Are dividends from both qualified and non-qualified shareholdings taxed at the same rate in Italy?

Yes, since 1 January 2023. Italy's 2018 Budget Law aligned both categories at the same 26 percent final substitute tax for individual investors without business status. A transitional rule previously preserved the old IRPEF-inclusion regime for profits generated before 2018. Agenzia delle Entrate ruling 454/2022 confirmed that from 2023 onward the 26 percent withholding applies universally regardless of profit-year origin.

Why do Italian government bonds (BTP, BOT) carry a 12.5% tax instead of 26%?

Legislative Decree 239/1996 established a preferential 12.5 percent substitute tax on interest and capital gains from Italian government securities (BOT, BTP, CCT, CTZ) and qualifying white-list sovereign bonds. The lower rate has applied since 1996 as a capital-markets policy measure to support retail demand for public debt. Corporate bonds and bank deposits remain at the 26 percent standard rate.

What is the difference between regime amministrato and regime dichiarativo?

Under regime amministrato (the Italian-broker default), the intermediary withholds the 26 percent substitute tax on each profitable transaction and remits it monthly; losses at the same intermediary offset gains within four years. Under regime dichiarativo (mandatory for foreign brokers, electable otherwise), the investor receives gross proceeds and self-reports annually, paying by 30 June of the following year -- allowing interim reinvestment of the pre-tax amount.

What is IVAFE and which assets does it cover?

IVAFE is Italy's annual 0.2 percent wealth tax on financial assets held abroad by Italian tax residents (Decree Law 201/2011). It covers foreign shares, bonds, brokerage accounts, life insurance, and pension funds. Assets in blacklist jurisdictions are taxed at 0.4 percent from 2024 under Law 213/2023. Foreign bank accounts are taxed at a flat 34.20 euros per account; no tax applies if the average annual balance is below 5,000 euros.

Who must complete Section RW of the Italian tax return?

Any Italian tax resident holding financial assets outside Italy -- including foreign brokerage accounts, foreign shares, bonds, cryptocurrency on non-Italian platforms, foreign life insurance, and foreign pension funds -- must complete Section RW of Modello Redditi PF (or Section W of Modello 730 from 2024) to satisfy the monitoring obligation under Article 4 of Decree Law 167/1990. The obligation applies even where the IVAFE tax itself is nil. Bank accounts with a maximum year value above 15,000 euros must always be disclosed.

Dividend and Investment Tax in Italy — Rates, Rules & Filing

Italy taxes most private investment income through a flat substitute tax (imposta sostitutiva di natura finanziaria) rather than through the progressive IRPEF income-tax scale that applies to employment and self-employment income. The central rate is 26 percent, introduced by Decree Law 66/2014 and consolidated into the Italian tax system since 1 July 2014. A reduced 12.5 percent rate applies to government bonds and equivalent instruments. Individual investors must also choose one of three administration regimes that determine who calculates and remits the tax. Italian residents holding financial assets outside Italy face an additional annual wealth levy -- IVAFE -- plus a foreign-asset disclosure requirement in Section RW of the annual income return.

Consult Italy country overview for a broader introduction to the Italian tax system, including IRPEF brackets, residency rules, and corporate taxes.

How are dividends taxed in Italy?

Dividends paid by Italian-resident companies to individual shareholders who are Italian tax residents are subject to a 26 percent final substitute tax (ritenuta a titolo d'imposta) applied at source by the distributing company acting as sostituto d'imposta under Article 27 of Presidential Decree 600/1973. Because the withholding is final, the dividend does not enter the shareholder's IRPEF base; no further declaration or additional tax arises on that income. The same 26 percent rate applies to dividends paid through an Italian-resident financial intermediary on foreign shares.

For individual investors without a business licence, a single flat rate has applied to both qualified and non-qualified shareholdings since 1 January 2023. Prior to 2018, individuals holding a "qualified" stake -- above 20 percent of voting rights or 25 percent of capital in unlisted companies, or above 2 percent of voting rights or 5 percent of capital in listed companies -- were taxed differently: 49.72 percent of the dividend was included in their gross IRPEF income. The 2018 Budget Law (Law 205/2017) aligned the two categories at the same 26 percent flat rate for dividend years from 2018 onward, initially subject to a transitional rule for profits generated before 2018. As confirmed by Agenzia delle Entrate ruling 454 of 22 September 2022, the 26 percent final withholding applies uniformly to all dividends received by resident individuals from 1 January 2023 regardless of which profit year generated them [1].

What rate applies to government bonds and white-list sovereign debt?

Interest income and capital gains from Italian government bonds -- Buoni Ordinari del Tesoro (BOT), Buoni del Tesoro Poliennali (BTP, including BTP Italia and BTP Valore), Certificati di Credito del Tesoro (CCT), and Certificati del Tesoro Zero-coupon (CTZ) -- are taxed at a preferential 12.5 percent substitute tax under Article 1 of Legislative Decree 239/1996 [2]. The same reduced rate applies to:

Government bonds of sovereign states included on Italy's "white list" of countries with adequate tax-information exchange (Ministerial Decree 4 September 1996, as periodically updated);
Bonds issued by qualifying supranational institutions such as the European Investment Bank, the World Bank (IBRD), the International Finance Corporation, and the African, Asian, and Inter-American Development Banks;
Regional and local-authority bonds issued within European Union member states.

