IVAFE and IVIE: Italy’s Taxes on Your Foreign Accounts and Property

Imagine opening an Italian tax letter about a savings account you left open back home, or a small flat you still own in Lisbon. Many new residents only learn about IVAFE and IVIE when an accountant asks for statements they never kept. This guide explains both taxes, who pays them, how they are calculated, and how a specialist like Taxes for Expats can help you file them correctly.

What IVAFE and IVIE Actually Are

My first spring as an Italian tax resident, I sat across from a commercialista in a small office near Porta Venezia in Milan. I thought I was there to talk about my salary. Instead she slid a sheet of paper toward me and asked, very calmly, for the year-end statements of every bank account, brokerage account and pension wrapper I held outside Italy. Then she asked about the apartment I still co-owned with my brother. I had no idea that Italy would want to know, let alone tax me on any of it.

That moment is common. IVAFE and IVIE are Italian wealth taxes on assets held abroad. Income tax looks at what you earn. These two look at what you own. They are not large for most people, but they are easy to overlook, and the reporting that comes with them is where most expats get into trouble.

The Two Taxes in Plain Terms

IVAFE stands for Imposta sul Valore delle Attività Finanziarie detenute all’Estero. It is the tax on the value of financial assets held outside Italy. This covers foreign bank accounts, savings accounts, brokerage accounts, shares, bonds, investment funds and similar financial products.

IVIE stands for Imposta sul Valore degli Immobili situati all’Estero. It is the tax on the value of real estate located outside Italy. If you own a house, apartment, plot of land or share of a property anywhere outside Italian borders, IVIE is the tax that applies.

Both exist for one reason. Italian residents who hold investments or property at an Italian bank, or own property inside Italy, already pay stamp duties and local property taxes. IVAFE and IVIE are meant to put assets held abroad on a similar footing. From the Italian state’s point of view, it is simply fair treatment. From the point of view of a newly arrived foreigner who still has a pension pot in London and a checking account in Chicago, it feels like a surprise bill for life before Italy.

Who Has to Pay

The deciding factor is Italian tax residency, not citizenship and not your visa type. If you are tax resident in Italy, you are generally expected to report your foreign assets and pay IVAFE and IVIE where they are due. That applies whether you are a remote worker on a digital nomad permit, a retiree on an elective residence visa, an EU citizen who registered at the anagrafe, or an employee relocated by your company.

People are often caught out by the timing. You may become tax resident in your first year without realizing it, especially if you register residency early and spend most of the year here. Once that happens, the accounts and property you left behind become part of your Italian tax picture. If you are unsure where you stand, your residency status is the first thing to settle with an adviser. Everything else in this guide follows from it.

Holding an asset jointly matters too. If you and a spouse share a foreign account or co-own a foreign house, each of you generally reports your own share. Each person is taxed on their portion, not on the full value twice.

Why These Taxes Feel So Frustrating

Let me be honest about the emotional side, because nobody else will. The amounts are often modest, but the work is not. You have to request statements from foreign banks that may not produce the documents an Italian accountant wants. You have to convert values into euros. You have to fill in a section of the return that most Italians never touch. And you have to do it every single year you remain resident.

Many expats I know put this off, assuming small balances do not matter. The tax may be tiny or zero. The reporting obligation still exists, and the penalties for failing to report are often far worse than the tax itself. That is the real reason to take IVAFE and IVIE seriously. It is also why a cross-border service such as Taxes for Expats is worth considering early, before a missed year becomes three missed years.

How IVAFE Works on Bank Accounts and Investments

This is where most online explanations go wrong. They describe one rule for everything, and readers end up confused about whether Italy cares about the balance on a single day or across the whole year. The answer is that it depends on what kind of asset you hold. Bank accounts and investments follow different logic, and once you see the split clearly, the whole tax makes sense.

Bank Accounts and the Average Balance Test

Foreign current accounts and savings accounts held by individuals do not pay a percentage of their value. Instead, each account pays a flat €34.20 per year.

There is one exemption. If the account’s average annual balance is €5,000 or less, nothing is due for that account. The average balance is used only for this purpose. It decides whether the account falls under the €5,000 exemption. It does not set the size of the tax. If the account is not exempt, the charge is the flat €34.20, whatever the balance is.

Here is a scenario that clears up the confusion. Sofia, a graphic designer living in Bologna, keeps a small euro account in Spain for occasional transfers. For most of the year it hovers around a few hundred euros. In late December a client pays her there, and the balance on 31 December jumps well above €5,000. Does she owe IVAFE on that account? For a bank account, the 31 December balance is not the test. What matters is the average balance across the year. Sofia’s average stayed at €5,000 or less, so that account owes nothing, even though it looked healthy at year end.

Now take Daniel, a retired teacher in Lecce who keeps his old US checking account running with a comfortable cushion all year. His average annual balance is well above €5,000. He owes the flat €34.20 on that account. It would be €34.20 whether the average were just over €5,000 or many times higher, because the charge on bank accounts does not scale with the balance.

