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Banks & Taxes in Italy
A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes
Managing finances in Italy can be a winding road. Get acquainted with Italy’s banking sector, which has many national banks, but few international banks to choose from. You should also be prepared for the country’s relatively high tax rates. Expect several taxes to apply to your income, whether self-employed or an employee.
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In this section, we help you understand the intricacies of handling your finances, from how to open a bank account to the tax system in Italy.
Opening a bank account in Italy is relatively straightforward—so long as you do it in the country. You will have to visit a branch with a few documents, and it should be easy enough to have an operational account within minutes. There are some options for banks operating entirely online and a few international banks to choose from.
Italy’s heavy taxation system is bound to scare both employees and self-employed workers. On top of the already high national tax rates, you will have to pay regional taxes on your income and municipal taxes, as well.
How to Open a Bank Account in Italy
Here is everything you need to know on how to open a bank account in Italy for nonresidents. Expats will have difficulty opening a bank account from overseas, and the best options for foreigners will likely cost more. The offer is also not standardized among banks. Some may have good options for expats, while other banks may have no offer at all. Read on to know some of those options, whether you are looking for an international bank, an online bank, or accounts with zero fees.
Can I Open a Bank Account in Italy as a Foreigner?
You can open a bank account in Italy regardless of your citizenship or visa status. However, for expats, the process may not be the easiest, especially if they are outside the country. There isn’t a standardized offer when it comes to banking products for foreigners—it largely depends on the bank. While some banks may offer their full range of products to nonresidents, some may only offer basic accounts, and others may not have options for expats at all.
If you wish to open a bank account in Italy, you are typically required to visit a branch in person. If you are in Italy, this process is relatively easy—you need only follow the same procedures as nationals, which are covered below.
Requirements to Open a Bank Account in Italy as a Nonresident
Requirements may differ from bank to bank, and sometimes even from branch to branch. The safest option is to contact your local branch beforehand to know the specific requirements that apply to your immigration status and your banking needs.
The standard documents required to open a bank account in Italy are:
- Valid ID or passport
- An Italian tax code (codice fiscale)
- A residence permit
- Proof of employment or self-employment (e.g., work contract, income tax return, etc.)
- An Anti-Money Laundry (AML) compliance.
Along with these documents, expect to fill in a lot of paperwork.
You can go to specialized agencies that provide banking services to immigrants. However, these services may be subject to a fee. That is why you are advised to open an Italian bank account only when you become a resident.
How to Open a Nonresident Account from Overseas
If you wish to open a bank account from overseas, you may not have a lot of options. Some banks do allow nonresidents to open an account while outside of Italy, but they may only do so if the banking product is profitable, such as, for example, a mortgage.
Opening a nonresident account, or conto corrente non residenti can have some benefits for expats. This includes using their home country’s currency along with Euros to avoid high exchange rates or allowing a higher number of transfers to foreign countries free of charge. On the other hand, these accounts may come with higher commission costs than accounts for nationals.
To open one of these accounts when outside of Italy, you are usually required to show:
- An identity document or passport
- A tax code (codice fiscal)
- Proof that you have an Italian address, such as utility bills
- Bank’s draft, if requested
Best Banks in Italy for Expats
The top banks in Italy to open an account as an expat are:
- BNL, Banco Nazionale del Lavoro
- Intesa Sanpaolo
- Poste Italiane
- Fineco Bank
As for best online banks in Italy, some of the best offers belong to Banca Sella with HYPE, or N26, which allow you to open an account entirely online.
No Fee Bank Accounts
If you are looking for no fee bank accounts in Italy, some of your best options are:
- Fineco Bank, an online bank with zero fees.
- HYPE current account with Banca Sella: this account also offers a free debit and credit card, allows online banking, and mobile banking, but does not provide telephone or branch banking. This bank operates entirely online, but beware that their products are only available to Italian residents.
- Conto Corrente Digital, with CheBanca IT: has a free debit and credit card, and offers online, phone, and branch banking, but no mobile banking.
- Crédit Agricole Italia: offers free credit and debit cards, online banking, as well as telephone and branch banking, but mobile banking is not available.
Excluding these accounts, other conventional banking products may come with some bank fees. Credit cards can cost between 12 and 35 EUR (13 and 38 USD), and annual fees may cost 30 EUR (3 USD) or more. A minimum deposit is not always a requirement, but some banks do establish a minimum amount for their banking products, which varies from bank to bank.
