Paying tax in Italy: IRPEF, Rome's surcharges and the Australia–Italy treaty

Once you live in Rome, Italy taxes what you earn everywhere, including what's still trickling in from Australia. The treaty stops you paying twice; the forms are on you.

The short version

• Italian income tax (IRPEF) runs at 23%, 33% and 43% in 2026, after the budget law cut the middle rate from 35% to 33% [1].
• On top, Lazio adds a regional surcharge of about 1.73% to 3.33% and Rome adds 0.9% [2][3].
• New arrivals with high qualifications may get the impatriate regime: only 50% of Italian work income is taxed (40% with a minor child), for five years, if you weren't Italian tax resident in the previous three years [4].
• Italian residents declare foreign assets, including Australian bank accounts and investments, and pay IVAFE on them, usually 0.2% of value plus a €34.20 flat charge on bigger accounts [5].
• The Australia–Italy double tax convention decides who taxes what first [6]. The separate Australia–Italy social security agreement can help you qualify for pensions in either country [7].

Are you an Italian tax resident?

Italy treats you as tax resident if, for most of the tax year (more than 183 days), you're registered at the Anagrafe, have your residence or domicile in Italy, or are physically there. Once you take residenza in Rome, assume Italy sees you as resident.

At the same time, the ATO runs its own tests. Many Australians who move to Rome for good become foreign residents for Australian tax, but it isn't automatic. Read Australian tax residency after moving before you file your first Australian return after leaving.

If both countries claim you, the Australia–Italy convention has tie-breaker rules: where you have a permanent home, then your centre of vital interests, then habitual abode. The convention was given the force of law in Australia by the Income Tax (International Agreements) Amendment Act 1983 [6].

The Italian tax year is the calendar year, 1 January to 31 December. That's a mismatch with Australia's July to June year, so the year you move gets messy on both sides. Keep payslips, bank statements and your arrival evidence.

How much IRPEF you pay in Rome

IRPEF is progressive, like Australian income tax, but there's no tax-free threshold in the brackets themselves. Instead, deductions for employees and pensioners (detrazioni) reduce the tax for lower incomes.

Source: Legge di Bilancio 2026, as summarised by Euroconference [1].

Then two local layers go on top, calculated on your whole taxable income:

• Lazio regional surcharge (addizionale regionale): for 2026 it starts at 1.73% for incomes up to €28,000 and is 3.33% for higher bands, according to the Region's own table [2]. There's a small €60 reduction for incomes between €28,001 and €30,000 [2].
• Rome council surcharge (addizionale comunale): 0.9%, with incomes up to about €14,000 exempt [3].

If you earn €50,000 in Rome, the regional and council surcharges together come to somewhere near €2,000 a year. Two families on the same salary in Milan and Rome don't take home the same pay.

Compare that with home: Australia's top rate of 45% (plus the Medicare levy) kicks in much higher up the scale. Italy hits middle incomes harder, but the 2026 cut to 33% softened that a little.

Who files what

Employees and pensioners paid by an Italian employer have tax withheld through the busta paga (payslip) by the employer, the sostituto d'imposta. The annual return then mostly tidies up deductions.

Many Romans file through a CAF (a tax assistance centre) or a commercialista (accountant). The Agenzia delle Entrate also prepares a pre-filled 730 online, which you can access with SPID. Deadlines move a little each year, so check the Agenzia's calendar.

The impatriate regime: a five-year tax break

Italy offers a big incentive to workers who move there. The rules were rewritten for people moving from the 2024 tax year (Legislative Decree 209/2023) [4]:

• What's taxed: only 50% of your Italian employment or professional income, up to €600,000 a year. If you move with a minor child, or have or adopt one during the regime, only 40% is taxed [4].
• Who qualifies: you must not have been Italian tax resident for the previous three years (six or seven if you keep working in Italy for the same foreign employer or group activity), you must hold high qualifications or specialisation, and you must work mainly in Italy [4].
• The commitment: you must stay Italian tax resident for at least four years, or the benefit is clawed back with interest [4].
• How long: five tax years [4].

