesa Sanpaolo, which is part of a larger national network. I chose this because, as a business account, I occasionally need to speak with the bank director, but otherwise I operate everything online. The monthly fee is modest, and transfers are inexpensive. It is more costly than my personal account, but that is to be expected for business banking.

There are also several other personal banking options in Italy that offer low‑cost or zero‑cost accounts, especially if you are comfortable with online banking. CheBanca!, ING, Hello Bank, Widiba, and N26, Revolut, and Wise all offer modern apps, free withdrawals, and free domestic transfers. Comparison websites make it easy to check current offers and see how much you could save by switching.

My simple message is this: pay some attention to your bank account in Italy if you have not done so for some time. It is not difficult to change accounts anymore, and with even basic Italian you can manage the process without problems. You could be making significant savings simply by switching to a more modern and cost‑effective bank. If someone is paying hundreds of euros a year in unnecessary fees, then it is certainly worth reviewing.

Take a moment to look at your recent bank statements and see what charges you are paying. Then compare them with what is available today. You may be surprised at how much you could save.

Spese Detraibili e Deducibili in Italia

Italy does not have a system of taxation with a tax free allowance system and therefore tax is paid from the very first Euro.

However, Italy does allow a number of tax deductible and detractable expenditures from taxable income.

Firstly, what is the difference between a tax deduction and a detractable expense?

• Deductible expenses (oneri deducibili)reduce your taxable income, meaning you pay tax on a lower income.

• Detractable expenses(oneri detraibili) give you a direct reduction in the tax you owe – usually a 19% tax credit on the value of item you are claiming, unless otherwise specified.

Both are valuable, and knowing the difference helps you understand how the savings work.

Healthcare expenses (19%)

Without a doubt the most common category is healthcare expenses (detractable at 19%)

What you can claim is as follows:

• Pharmacy receipts (scontrini parlanti) showing the name of the medicine and your tax code (codice fiscale)
• Doctor visits (GPs and specialists)
• Surgeries and hospital stays (private and public)
• Diagnostic tests, X-rays, and blood work
• Dental care (e.g., orthodontics, if medically necessary
• Physiotherapy and rehabilitation
• Medical devices (e.g., glasses, hearing aids, prosthetics) 

There is a ‘franchigia’ (excess) related to these expenses, which means that it is only the accumulated expenses over €129.11 which are considered eligible.

If your total health expenses are below this amount then you cannot detract from tax. (Equally, you cannot claim this credit if the expense is covered by insurance.

To give an example……if my total expenses are €800 during the year, then the calculation is €800 – €129,11 = €670,89, on which I apply the 19% tax credit = €127,47 tax credit.

It may not seem much but a few years ago I had to have some urgent dental care which cost €10,000. It was not covered by insurance and so I had to pay myself. That year I had a tax credit of €1875,46. Every little helps!

When you go to the farmacia make sure you present your codice fiscale to the pharmacist and they will normally tell you whether it is an item that qualifies or not.

** FARMACIA AND HEALTH EXPENSES ARE NOW REGISTERED AUTOMATICALLY ON THE AGENZIA DELLE ENETRATE (TAX AUTHORITY) WEBSITE.  YOU CAN ACCESS THE WEBSITE AND CHECK THEM YOURSELF,  HOWEVER THERE ARE OCCASIONS WHEN THEY DON’T APPEAR SO MAKE SURE YOU KEEP YOUR RECEIPTS AND GIVE THEM TO YOUR COMMERCIALISTA / FISCALISTA (ACCOUNTANT) WHEN YOU FILE YOUR RETURNS **

Home renovations and energy efficiency (various rates from 36% to 50%)

This is by far and away the next biggest category for gaining tax credits.

The key incentives for home improvements are as follows: (at at 2026)

• Bonus Ristrutturazioni(Renovation Bonus) – 50% for general home upgrades
• Ecobonus– 50–65% for energy-saving improvements (e.g., insulation, windows, solar panels)

On your ‘Prima Casa’ (first home) you can claim a 50% tax credit up to a maximum spend of €96000, spread over 10 years.(at time of writing)

On your second home or property (other than Prima Casa) it is a 36% on a maxi spend of €96000 spread over 10 years.
(excluding boilers which burn fossil fuels.)