Two practical points follow from this. First, the charge is per account. If you hold several foreign accounts that are each above the exemption, each one carries its own €34.20. Closing dormant accounts you no longer need is one of the simplest ways to cut both tax and paperwork. Second, how the average is worked out when you hold several accounts at the same bank is a detail worth confirming with your adviser, because the way balances are combined can change whether the exemption applies.

Investments and the 31 December Value

Everything that is not a plain current or savings account falls into a different bucket. Brokerage holdings, shares, bonds, ETFs, investment funds and similar foreign financial products pay 0.2% of their market value at the end of the calendar year, which means the value on 31 December.

Here the year-end snapshot is exactly what counts. There is no average balance test and no €5,000 exemption for these products. Those apply only to bank accounts. If you hold a foreign brokerage account with a portfolio of index funds, the IVAFE on that portfolio is 0.2% of what it was worth on 31 December.

Take Priya, a software engineer who moved to Turin and still holds a brokerage account back home. Her cash sweep inside that account and her fund holdings may be treated differently, so her adviser asks for a breakdown. The funds are valued at 31 December and taxed at 0.2% of that value. Any separate deposit account she holds is checked against the €5,000 average balance test and, if not exempt, pays the flat €34.20. Same bank, two different rules. Once you see it that way, the statements your accountant asks for start to make sense.

People also ask whether a falling market helps. In a sense, yes. Because the investment charge follows the 31 December market value, a portfolio that has dropped by year end will produce a lower IVAFE bill. This is not a reason to time anything around the tax, but it explains why the figure can move from year to year even if you never touch the account.

Tax-Haven Holdings and Partial-Year Ownership

There is one more rate to know. From 2024, foreign financial products held in a jurisdiction that Italy treats as a tax haven pay 0.4% of their market value at 31 December instead of 0.2%. If you hold investments through an offshore platform or in a country on the Italian list of privileged tax regimes, check carefully, because the rate doubles. Your adviser can confirm whether the country where your assets sit falls into that category.

Ownership that lasts only part of the year is handled proportionally. If you opened or closed an account partway through the year, or became Italian tax resident partway through, the tax is generally scaled to the portion of the year the asset was held while you were resident. Your ownership share works the same way, so a joint holder pays only on their portion. These adjustments are exactly the kind of detail that gets lost when people try to do the return alone the night before the deadline.

Here is a side-by-side view of the rules covered so far, plus IVIE, which is explained in the next section.

If you want a broader walkthrough of the declaration itself, see Declaring Overseas Assets (IVIE/IVAFE) in Italy, which sits alongside this guide.

IVIE on Foreign Property

IVIE tends to cause more anxiety than IVAFE. Property feels personal, and many expats arrive in Italy still owning the family home, a buy-to-let apartment, or an inherited share of a house with siblings. The good news is that IVIE follows a clear structure once you understand how the value is set and what can reduce the bill.

How the Property Value Is Set

IVIE is charged as a percentage of the value of the foreign property. The key question is which value counts, because a property can have several. The rules generally look for the value in this order:

1. For property in many EU and EEA countries, the value used for local property or income tax purposes in that country is typically the starting point, much like the cadastral value used in Italy.
2. Where no such value exists, the purchase cost shown in the purchase deed or contract is used.
3. If there is no reliable purchase cost, for example with an inherited or gifted property, the market value in the place where the property sits is used.

In practice this means you need paperwork from the country where the property is located. Marta, a Polish nurse working in Verona, co-owns her late father’s apartment in Kraków with her sister. She had never seen the purchase deed. Her adviser needed it, or an alternative valuation, plus confirmation of her ownership share. Gathering that took weeks. Starting early saved her from filing a rushed estimate.

The same proportional logic applies as with IVAFE. If you owned the property for only part of the year while resident in Italy, or own only a share of it, the tax reflects that. A half-owner pays on half the value, scaled for the period held. For more on the reporting side of property specifically, see Declaring a Foreign Property in Italy’s Quadro RW.

Credits for Foreign Property Taxes

This is the part that brings real relief. If you already pay a property tax or wealth tax on the same property in the country where it sits, that foreign tax can generally be credited against your IVIE. Italy does not want to tax the same house twice for the same purpose, so what you pay abroad reduces what you owe here.

Think of Tom, a British retiree in the Marche who still owns a terraced house in Yorkshire. He pays the local council property charge there every year. His adviser looks at whether that charge counts as a creditable property tax and, if so, offsets it against his IVIE. Depending on the numbers, the credit can reduce the Italian charge a great deal or remove it entirely. Not every foreign charge qualifies, so this is a question for a professional, not a guess. Treaties also affect how foreign property and its income are taxed, which is covered in Italy’s Tax Treaties: Avoiding Double Taxation.

Income from the property, such as rent from a holiday let, is a separate matter that runs through income tax. Keep the two distinct in your mind: IVIE is about owning the property, while rent is about earning from it.

The Main-Home Question

Many people ask whether their foreign home is exempt because it is their main residence. The idea of a main-home exemption does exist, but here is the catch. Once you are tax resident in Italy, your main residence is normally in Italy. The flat you left behind in Dublin or Toronto is usually not your main home in the legal sense any more, so the exemption rarely applies to it.