International Banks in Italy
Even though the Italian banking sector is mostly dominated by national banks, there are a few options for international banks in Italy. Some of the biggest banking groups and banks operating internationally are Deutsche Bank, ING, or the French group Crédit Agricole. Banca Nazionale del Lavoro, although an Italian bank, is a subsidiary of BNP Paribas.
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What is the Tax System in Italy?
If you are going to receive an income of some sort, it’s only natural to want to know what the tax system is like in Italy. Income taxes are among the highest in Europe. If you are going to receive a high income, be prepared for tax rates as high as 40%. Keep reading to know all about the tax system in Italy, the various types of taxes, and the rates that apply to you.
Types of Taxes in Italy
The most relevant taxes in Italy are:
- income tax
- social security
- corporate tax
- value-added tax
Italy has several double taxation agreements in place, so check if it applies to your specific situation.
What is the Income Tax in Italy?
Income tax in Italy is known as IRPEF, imposta sul reddito delle persone fisiche, and it applies to salaries, pensions, interests, and dividends. This type of tax is progressive—the more you earn, the higher taxes you pay. These taxes are withheld monthly on the income you receive from your employer.
Rates are set annually by the government. Below are the current tax brackets in Italy:
|Income EUR||Income USD||Tax Rate|
|Over 75,000||Over 82,500||43%|
Besides these rates, which are established nationally, you have to pay regional taxes on your income. These regional taxes are progressive as well and can go from 1.23% to 3.33%, depending on your income level.
On top of these, you may have to pay municipal taxes on your income depending on where you are residing. These range from zero to 0.9%. You may also have to pay additional municipal tax along with your income tax balance for the previous year. This is a one-off payment set to 30% of said tax.
When am I Considered a Tax Resident?
You are considered a resident for tax purposes if, for the greater part of the year (183 days or more), you stay in the country, have your main business in the country, or are registered in the Office of Records of the Resident Population.
Tax Returns and How to Pay Taxes in Italy
To pay taxes in Italy, you must file a tax return electronically. There are two types of tax returns you can file: 730 Model return and Model Income return.
730 model applies to employees that qualify as Italian tax residents for two years consecutively. It may also be filed by residents who do not have a work contract. This model must be filed by 23 July of the following tax year.
Model income return must be filed by those receiving a non-Italian payroll or holding investments or bank accounts outside of Italy. It includes tax withheld, capital gains (Form RT), foreign income and assets (Form RW) and must be filed before its deadline, 31 October of the following fiscal year.
If your salary is your sole income source, which your employer should be withholding on a monthly basis, these taxes can be considered comprehensive, and you are not subject to other compliance obligations.
Tax Concessions for Expats
Some expats may be subject to a tax abatement of 50% on their income tax if they meet the following criteria:
- They perform a high-managerial or directing role;
- They have been a nonresident of Italy in the previous five fiscal years, and remain a resident in Italy for at least two fiscal years;
- They have an employment connection with an Italian company;
- Their work activity is carried out in Italian territory.
Taxes for the Self-Employed in Italy
There are three ways you can be self-employed in Italy, and the requirements on the type of taxes that apply to each may differ:
- Self-employed (lavoro autonomo or lavoro in proprio)
- Freelancer (lavoro indipendente or libero professionista)
- Sole trader (commerciante in proprio, imprenditore or ditta individuale)
In general, self-employed workers who are considered residents for the purpose of taxation must pay taxes on their income and file a tax return annually. The tax rates that apply to self-employed workers, both freelancers and sole traders, are the same as for employees (mentioned above).
Paying Corporate Tax as a Self-Employed Worker
If you open a limited liability company, you pay corporate tax as well. Corporate tax includes rates for the IRES and IRAP, which can vary from region to region.
These taxes do not include social security contributions, which you must pay as well. We cover all you need to know about social security in the working section of this guide.
Before you incur in any type of trade, make sure you have the right visa and work permit to carry out self-employed work and are properly accredited and registered with the right authorities to carry out your professional activity. It is very important that you do so beforehand, to avoid heavy fines, having your equipment confiscated, and even being deported from the country.
How to Pay Taxes as Self-Employed
To pay taxes as self-employed, you must file a tax return annually on the Italian Revenue Agency website (Agenzia delle Entrate). This corresponds to the form UNICO Persone Fisiche, which must be submitted until 2 October. Income tax should be paid by 30 June.
The requirements and process of paying taxes may vary according to the type of business you carry out. If you are a freelancer, besides paying income taxes, you will need to have a VAT number. Clients who you invoice withhold 20% of the value for tax payments to the government and pay it themselves.
As a sole trader, you may also need to register for a VAT number, depending on the type of activity you carry out. Sole traders do not need to file corporate taxes.
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