• Sismabonus – 50% on Prima Casa for 2025 then 36% for 2026/27 for work related to protection against sismic risks. 30% from 2026/27.
• Bonus mobili (e grande elettrodomestici) – tax credit of 50% on spend of up to €5000 on electrical appliances and furniture that are linked to renovations.
• Nuovo contributo per elettrodomestici ad alta efficienza – 30% up to €100 discount on electrical domestic appliance purchases, outside renovation works
• Green Bonus – 36% on garden and green area improvements.

Insurance premiums

This is a category which people often fail to utilise because there are some questions over whether foreign insurance premiums paid can be deducted in an Italian tax return.

For policies that qualify as Life insurance, accident (both max €530) and long-term care insurance (LTC) – (€1291)

They must qualify (even if issued outside Italy) under the following conditions:

1. Policy must be with an EU or EEA-authorized insurer(i.e. the company must be licensed to operate in the EU/EEA under EU regulations).
2. The policy must cover eligible risks: life, accidents, disability, or Long Term Care
3. The beneficiary must be the taxpayer or close family(not a third party like a bank).
4. The contract must not be speculative(e.g., pure investment policies are excluded unless they include real coverage of life or disability).

I enter my life policies issued in the UK years ago, before Brexit, and which cover me throughout the EU and were issued whilst the UK was still in the EU. I principally have life insurance contracts with Legal and General and provide cover across the EU. The other alternative is to take out Italian equivalent policies especially for things like health insurance. It’s worth getting a quote from one of the bigger insurance providers such as Generali (or Genertel, their online offering) Allianz, Zurich, Groupama, Unipol Sai, Banca Intesa, Reale etc

Other categories include:

Donations (19-30%)
donations to recognised NGO’s, religious institutions or universities.

Mortgage interest (19%)
You can deduct interest on mortgages for your first home (prima casa) up to a cap of €4,000 per year.

Education expenses (19%)

• Kindergarten through university tuition (both public and private, up to limits)
• School meals and after-school program
• University housing (if located outside the student’s home province)

Max annual deduction for private schools may vary by level and region, with a cap around €800 per child.

Rental deductions

If you rent your main home, you may claim a tax credit based on your income and contract type.

For example: Ordinary rental contracts (contratto 4+4), Student housing and transfers for work (if you’ve moved for employment reasons)

The credit varies depending on income, age, and contract type (e.g., up to €495.80 or more).

Family related deductions and credits

Dependent children and other family members, alimony and maintenance payments (deductible), Nursery/kindergarten costs (detraction up to €632 per child)

Disabled persons (LEGGE 104/1992 BENEFITS)
Special deductions and detractions for people with disabilities or their caregivers, including: 19% for adapted vehicles (with limits), full deduction of medical devices, assistance costs, etc.

Sport and Youth activities (19%)

Up to €210 per child under 18 for gym, swimming, dance classes, etc. Applies to recognized sports facilities and clubs.

What is it and how does it affect your life in Italy?

I admit it. I have been confused for years about the rendita catastale. I have never been entirely sure about its role in the Italian economy or how it benefits the individual or the system as a whole. Until now. A recent deep dive into some economic analysis finally made the penny drop.

Which taxes are calculated using the ‘rendita catastale’?

IMU – (Imposta Municipale Propria) – The tax on second + properties and houses, which are considered luxury properties (Class A/1, A/8, A/9)

Imposta di registro, Ipotecaria e Catastale – the taxes when buying and selling property (not market value!)

Imposta di successione e donazione – the value of property is calculated using the rendita catastale for the purposes of inheritance tax. https://spectrum-ifa.com/how-can-i-save-on-inheritance-tax-in-italy

Why is it important?

The rendita catastale represents the amount of “theoretical rent” that a householder pays to him or herself as a measure of economic consumption. It is an imputed figure — a notional income — that reflects the benefit you receive simply by living in a property you own. In other words, if a householder owns their home outright, with no mortgage or debt, then that person is considered both a consumer and an investor of the invisible rent money they would have received had they been renting out a similar property. This money is assumed to be spent, reinvested, or otherwise circulated back into the economy.

Economists consider this a growing financial benefit that property owners enjoy from not having to pay rent. It is a silent contribution to economic activity, even though no cash actually changes hands. And in a country like Italy, where home ownership is culturally and economically significant, this imputed value plays a surprisingly large role.

