How investment taxes work in Italy: a practical guide

If you live in Italy and you invest, the Italian state wants its share. That part is the same everywhere. What catches people out is the vocabulary: your broker will ask you to pick a regime, your accountant will mention a quadro RW, and none of it appears in English anywhere on the form.

This guide keeps the Italian terms in place, because those are the words you will actually see. Knowing them is half the job.

The rate: 26%, with one big exception

In Italy, gains from financial investments — plusvalenze, or capital gains — are taxed at 26%. Buy an ETF for €1,000, sell it for €1,300, and the €300 gain costs you €78 in tax. Dividends are taxed at the same 26%.

The exception matters. Italian government bonds (BTP) and bonds from other countries on the European white list are taxed at 12.5%. Same investor, same account, half the rate — purely because of what you hold.

The two regimes: amministrato and dichiarativo

When you open an account with an Italian broker, you choose between two tax regimes. This is not a formality; it decides who does the paperwork.

Regime amministrato. The broker calculates and pays the tax for you. Every time you sell at a profit, it withholds 26% and forwards it to the Agenzia delle Entrate, the Italian tax authority. Your annual tax return needs to say nothing about it. For most private investors, this is the sane choice.

Regime dichiarativo. You calculate and declare the gains yourself, in your own tax return. This is mandatory with most non-Italian brokers. It demands more attention — often an accountant — but gives you more room to manage losses.

The word you want on the form is amministrato if you would rather not think about any of this.

Losses are a credit you can spend

Sell at a loss and that loss is a minusvalenza. It is not simply gone: it becomes a credit you can set against future gains, and you have four years to use it.

Then comes the asymmetry that makes Italian investors grind their teeth. Losses on ETFs cannot offset gains on ETFs. Under Italian law, ETF gains count as redditi di capitale while ETF losses count as redditi diversi, and the two categories do not talk to each other. Your ETF loss can offset a gain on individual shares, but not on another ETF.

It is one of the most criticised quirks in the Italian system. It is also, for now, the law.

Foreign brokers: cheaper, but you do the filing

Many popular European brokers do not act as a sostituto d’imposta in Italy — they do not withhold tax on your behalf. Using one puts you automatically in regime dichiarativo, and it adds two forms to your annual return:

• Quadro RW — declares assets you hold abroad. This is a monitoring requirement, separate from the tax itself, and it applies even in a year when you made no gain at all.
• Quadro RT — declares the capital gains and calculates what you owe.

None of this is illegal or unusual. It is simply work, and forgetting the quadro RW is one of the more common and more expensive mistakes foreign residents make.

If you have only recently become resident

Tax residency, not citizenship, is what triggers these rules. If you spend more than 183 days a year in Italy, or your habitual residence is here, Italy will generally treat you as tax resident and expect to tax your worldwide investment income.

That has consequences for accounts you left open in your home country: they very likely belong in the quadro RW, whether or not you have touched them since moving.