Money and taxes in Italy

Currency, payments, bank account

The currency is the euro. Cards are accepted in the great majority of shops and public services; cash payments between different parties are allowed only up to a threshold set by anti-money-laundering law (art. 49 of legislative decree 231/2007), changed several times over the years: the amount in force is published by the Agenzia delle Entrate and the Ministry of Economy.

Anyone legally resident in an EU state has the right to open a basic payment account in any EU country: the bank cannot refuse it just because the applicant does not live in that country, but it may ask for proof of a genuine interest in the account and must apply anti-money-laundering rules (identification; in Italy the tax code, codice fiscale, is required). Registered residence is not compulsory for an account, although many banks ask for an address in Italy. An IBAN from another EU state cannot be refused for salaries, bills, refunds or direct debits if the counterpart accepts those transactions from domestic accounts, and euro transfers to other EU countries must cost the same as domestic ones. Alongside traditional banks there are online banks and prepaid cards with an IBAN, including those of Poste Italiane.

Tax code and tax residence

The tax code (codice fiscale), assigned by the Agenzia delle Entrate, identifies a person in every dealing with public administration and private parties (health care, employment and rental contracts, banks, utilities). People arriving on a long-stay visa are generally assigned one as part of the residence permit procedure (for digital nomads the questura communicates it); in other cases it is requested at Agenzia offices or, from abroad, at the consulate.

For income tax purposes a person is resident in Italy if, for most of the tax period, counting fractions of a day, they have in Italy their residence under the civil code, their domicile, meaning the place where their personal and family relationships mainly develop, or are physically present in the country. Anyone registered in the resident population register for most of the year is presumed resident, unless proven otherwise (art. 2 TUIR, as amended by legislative decree 209/2023 and in force since 2024). Residents are taxed in Italy on income wherever earned; bilateral double-taxation treaties determine which state taxes each type of income and how double taxation is removed, usually through a credit for taxes paid abroad or an exemption. Someone working in one country and living in another is as a rule taxed where the work is performed, according to the treaty between the two states.

Tax return, contributions, pensions

Income is declared every year with the 730 form (employees and pensioners; the Agenzia delle Entrate provides a pre-filled version) or with the Redditi Persone fisiche form (VAT-registered individuals and other cases). Deadlines are set year by year and published on the Agenzia delle Entrate website; CAF tax-assistance centres, patronati and accountants (commercialisti) help with filing, for a fee or under agreements.

Employees pay social security contributions through their employer, who withholds them from pay and remits them to INPS; self-employed workers without a professional fund register with the INPS Gestione separata, artisans and traders with the respective INPS schemes, professionals with a professional register with their own fund (cassa). Rates are updated every year by INPS.

Anyone who has worked in several EU or EEA states or Switzerland applies for their pension in the country where they live or last worked; each state adds up the periods completed in the others to check eligibility and pays its own share in proportion to the years covered (EU coordination of social security). In Italy the competent institution is INPS, which has a section dedicated to rights and obligations within the Union.