During the financial crisis 2008/9, the Italian economy shrank dramatically. GDP fell, unemployment rose, and many sectors contracted sharply. Yet property, proportionately, made up more of the gross domestic product. The weighting of property in Italian GDP increased despite falling house prices and fewer transactions. That gives you an idea of how severe the declines were in other parts of the economy. Even when the market was weak, the imputed value of housing — the rendita catastale — continued to represent a stable and substantial component of national wealth.

This helps explain why successive governments treat property taxation so delicately. When the financial benefit from housing takes up a larger proportion of a property owner’s economic position, it becomes politically sensitive. It is no coincidence that governments have repeatedly adjusted or abolished taxes on the prima casa, recognising that Italian homeowners’ spending habits are more important to the domestic economy than the behaviour of foreign buyers. Italy’s economic engine is fuelled by its own residents, and the majority of them live in homes they own.

The Italian economy relies heavily on home ownership. Simply by residing in debt‑free housing, paying no rent, living in family homes, or paying below‑market rents, Italians contribute a significant share to national GDP through this imputed rental value. In a country where more than seventy percent of the population live in owned residences, this contribution is not only substantial but essential. It has grown over time, rising as a share of GDP, and continues to act as a stabilising force even when other sectors fluctuate.

Understanding the rendita catastale also helps explain why property taxation in Italy often feels disconnected from market reality. The cadastral values used for tax purposes are based on an old system that does not reflect current market prices. Yet these values continue to underpin calculations for IMU, taxes on buying and selling properties, inheritance tax, and other assessments. The system persists because it provides predictable revenue for the state and a predictable burden for homeowners, even if it bears little resemblance to actual property values.

There have been discussions for years about reforming the cadastral system, modernising valuations, and aligning them more closely with market prices. But such reforms would have enormous political and economic consequences. Updating cadastral values would instantly increase the taxable base for millions of households, and no government has been willing to take that risk. So the rendita catastale remains, outdated but deeply embedded, shaping everything from tax bills to inheritance planning.

What becomes clear is that the rendita catastale is not just a quirky Italian administrative concept. It is a structural pillar of the economy, a silent indicator of wealth, and a key reason why property taxation is handled with such caution. It reflects the reality that Italians’ relationship with property is not merely financial but cultural, generational, and deeply tied to economic stability.

And now that you finally understand it, you can see why it matters — not just to economists, but to anyone living, buying, inheriting, or planning their financial future in Italy, including us.

You may not be aware, but from an inheritance tax point of view, Italy is actually considered more like a fiscal paradise. After you have picked yourself up off the floor because I just called Italy a “fiscal paradise”, you might want to read on. If your estate, or part of it, is likely to be subject to Italian inheritance tax on your death, then the current rules may interest you.

Italian inheritance tax law dates back to the Napoleonic period.

It requires parents, on death, to leave a major proportion of their wealth to their children instead of just their spouse. This system of forced heirship still exists today and continues to shape how estates are distributed in Italy.

Italy’s inheritance tax works as follows:

If the estate is passed to your spouse or relatives in a direct line, such as children, they are required to pay 4% on the value of the inheritance that exceeds one million euro per beneficiary. Brothers and sisters must pay 6% with an allowance of one hundred thousand euro each. Other relatives must pay 6% or 8% depending on the degree of relationship, but without any allowance. Non‑relatives pay 8% with no allowance.

However, there is a term called ‘eredi legittimi’  meaning that only certain relatives have an absolute right to the share of your estate on your death.  These are your children and, spouse.   If you don’t leave any children then your parents and brothers and sisters have a legal right to a share in your estate and only in the event that there are none of the above, would your other relatives up to the 6^th degree have a legal right to a percentage of your estate.

For foreigners (non- Italians) living in Italy at the time of death they have a right to nominate the law of their home country as a way to distribute the assets from your estate on death, instead of being forced to adopt the Italian forced succession rules.  (If you are from the UK, this could create significant IHT planning opportunities).   It mean you are taxable in your home country (depending on the IHT rules there) but simply means you may be able to distribute your assets according to a last will and testament, if that is your choice.   One exception does apply, where you have spouse of children who are resident in Italy at the time of your death, and in this https://spectrum-ifa.com/rendita-catastale-in-italy/ case, they may be legally entitled to their fair share of your estate regardless of your will.  If you are in any doubt it is always best to consult a legal professional to discuss the options.

Despite Italy having a large number of people who are subject to inheritance tax each year, the tax collection is relatively small. This is due to the high allowances and also the fact that succession for a property is based on the valore catastale, not the market value. The cadastral value is often significantly lower than the real value, which reduces the taxable amount.

