禁漫天堂

My shock came at a price of world wide income tax being 26,000 euro. The no double Taxation law didn鈥檛 help because on that same income in the US I only paid $1900. So that barely covers the tax here. How is it that we come here on ERV, spend all our money here and i to the economy and yet we are 鈥榩enalized鈥� and are basically supporting the country鈥檚 health system etc. BTW I pay 鈧�2000 euro a year for the national health system. Doesn鈥檛 make sense that there are no deductions allowable.馃し馃徎鈥嶁檧锔�

@filmpearl

Maybe you should be questioning the USA, why should you be paying taxes in a country you don't live in.

@filmpearl
Maybe you should be questioning the USA, why should you be paying taxes in a country you don't live in. - @SimCityAT

Probably due to the fact the US citizens living overseas are still .聽 UK residents living abroad also have to pay voluntary NIC's if they want to qualify for the full state pension (35 years of payments).

My shock came at a price of world wide income tax being 26,000 euro. The no double Taxation law didn鈥檛 help because on that same income in the US I only paid $1900. So that barely covers the tax here. How is it that we come here on ERV, spend all our money here and i to the economy and yet we are 鈥榩enalized鈥� and are basically supporting the country鈥檚 health system etc. BTW I pay 鈧�2000 euro a year for the national health system. Doesn鈥檛 make sense that there are no deductions allowable.馃し馃徎鈥嶁檧锔� - @filmpearl

This 鈧�26K is your Italian tax on your Expected Rental Value (ERV) of property you own, I'm assuming. If so, did you not receive any annual tax liability advice from the seller or his agent? That would shock me as well if I had no prior knowledge of the tax burden of rental property ownership.聽 There are many things to consider when shifting one's residence from one country to another. While I see ownership of such an investment property a good passive income source for someone much younger than me, I'm no longer in the frame of mind or physical condition to pursue it. My idea is to simply rent and divest myself of the responsibilities of ownership. When I make the move and get established I will be a full Italian citizen and probably renounce my US citizenship as a practical measure to protect my taxation exposure. The US Social Security law states that my monthly SS income will not suffer from renunciation, but my medical coverage will.聽 The former could be at risk in the current administration so I'm keeping a wary eye out for any changes that could negatively affect my plans. On the topic of this thread, I advise all with plans to invest in a move outside CONUS to research all manner of NAA taxation law to avoid nasty surprises.

@Cheryl

Hi Cheryl, Thank you for starting this thread!聽 I have been trying to get clarity around Italy income taxes for US citizens that may become Italy Tax Residents by staying in Italy more than 183 days in a given calendar year.聽 Our income will be primarily coming from Roth IRA accounts and while Roth IRA distributions are tax exempt in the US, it seems that Italy taxes Roth IRA distributions as they are treated as ether pension income or investment income, both of which are taxed.聽

Is this something you could help shed some light on?

Grazie Mille Cheryl!

Adrian

@lackstone0016

ERV is an elective residency visa.

Hey adrianluzzi,

Hopefully, someone will be able to shed some light on this for you.

Cheers,

Cheryl

@Cheryl

Taxes expats need to be aware of

IRPEF (income tax): Applies to your worldwide income once you鈥檙e considered an Italian tax resident (typically after 183 days or official registration).

INPS (social security): If you're self-employed or earning income not already subject to contributions abroad, Italy may require you to register and pay into INPS 鈥� unless a valid social security agreement applies.

IVAFE / IVIE: These are annual wealth taxes on foreign bank accounts, investments, and real estate. Many new arrivals are unaware they need to declare and possibly pay on these.

VAT obligations: If you run a business or sell goods/services (especially online), you'll need to navigate Italian VAT rules 鈥� and potentially EU-wide compliance too.

Recent changes

The 鈥淩egime degli Impatriati鈥� has been tightened. It now has more restrictive eligibility and lasts a maximum of 5 years unless extended under specific conditions.

The 7% flat tax for retirees moving to small towns in Southern Italy is still active, but only for those transferring from abroad and meeting specific residence criteria.

For U.S. citizens (and others with tax obligations abroad)

The U.S.鈥揑taly tax treaty prevents double taxation in principle, but does not exempt you from filing and reporting obligations in both countries.

U.S. government pensions are usually taxable only in the U.S., but Social Security and other income may be taxed in Italy.

If you're already contributing to U.S. Social Security, you may be able to avoid INPS, but the process requires proper planning and documentation.

Common surprises

Thinking you don鈥檛 have to file in Italy because your income is all foreign 鈥� you do, once you鈥檙e tax resident.

Not declaring foreign bank accounts, which triggers penalties even if there's no income.

INPS contributions can be significant and are often missed in early planning.

Misunderstanding what income counts for certain visa types (for example, dividend income often doesn't qualify for ERV applications unless structured properly).

