Capital Income & Investment Taxation – Italy

Capital gains from sale of shares, bonds, funds: flat 26% substitute tax instead of IRPEF. No annual exemption. Losses offset gains within same year and carry forward 4 years. Applies to both Italian and foreign securities.

Crypto gains taxed at 26% only if total annual gains exceed €2,000 threshold. Each trade is taxable event. Must hold 7+ days to be investment (not income). Calculate using FIFO method. Losses offset gains. Report in Quadro RW and RT.

Property sold within 5 years of purchase: 26% on gain (or can opt for IRPEF if more beneficial). After 5 years: full exemption if primary residence. Investment properties sold after 5 years still taxable at 26%. Renovated properties have special rules.

Sale of substantial holdings (>20% voting, >25% capital in unlisted, >2%/5% in listed): only 58.14% of gain taxable at 26% (effective 15.1%). Remaining 41.86% exempt. Encourages long-term business ownership.

Dividends from Italian companies: 26% substitute tax withheld at source by paying company. Final tax - no further IRPEF due. Exempts dividends from progressive rates. Efficient for high earners (vs 43% IRPEF).

Foreign dividends: default 26% substitute tax in tax return. Can opt for progressive IRPEF taxation if more beneficial (rarely). Foreign withholding tax credited against Italian tax. Must declare in Quadro RM/RW.

Dividends from qualified participations (>20%/25% ownership): 58.14% of dividend taxable at progressive IRPEF rates (23-43%), not flat rate. Less favorable than small holdings. Encourages diversification.

Italian companies selling qualified participations: 95% of capital gains exempt under participation exemption (PEX) regime. Only 5% taxed at 24% IRES rate. Promotes business restructuring and M&A activity.

Interest on bank deposits: 26% substitute tax withheld at source by bank. Final tax. Banks report to tax authorities automatically. No action needed by taxpayer. Applies to checking, savings, deposit accounts.

Interest on Italian government securities (BOT, BTP, CCT, CTZ): preferential 12.5% substitute tax. Encourages domestic government bond ownership. Applied at source. Significantly lower than 26% standard rate.

Interest from foreign accounts/bonds: 26% substitute tax declared in annual tax return. Foreign withholding tax credited. Must report in Quadro RM and RW. IVAFE monitoring tax (0.2%) may apply.

Must report all foreign financial assets (bank accounts, investments, crypto) if total value >€5,000 at any point during year. Required even if no income generated. Separate from IVAFE/IVIE taxes. Failure to report: penalties €1,000-€5,000 per asset.

Wealth tax on foreign financial assets (accounts, securities, crypto): 0.2% of year-end value. Minimum €34.20 per intermediary. Separate from income tax. Due with tax return. Exemption if total value under €5,000.

Annual wealth tax on foreign real estate: 0.76% of cadastral value (or purchase price if no cadastral). Primary residence abroad: €200 flat rate. Due with tax return. Separate from Italian property taxes (IMU).