Capital gains tax in Italy

Italy taxes capital gains through a dual-track system: a flat-rate substitute tax (imposta sostitutiva) on financial instruments, and a separate regime for immovable property that pivots on a five-year holding period. Both tracks operate under the framework of Decreto Legislativo 461/1997 and Articles 67-68 of the Testo Unico delle Imposte sui Redditi (TUIR, DPR 917/1986). The substitute-tax mechanism means financial gains do not enter the progressive IRPEF brackets (23%-43%) that would otherwise apply to general income.

What rate applies to gains on shares, bonds, and investment funds?

Gains on non-qualifying shareholdings, corporate bonds, exchange-traded funds, mutual fund redemptions, derivatives, and foreign-currency deposits are all subject to the 26% substitute tax (imposta sostitutiva del 26%) pursuant to Article 5 of D.Lgs 461/1997. This rate has applied uniformly since 1 July 2014, when it replaced the earlier 20% rate. The same 26% rate applies to both qualifying and non-qualifying shareholdings for disposals from 1 January 2019 onward, eliminating the pre-2019 system under which 49.72% of qualifying-shareholding gains were included in taxable IRPEF income. The qualifying-shareholding threshold for traded securities is 5% of share capital or 2% of voting rights; for unlisted companies the threshold is 25% of capital or 20% of voting rights.

One significant reduced rate survives: gains on Italian government bonds (BTPs, BOTs, CCTs, CTZs) and bonds issued by sovereign states on the Italian white list (essentially OECD members and states with adequate exchange-of-information agreements with Italy, approved by Ministerial Decree of 4 September 1996) are taxed at 12.5%. The same 12.5% applies to bonds of supranational issuers such as the European Investment Bank. Where a mutual fund or life-insurance policy holds a mixture of government and non-government instruments, a proportional blended rate is applied: the portion of the gain attributable to qualifying government instruments is taxed at 12.5%, the remainder at 26%.

Losses from financial-asset disposals can offset gains of the same category in the same tax year and carry forward for four successive years. Losses cannot offset dividend income or interest income classified as capital income (redditi di capitale) rather than miscellaneous income (redditi diversi) -- a structural asymmetry that affects net-of-tax returns on mixed portfolios.

How do the three tax-management regimes work?

Italian law offers three procedural regimes for administering the substitute tax on financial assets.

Under the regime amministrato (administered regime, Article 6 D.Lgs 461/1997), the investor holds instruments through an Italian-resident financial intermediary -- a bank, broker, or SIM. The intermediary calculates and withholds the substitute tax on each disposal, remits via Modello F24, and tracks the loss pool automatically. The investor receives an annual summary and does not report administered-regime gains on their own income-tax return (Modello Redditi PF). This regime is the default for self-directed retail investors using Italian online brokers.

Under the regime gestito (managed-portfolio regime, Article 7 D.Lgs 461/1997), a discretionary portfolio manager computes the substitute tax on the aggregate annual change in portfolio value (mark-to-market on 31 December minus mark-to-market on 1 January, adjusted for contributions and withdrawals). Tax is settled annually by 28 February of the following year via the manager's Modello UNICO-SF filing. The gestito regime allows losses within the portfolio to offset gains at the portfolio level in real time, which can be advantageous for high-turnover managed accounts.

Under the regime dichiarativo (self-declaration regime), the investor self-reports all gains and losses in Quadro RT of the annual Modello Redditi PF income-tax return, calculates the substitute tax, and pays via Modello F24 at the normal income-tax deadlines. The dichiarativo regime permits aggregation of gains and losses across multiple intermediaries and jurisdictions, which can improve loss-utilisation for investors using non-Italian brokers or holding instruments in foreign accounts.

How are real-estate capital gains taxed?