There has been periodic political discussion about increasing inheritance tax in Italy, but as of 2026 no changes have been implemented. The current system remains one of the most generous in Europe, especially for spouses and children. However, this does not mean that planning is unnecessary. On the contrary, understanding how your assets are treated under Italian succession law can make a significant difference to what your heirs ultimately receive.  The new UK Statutory Resident rules https://spectrum-ifa.com/new-uk-inheritance-tax-rules/ for inheritance tax mean that many more UK nationals living in Italy may be able to avoid UK and Italian IHT altogether with some clever planning.

As part of any inheritance tax or succession planning that you may undertake, you may want to look at ways in which you can hold assets in a more tax‑efficient manner. The polizza assicurativa — or life assurance bond — meets exactly that criteria. Any money that you hold in one of these tax‑efficient accounts is completely free from Italian inheritance tax and is kept outside of the estate when the value is calculated. This can be particularly useful for those who wish to leave assets to beneficiaries who are not in the direct line, or who wish to avoid the constraints of forced heirship within the limits permitted by law.   It is also outside the Italian equivalent of probate (successione) and so will not get potentially tied up for any length of time in administration or legal affairs, potentially saving thousands in legal fees as well.

The not‑so‑good news is that if the majority of your estate is in your property, this cannot be placed inside the tax‑protective structure. However, any other invested or investable assets can be, generally from around €250,000 upwards. One of the great advantages is that there is no upper limit to contributions. You can protect a large part of your estate from Italian inheritance tax easily and with maximum flexibility to access the capital and any income from it during your lifetime.

If you are buying a house in Italy and are intending on benefitting from the system of detractions and deductions for the costs of building and renovating your property, then here are 5 things which we learned in our home restoration.

1. All payments must be made by traceable means i.e bonifico (bank transfer) or credit card payment. No trace, no bonus!
2. If paying by bonifico (bank transfer) then you need to pay by using the ‘bonifico per agevolazione fiscale’ option with your bank and NOT the ‘bonifico ordinario’ option. It asks for more information, such as the partitia IVA of the company / person you have worked with and this is needed for the bonus.
3. If you employ single workmen working alone then you don’t need an authorisation (SCIA or CIA) from the local authority but if they are a ‘dita edilizia’ (this can include even 2 people working together as a construction company) then you may need to have a ‘piano di sicurezza’ from an architect who will need to draw that up and provide you with the necessary numbers/reference codes. No ‘piano di sicurezza’ no bonus! (Our’s cost around €1000!)
4. Your workmen can apply for 10% IVA (VAT) on purchased items, but this is not necessarily a given. Our commercialista recommended that we signed a document ‘richiesta di applicazione dell’IVA ad aliquota ridotta’ for each workman / company so they would be authorised to apply for it as the materials would fall under the approved renovation works. Obviously, the Agenzia delle Entrate have the right to investigate these events in the future and so we did the maximum possible to avoid future problems. Documents should be kept for 10 years.
5. Try and employ local workmen or businesses which operate in the area, because if you have problems in the future you want to be able to get hold of them quickly and easily.

Living in a foreign country is never easy, but have you thought how complicated it would be for your family if you die suddenly?

(Apologies for the subject matter around Easter, but if you are anything like me, I like to try and organise my annual tax paperwork for the commercialista around this time and so it is also a good moment to think about putting parts of your financial paperwork in order)

This article is one which I prepared years ago and have been sending out infrequently because on my travels and in the conversations I have, it is ever apparent that most people do not have all their financial paperwork in order in case anything happens to them.

Ensuring that your papers are in order in the event of your sudden death is incredibly important when living in another country. It will provide you with peace of mind that your loved ones will not have too much difficulty in administering your estate, and your family will be thankful that you did it for them.

The big problem is that we often have documents spread across multiple locations: the office, a house in another country, with family members and in that old box that no-one dares look in.

The purpose of this article is to outline a proven way of organizing your affairs to reduce stress on the family in the event of your death.

So what is ‘THE’ folder?

It is a single file (digital or physical) where you keep all of your important personal and financial information together. It allows easy access to these documents in the event that you are no longer around to deal with these things. It is really important to have it in place where one family member takes the lead on the family finances (as I do in our household). That includes paying bills, managing accounts and storing documents.

Is it worth the effort?

