Foreign property that is let
The rent is declared according to the rules of the foreign State, with a credit for the taxes paid there.
Individuals · Assets abroad
IVIE and IVAFE: tax on foreign assets
IVIE and IVAFE are two wealth taxes on what people resident in Italy own outside the country. They are declared in the same section of the return as the monitoring of foreign assets, and the most common mistake is to believe they only concern large fortunes.
01 · The taxpayers
Who has to pay IVIE and IVAFE
Both taxes concern individuals who are tax resident in Italy and who hold assets located abroad, as owners or under another right in rem (such as usufruct).
The starting point is tax residency: if you are not resident in Italy you do not owe them, and if you are, you owe them even when the asset produces no income at all.
- IVIE (the tax on the value of property held abroad) applies to buildings and land located outside Italy.
- IVAFE (the tax on the value of financial assets held abroad) applies to financial assets held outside Italy: current accounts, deposits, securities, units in funds.
- They apply in proportion to your share and to the period of ownership during the year.
- They also concern people who have inherited a property abroad and do not use it.
- The obligation exists whether or not the asset produces any income.
- For some people the obligation is extended, for example beneficial owners of holdings in foreign entities.
IVIE and IVAFE are separate from the tax monitoring required in the quadro RW (the section of the Italian return for foreign assets), even though they are filled in within the same section. Monitoring is a reporting obligation that exists even when no tax is due, and failing to meet it carries its own penalties, often heavier than the tax itself.
02 · Property
The tax on property held abroad
IVIE is the foreign counterpart of IMU (the Italian municipal property tax): it is charged on the value of the property at a proportional rate.
- The tax is paid with the F24 form (the Italian tax payment form), by the same balance and advance deadlines as income taxes.
- The period of ownership rule applies: if you bought in September, you pay for four months.
- The credit is available for foreign wealth taxes, not for foreign income taxes.
- Let property also produces income to be declared, in addition to IVIE.
- Appurtenances (such as a garage or cellar) follow the treatment of the main property.
| Element | Rule |
|---|---|
| Taxable base in the EU | The cadastral value used in the foreign State or, failing that, the purchase cost |
| Taxable base outside the EU | The cost shown in the deed of purchase, or the market value |
| Rate | Proportional to the value, at the rate set by law |
| Main home abroad | Exemption or a reduced rate, depending on the conditions set out |
| Credit for foreign taxes | Wealth taxes paid in the foreign State are deducted from the amount due |
| Exemption threshold | Provided for very small amounts |
03 · Accounts and securities
The tax on financial assets held abroad
IVAFE applies to financial assets held outside Italy, with two different rules depending on the type of asset.
Current accounts and savings books
A fixed annual amount for each account, scaled to the period the account was held and to your share of ownership.
Exemption for small balances
If the average annual balance on the account does not exceed a threshold, the fixed amount is not due.
Other financial assets
Securities, shares, bonds, units in funds, insurance policies: a proportional tax on the market or nominal value.
Accounts held with Italian intermediaries
These fall outside IVAFE: they are already subject to the ordinary imposta di bollo (Italian stamp duty).
The things people forget
Accounts and holdings that look irrelevant, and are not.
- The account left open in the country where you studied or worked
- An account on a foreign payment platform with a remaining balance
- Foreign insurance policies with a financial content
- Units in funds bought through non-resident intermediaries
04 · Monitoring
Tax monitoring of foreign assets
This is the obligation to declare that you hold assets abroad, even when they produce no income and even when no wealth tax is due.
- It covers foreign investments and financial assets of any kind, including those held indirectly.
- The obligation falls on the holder and also on the beneficial owner, under the anti-money-laundering rules.
- Cryptocurrencies and digital assets have their own treatment, covered in quadro RW and crypto.
- There are exemptions, for example for assets entrusted to resident intermediaries that apply withholding tax.
- Failing to report carries a penalty proportional to the amount not declared, with heavier measures for States with a privileged tax regime.
- You can put things right on your own initiative with ravvedimento operoso (voluntary correction), with reduced penalties.
The automatic exchange of information between tax administrations now makes it very likely that an undeclared foreign account will come to light. The compliance letters sent by the Agenzia delle Entrate (the Italian Revenue Agency) start from exactly that data, and they arrive for modest amounts too.
05 · Not just wealth
The income those assets produce
IVIE and IVAFE are wealth taxes: they are charged on ownership. Any income the assets produce must be declared separately, under its own rules.
Foreign property that is not let
If it is not taxed in the foreign State, as a rule it produces no taxable income in Italy. IVIE is still due.
Interest on foreign accounts
Income from capital, declared with the substitute tax or under the rules that apply.
Foreign dividends
To be declared, with different rules depending on whether the intermediary is resident or not.
Capital gains on foreign securities
Declared in the section for other financial income, under the self-declaration regime.
The tax credit
Income taxes paid abroad give the right to a credit, up to the limit of the Italian tax on the same income.
06 · Putting it right
How to regularise a past position
This situation is more common than it seems, and it can almost always be sorted out. The sooner you act, the less it costs.
- A supplementary return is filed for each year that can still be assessed.
- You pay the taxes, the reduced penalties for voluntary correction and the interest.
- The documentation has to be rebuilt: bank statements, deeds of purchase, year-end values.
- The penalty reduction depends on when you act: after a compliance letter it is still possible, after a tax assessment it is not.
- If a compliance letter has arrived, replying is in your own interest: the alternative is an assessment.
- The effect on your tax residency needs to be assessed if the foreign assets are linked to a move abroad that was never completed.
Rebuilding the paperwork is the longest part: foreign banks can take weeks to issue historical statements. It is worth asking for them as soon as you decide to regularise, before any calculations are done.
Frequently asked
The questions that keep coming up
I have a foreign account with very little money in it. Do I have to declare it?
Yes. The monitoring obligation depends on holding the account, not on the amount, except for the exemptions expressly provided.
For IVAFE there is an average balance threshold below which the fixed amount on accounts is not due, but that does not remove the reporting obligation. They are two separate matters.
I inherited a house in Romania that I do not use. Do I pay anything?
Yes. IVIE is due on the value of the property for your share and period of ownership, regardless of how it is used and whether it produces income.
Any wealth taxes paid in Romania give the right to a credit. The property must still be reported in the quadro RW.
My account is managed by an Italian bank. Does the same apply?
No. Financial assets held with intermediaries resident in Italy fall outside IVAFE: they are subject to the ordinary stamp duty applied by the intermediary.
The monitoring obligation also falls away when the resident intermediary applies the required withholding taxes. What matters is where the account is opened, not where you are.
I have received a letter from the Agency about a foreign account. What should I do?
It is a compliance letter, generated by the automatic exchange of information. It is not a tax assessment, and voluntary correction is still open to you, with reduced penalties.
Replying and regularising is almost always worthwhile. Ignoring it leads to an assessment, where penalties are charged in full and the options for settling are more limited.
Let's talk
A forgotten foreign account costs more than the tax it would have generated
The penalty for failing to report foreign assets stands on its own and is proportional to the amount. If you hold something abroad, let us put it in order now.