Residential and commercial property gains are governed by Article 67(1)(b) TUIR and follow a holding-period rule. A gain on a property held for more than five years from the original purchase deed (rogito) is entirely exempt from Italian income tax -- no IRPEF, no substitute tax. The five-year clock runs from the date of the notarial acquisition deed. Properties received by inheritance receive a step-up to fair market value at the date of death and a fresh five-year clock for the heir.

Where a property is sold within five years of acquisition, the gain is ordinarily included in the seller's IRPEF taxable income and taxed at progressive rates (23% to 43% plus regional and municipal surcharges). The seller may alternatively elect a 26% substitute tax at the time of the notarial deed (rogito), as provided by Article 1(496) of Legge 266/2005 -- an election made in the presence of the notary and irrevocable after signing. For sellers in the upper IRPEF brackets, the 26% flat option is generally more favourable than the marginal IRPEF rate. The gain is calculated as sale price minus original acquisition cost, plus eligible improvement expenses (only structural improvements demonstrating increased property value qualify; ordinary maintenance, agent fees, and notary fees on the original purchase do not reduce the taxable gain under standard IRPEF inclusion, but notary and brokerage costs do adjust the cost basis for the substitute-tax calculation).

A separate exemption applies where the property was the seller's principal residence (abitazione principale) for the predominant part of the holding period, regardless of the five-year rule. A property used as the primary residence for the majority (more than 50%) of the holding period is exempt from capital-gains tax on disposal even if sold within five years of acquisition. The principal-residence test relies on registered residency with the local municipality (the same registration that triggers the IMU municipal property-tax exemption). Building land (terreni edificabili) is always taxable regardless of holding period, with no five-year exemption available.

How is crypto taxed, and what changes in 2026?

Crypto-asset gains are taxed separately from financial-instrument gains. Under the regime introduced by the 2023 Budget Law (Legge 197/2022) and modified by the 2025 Budget Law (Legge 207/2024), gains on crypto assets realised through 31 December 2025 are subject to the 26% substitute tax. The previous EUR 2,000 annual tax-free threshold was eliminated from 1 January 2025 -- all gains are now taxable with no minimum threshold.

From 1 January 2026, the rate increases to 33% under the provisions of the 2025 Budget Law. Euro-pegged stablecoins are treated separately under the 2026 Italian Budget Law and carry the 26% rate rather than the 33% general crypto rate. Taxpayers had the option to step up the cost basis of crypto assets to fair market value as of 1 January 2025 by paying an 18% substitute tax on the difference -- a transitional measure available for the 2025 tax year only. Crypto gains are reported in Quadro T of the Modello 730 or Quadro RT of Modello Redditi PF.

What is the Quadro RW monitoring obligation?

Italian tax residents holding financial assets abroad -- foreign brokerage accounts, foreign bank deposits, foreign mutual funds, foreign life insurance, or crypto held with non-Italian custodians -- must complete Section RW (Quadro RW) of their annual Modello Redditi PF. The obligation arises under Article 19 of Decreto Legge 201/2011 and is a monitoring requirement independent of whether any income is produced. RW reporting is required when the maximum balance of a foreign account exceeds EUR 15,000 at any point during the year.

Quadro RW also serves as the basis for two annual wealth-type taxes: IVAFE (0.2% on foreign financial assets, EUR 34.20 per foreign current account) and IVIE (1.06% on foreign real estate, reduced to 0.4% for a foreign principal residence). These taxes are separate from -- and not credited against -- capital-gains tax. Penalties for omitting or understating the RW disclosure start at EUR 258 for timely-corrected omissions and scale to 3%-15% of the undeclared asset value for material omissions, with higher rates for assets held in non-cooperative jurisdictions. For more on how Italy distinguishes dividends and investment-income classification from gains, see the related page on Italy dividend and investment income taxation.

Italy capital gains tax rates at a glance

Tax rules in this area change frequently and interact with individual circumstances in ways that this page cannot anticipate. Consulting a qualified tax professional who practises Italian tax law is the appropriate step before acting on any of the information above.