Well, I think it is worth the effort. I did mine a while ago and it gives me peace of mind more than anything else. I also told a few people about its location and left a note of who my wife should contact in the event of my death.. A time of loss can be stressful enough without having to try and piece the financial affairs together.

Preparing ‘THE’ folder is much more than avoiding stress as well. If you leave behind an administrative nightmare you could also delay access to the inheritors’ funds and potentially cost a small fortune in legal fees.

Which is best…..physical or digital?

This comes down to personal preference. It can be done by either creating an electronic file that survivors can access in the event of death. This file can then be stored on your main computer, in the cloud or on an external hard drive. Alternatively you can use a physical folder to keep all of the important information together.

For what it’s worth, I decided to do both when building mine because my wife prefers paper and so is happier with hard copies of everything. I prefer digital. I have also shared the digital folder with some trusted family members.

So what should go in ‘THE’ folder?

Birth, marriage and divorce

• Personal birth certificate
• Marriage licence
• Divorce papers
• Birth certificate/adoption papers for minor children
• Certificato di residenza (although it only has a 6 month validity, it might be worth while keeping a copy in there, where you are listed as being at your current address)
• Stato di Famiglia document

You can download free copies of your Italian documents, and copies with the ‘bollo’ (for €16) from the Italian national register website, here: https://www.anagrafenazionale.interno.it/ You will need to access it with your SPID or CIE.

Life insurance and retirement

• Life insurance policy documents (including beneficiary nomination forms)
• Details of any employer death in service benefits
• Personal pension documents
• Employer pension details
• Annuity documents
• Details of any entitlement to state pensions and in which country they derive.

Bank accounts

• List of bank accounts with account numbers, login details, passwords etc
• Details of any credit cards
• Details of safety deposit boxes

Assets

• Property, land and cemetery deeds
• Timeshare ownership
• Proof of loans made
• Vehicle ownership documents or rental agreements.
• Stock certificates, brokerage accounts, investment platform details, online investment account details
• Details of holdings of premium bonds, government bonds, investment bonds
• Partnership and corporate operating/ownership agreements (including offshore companies)

Liabilities

• Mortgage details
• Proof of debts owed

Details of gifts

• Dates and amounts/values (potentially helpful when calculating any inheritance tax liability)

Income sources

• Make a listing of all your sources of income, especially ones that your family might not know too much about
• Employer details
• A copy of your most recent tax return or accounts.

Monthly expenses

(so they can be maintained if necessary or cancelled if not.  Essentially list the fixed costs which would need to continue after death)

• Utilities
• Insurance
• Rent/mortgage
• Loans
• Subscriptions/memberships

Email and social media account details 

Essentials

• Will / testament + details of the legal firm that helped create it
• Living will details.

• Instruction letter/s
• Trust documents
• Burial/cremation wishes

Contact details

• List of names and contact numbers for: Financial adviser, doctor, lawyer/solicitor, accountant, insurance broker, 

How often should ‘THE’ folder be reviewed?

Firstly, it is sensible to note the date that it was last reviewed so that anyone using it has an idea of how up-to-date the details are.

Going forward, reviewing the file on an annual basis should be sufficient.

This may, however, be a step too far for you given the data breaches that seem to happen often and I appreciate that and if you are not comfortable in using such an app then its important to have a physical record some where that can be accessed in the event of your death.

PHONE PASSWORDS 

This may seem like common sense but our lives now revolve around our phones and so ensuring that you leave details of not just your password to access the phone / PIN or line drawing shape, but also the PIN or access codes when the phone has been switched off AND your PUK code in the event that they get blocked out.    If you use fingerprint authentication then you may also want to ensure that you leave open another access possibility, such as the PIN so that the phone can be opened without the need for your fingerprint, when that is no longer possible.

COMPUTER PASSWORDS 

As per the above, do the same for your computer.

SPID and CIE 

It’s probably worth a note about your SPID (Sistema Pubblico di identità digitale) and / or your CIE ( carta d’identità abilitata).  These are digital identities accessed via apps and are now arguably some of the most important  phone apps to access important financial and legal information held by the Italian state and therefore ensuring that you leave details of your passwords to access the apps could help your beneficiaries resolve estate issues without needing to engage or financial professionals to communicate with the various agencies on your behalf and at great cost.

And finally…

Lastly, be sure to tell someone about it. There is little point going to the effort of creating such a folder if no one knows of its existence  / where to find it.