Steps to claim it:

1. Check you fit before you move. Confirm your three years abroad and that your role counts as highly qualified.
2. Take residenza promptly so your Italian tax residence starts cleanly.
3. Tell your employer in writing if you want the break applied through your payslip.
4. Or claim it in your return if you're self-employed or your employer didn't apply it.
5. Keep records of the four-year commitment.

Australians with Italian citizenship by descent can qualify too. Being Italian doesn't matter; your past tax residence does.

Your Australian money: IVAFE, IVIE and super

Here's what surprises most new arrivals. Italy doesn't just tax your income; it also taxes foreign assets you hold.

• IVAFE applies to financial assets held abroad: Australian bank accounts, shares, managed funds. The rate is 0.2% of market value a year (0.4% for blacklisted tax havens). Instead, foreign bank accounts pay a flat €34.20 a year per bank, waived if your average balance with that bank was €5,000 or less [5].
• IVIE is the equivalent for property held abroad, such as an investment unit in Brisbane, based on its value.
• Reporting goes in quadro RW of the Redditi form or quadro W of the 730 [5]. Skipping the declaration can bring penalties even when little or no tax is due.

Foreign wealth taxes paid can be credited, but only up to the Italian IVAFE due [5]. Australia doesn't have a matching tax, so that rarely helps.

Superannuation is the tricky one. Whether Italy treats your super as a declarable foreign asset, how IVAFE applies, and how a future lump sum is taxed in Italy are questions where advice from an Italian commercialista who knows Australian super is worth paying for. Keep your fund's annual statements. Read Super while living overseas for the Australian side.

Where the treaty and social security agreement help

The double tax convention. Australia and Italy have a comprehensive tax treaty [6]. In broad terms:

• Salary for work in Rome is taxed in Italy, not Australia, once you're no longer Australian resident.
• Australian-source income, such as rent from a property at home, can be taxed in Australia first. Italy then taxes it too but gives a credit for the Australian tax.
• Interest and dividends from Australia face reduced withholding rates under the treaty [6]. Tell your bank you've become a non-resident.
• Pensions and government payments have their own articles. Check the treaty text for your type of income.

The social security agreement. The Australia–Italy agreement, revised and in force since 1 October 2000, lets Italian contributions count towards the Australian residence you need for an Age Pension, and Australian working-life residence count towards Italian pension qualifying periods [7]. You need at least one year of Australian working-life residence, including six continuous months [7]. Each country pays only for its share. Our Centrelink and the Age Pension abroad guide covers the Australian rules.

Employees in Rome pay INPS contributions through their payslip, and the self-employed pay their own. Ask the ATO and INPS how any secondment from an Australian employer is handled, as the agreement's FAQs point seconded workers to the ATO [7].

Ask the people who've filed

Which CAF in Rome is happy with foreign income, and who's found a commercialista who understands super? Join Cooee Italy, our Facebook group for Australians in Italy, and ask around. Join the community.

Sources

1. Legge di bilancio 2026: revisione delle aliquote IRPEF – Euroconference News
2. Addizionale regionale IRPEF 2026 – Regione Lazio
3. Roma: aliquote IRPEF e addizionali 2026 – TuttoCalcolato
4. Regime impatriati – Assolombarda
5. IVAFE 2026: imposta sulle attività finanziarie estere, la guida – Money.it
6. Income Tax (International Agreements) Amendment Act 1983, giving effect to the Italian convention – Federal Register of Legislation
7. Social Security Agreement between Australia and Italy: FAQs – Department of Social Services

Keep reading

• Freelancing in Rome: the partita IVA and the flat-tax regime
• Opening a bank account in Rome: what Italian banks want
• Australian tax residency after moving
• Super while living overseas