Edge cases do exist, particularly in the year you move or where family members still live in the foreign property. These are exactly the situations where a quick conversation with a specialist pays for itself. Assuming an exemption that does not apply is one of the most common IVIE mistakes I see.

Reporting, Paying, and Getting Help

Knowing how the taxes are calculated is half the battle. The other half is getting them onto the right form, paid on time, and backed by documents that will stand up if the Agenzia delle Entrate ever asks. This is also where the case for professional help, and for a service like Taxes for Expats in particular, becomes clear.

Quadro RW Step by Step

Foreign assets are reported in Quadro RW, the section of the Italian return used for foreign holdings. IVAFE and IVIE are calculated there and then paid alongside your income tax balances. Most people with foreign assets file using the Redditi PF return, and the differences between that and the simpler form are explained in Filing Taxes in Italy: Modello 730 vs Redditi PF. A typical annual process looks like this:

1. Confirm your Italian tax residency for the year, including the date it began if you moved during the year.
2. List every foreign bank account, brokerage account, investment and property you held at any point in the year, including joint holdings and accounts you closed.
3. For each bank account, obtain statements showing the average annual balance, so the €5,000 exemption test can be applied.
4. For each investment, obtain the market value on 31 December, and note the country where it is held in case the 0.4% tax-haven rate applies.
5. For each property, gather the deed, the local tax valuation or a market valuation, your ownership share, and proof of any foreign property tax paid.
6. Convert all values into euros using the method your adviser applies consistently.
7. Complete Quadro RW, calculating the flat €34.20 for each non-exempt bank account, 0.2% or 0.4% on investments, and IVIE on property after any foreign credits.
8. Pay the resulting amounts through the F24 payment system by the relevant deadline.
9. Keep every statement and calculation on file, organized by year, in case of a later query.

If the payment step is unfamiliar, see How to Pay Italian Taxes With an F24 Form. And because the reporting duty can apply even where no tax is due, the rules on when assets must be declared are worth reading in Reporting Threshold for Foreign Assets in Italy.

Common Mistakes Expats Make

After years of comparing notes with other foreigners over aperitivo, I can tell you the same errors come up again and again.

The first is mixing up the bank account rule and the investment rule. People apply the 31 December value to their current account, or assume the €5,000 exemption covers their brokerage portfolio. Neither is right. Bank accounts use the average annual balance only for the exemption test and then pay a flat €34.20. Investments use the 31 December market value and pay a percentage.

The second is forgetting small or dormant accounts. That old savings account with almost nothing in it may owe no tax, but it may still need to appear on the return. Leaving it off is a reporting failure, and reporting failures are what trigger penalties.

The third is ignoring property held jointly or inherited. Co-owners often assume someone else is handling it. In Italy, each resident co-owner reports their own share.

The fourth hits Americans especially hard: treating Italian and US reporting as one job. US citizens in Italy report the same foreign assets to two countries under two different systems with different thresholds and forms. That double burden is explained in Quadro RW and FBAR Together: The Same Assets Reported to Two Countries, and it is precisely why a coordinated approach matters.

Why Taxes for Expats Is the Smart Move

I spent my first year trying to do this myself with a spreadsheet, a translation app and too much coffee. It worked, technically, but I lost several weekends and still was not confident I had treated my brokerage account correctly. That is the honest reason I now recommend getting specialist help from day one.

Taxes for Expats focuses on people living across borders. The value of a firm like this is not just filling in a form. It is having someone who understands that an American in Rome or a Brit in Florence is dealing with two tax systems at once, and that a decision on one side can change the outcome on the other. When your foreign accounts, pensions and property have to be reported in Italy and also, for US citizens, back home, a coordinated service reduces the chance of contradictions between the two filings.

When you contact Taxes for Expats, ask exactly what their service covers for Italy residents. In particular, ask whether they prepare the Italian return directly or work alongside an Italian professional, how they handle Quadro RW, IVAFE and IVIE, and what documents they will need from you. Their fees depend on the complexity of your situation, so check their own website for current pricing and scope rather than relying on anyone’s memory. A household with one foreign account will be very different from one with several brokerage accounts and a co-owned property abroad.

Many expats pair a cross-border specialist with a local accountant. If you go that route, Choosing a Commercialista (Accountant) in Italy covers what to look for, and How to Find an English-Speaking Commercialista in Italy helps if Italian is not yet your working language. Whichever combination you choose, the goal is the same: one consistent picture of your assets, reported correctly in every country that asks.

If you hold anything abroad and you have become tax resident in Italy, do not wait until you are scrambling. Gather your statements, list your accounts and properties, and reach out to Taxes for Expats for a review of where you stand. A short conversation now is far cheaper, and far calmer, than untangling missed years of reporting later. Let Taxes for Expats handle the cross-border complexity, so you can get back to enjoying the reasons you moved to Italy in the first place.

Disclaimer

This article is for general informational purposes only and does not constitute professional advice. Laws, prices and regulations vary by location and change over time. Consult a qualified professional for guidance on your specific situation.

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