What I wish more people knew earlier

Tax strategy and immigration planning should go hand in hand 鈥� especially regarding timing.

Choosing the wrong date to move can result in a full year of taxation on worldwide income.

Most generalist accountants in Italy are not equipped to deal with expat cases 鈥� especially with international income or U.S. tax coordination.

I run Tax for Expats, a boutique studio that works only with international clients living in or moving to Italy. We're based in Milan, Los Angeles, and Mexico City, and we focus on cross-border tax and residency cases 鈥� especially for Americans, Canadians, Brits, and Australians.

If this is something you鈥檙e dealing with, feel free to reach out at omar@taxforexpats.it or book a call. Happy to help.

@adrianluzzi

Hi Adrian,

You鈥檙e right to dig into this 鈥� Roth IRAs are one of the greyest areas for U.S. expats in Italy, and unfortunately, most local accountants don鈥檛 know how to handle them correctly.

Here鈥檚 the issue:

In the U.S., Roth IRA distributions (qualified) are tax-free. But Italy doesn鈥檛 recognize the Roth as a tax-exempt retirement vehicle, because there鈥檚 no equivalent structure under Italian law.

So when you become tax resident in Italy (typically after 183 days or if you establish formal residency), Italy may treat Roth IRA distributions as taxable income, depending on how they're classified:

If viewed as pension income, they're taxed as ordinary income (IRPEF), with no exemption for the "Roth" status.

If seen as investment income, then part of the distribution may be treated as capital gains, which are also taxable.

In both cases, there is no automatic exemption, unless you proactively structure and disclose things in a way that supports a different interpretation (which is hard, but in some cases arguable 鈥� depending on your specific situation and how/when the contributions were made).

What鈥檚 even more important is that distributions from a Roth IRA do not benefit from the U.S.鈥揑taly tax treaty protections, because the treaty does not explicitly reference Roth accounts. That makes Italy free to tax the distributions, unless you qualify under a regime like the 7% flat tax (which excludes most investment income), or unless you structure around it in advance.

We鈥檝e helped a number of clients navigate this 鈥� especially early retirees or those relying on Roth withdrawals while living in Italy. There are some planning options (e.g., timing of residency, cash flow strategy, or asset reallocation), but it鈥檚 something you want to handle before you trigger Italian tax residency.

If you want to walk through the details or see how your Roth distributions might be treated based on your setup, feel free to reach out at omar@taxforexpats.it or book a call. Happy to clarify further.

@Cheryl
Hi Cheryl, Thank you for starting this thread! I have been trying to get clarity around Italy income taxes for US citizens that may become Italy Tax Residents by staying in Italy more than 183 days in a given calendar year. Our income will be primarily coming from Roth IRA accounts and while Roth IRA distributions are tax exempt in the US, it seems that Italy taxes Roth IRA distributions as they are treated as ether pension income or investment income, both of which are taxed.

Is this something you could help shed some light on?

Grazie Mille Cheryl!
Adrian - @adrianluzzi

Hi Adrian,

You鈥檙e right to dig into this 鈥� Roth IRAs are one of the greyest areas for U.S. expats in Italy, and unfortunately, most local accountants don鈥檛 know how to handle them correctly.

Here鈥檚 the issue:

In the U.S., Roth IRA distributions (qualified) are tax-free. But Italy doesn鈥檛 recognize the Roth as a tax-exempt retirement vehicle, because there鈥檚 no equivalent structure under Italian law.

So when you become tax resident in Italy (typically after 183 days or if you establish formal residency), Italy may treat Roth IRA distributions as taxable income, depending on how they're classified:

If viewed as pension income, they're taxed as ordinary income (IRPEF), with no exemption for the "Roth" status.

If seen as investment income, then part of the distribution may be treated as capital gains, which are also taxable.

In both cases, there is no automatic exemption, unless you proactively structure and disclose things in a way that supports a different interpretation (which is hard, but in some cases arguable 鈥� depending on your specific situation and how/when the contributions were made).

What鈥檚 even more important is that distributions from a Roth IRA do not benefit from the U.S.鈥揑taly tax treaty protections, because the treaty does not explicitly reference Roth accounts. That makes Italy free to tax the distributions, unless you qualify under a regime like the 7% flat tax (which excludes most investment income), or unless you structure around it in advance.

We鈥檝e helped a number of clients navigate this 鈥� especially early retirees or those relying on Roth withdrawals while living in Italy. There are some planning options (e.g., timing of residency, cash flow strategy, or asset reallocation), but it鈥檚 something you want to handle before you trigger Italian tax residency.

If you want to walk through the details or see how your Roth distributions might be treated based on your setup, feel free to reach out at omar@taxforexpats.it or book a call. Happy to clarify further.