Corporate bonds, bank deposit interest, and most other interest-bearing instruments remain at the standard 26 percent rate. The gap of 13.5 percentage points between the two rates creates a persistent structural preference for sovereign-bond allocation within Italian retail portfolios. For capital gains on government bonds, the mechanics produce an effective 12.5 percent outcome through a grossing-up technique: 48.08 percent of the realized gain is included in the taxable base, then taxed at 26 percent, which arithmetically equals 12.5 percent of the full gain.

How do the three administration regimes work?

Individual investors resident in Italy may hold financial assets under one of three regimes that determine who calculates the substitute tax and when it is paid. The choice affects cash flow, compliance burden, and loss-offset flexibility.

Regime amministrato (administered savings) is the default for accounts opened with Italian-resident financial intermediaries. The intermediary acts as sostituto d'imposta: it calculates the gain or loss on each transaction, applies the 26 percent substitute tax (or 12.5 percent where applicable) at the time of each profitable sale, and remits the tax to the Agenzia delle Entrate on a monthly basis. Losses can offset subsequent gains at the same intermediary and be carried forward for up to four fiscal years. A transfer to a different intermediary does not reset the carryforward, but cross-account loss offsets are generally not permitted within this regime [3].

Regime dichiarativo (declarative) applies automatically when the investor holds assets through a non-resident intermediary that has no Italian withholding obligation. It is also available to resident investors who elect it by written notice before 31 December. The investor receives gross proceeds, calculates the net gain using the LIFO (last-in-first-out) cost method, and declares and pays the 26 percent substitute tax in the annual Modello Redditi PF -- with payment due by 30 June of the following year. The deferral benefit allows the investor to reinvest pre-tax proceeds during the intervening period. Loss offsets across all positions and across different intermediaries are permitted, giving greater flexibility than the administered regime [3].

Regime gestito (managed portfolio) applies to assets managed by an authorized Italian portfolio manager (SGR or SIM). Taxation is computed annually on the overall portfolio's net performance -- the difference between the portfolio's year-end market value (including accrued income) and its opening value, plus withdrawals minus deposits. A single 26 percent substitute tax is applied to the net positive annual result rather than to each transaction individually. Losses in one year can offset gains in subsequent years. Switching from gestito to another regime triggers taxation on unrealized gains at the transfer date.

Feature	Dichiarativo	Amministrato	Gestito
Who calculates tax	Investor	Intermediary	Portfolio manager
Tax timing	Annual return (June 30)	Per transaction	Annual (year-end)
Cost method	LIFO	Weighted average	Net portfolio result
Cross-account loss offset	Yes	No	Within same manager
Loss carryforward	4 years	4 years	4 years
Foreign intermediary	Required or elected	Default (Italian)	Elected (Italian)

What is IVAFE and who must file Section RW?

IVAFE (Imposta sul Valore delle Attivita' Finanziarie all'Estero) is an annual wealth tax on financial assets held outside Italy by Italian tax residents, introduced by Decree Law 201/2011 and charged at 0.2 percent (2 per mille) of the asset's year-end market value, proportional to ownership share and holding period [4]. The rate was doubled to 0.4 percent for assets held in jurisdictions with a privileged tax regime (the so-called blacklist), following Article 1, paragraph 91(b) of Law 213/2023 (2024 Budget Law), effective from fiscal year 2024. For current accounts and savings deposits held abroad, the tax is levied as a flat amount of 34.20 euros per account for individuals (not as a percentage), and no tax is due if the average annual balance does not exceed 5,000 euros.

Separate from the tax itself, Italian residents holding financial assets abroad -- including shares, bonds, foreign brokerage accounts, foreign life insurance, foreign pension funds, and cryptocurrency held on non-Italian platforms -- must complete Section RW of the annual Modello Redditi PF (or, from 2024 onward, the equivalent Section W of Modello 730) to satisfy the foreign-asset monitoring obligation under Article 4 of Decree Law 167/1990 [4]. The monitoring obligation applies even when IVAFE is nil (for example, a bank account with average balance below 5,000 euros). The reporting threshold for bank accounts under RW is a maximum year value exceeding 15,000 euros.

Financial assets administered through Italian-resident intermediaries are not subject to IVAFE and do not require RW disclosure for those assets, because the Italian intermediary already reports them directly to the tax authority.

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  <text x="110" y="102" text-anchor="middle" font-size="10" fill="#dee5dc">Standard rate</text>
  <text x="110" y="118" text-anchor="middle" font-size="9" fill="#dee5dc">Dividends, capital gains,</text>
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  <text x="310" y="102" text-anchor="middle" font-size="10" fill="#f4f6f1">Reduced rate</text>
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  <text x="210" y="188" text-anchor="middle" font-size="9" fill="#5bb829">IVAFE: 0.2% on foreign financial assets (0.4% blacklist) -- Art. 4 DL 167/1990</text>
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How does withholding work in practice?

For dividends from Italian-resident companies, the company itself (or the Italian-resident intermediary holding the shares in custody) withholds the 26 percent and remits to the Agenzia delle Entrate quarterly via Modello F24 using tribute code 1035 for corporate dividend withholdings. The shareholder receives the dividend net of tax and has no further filing obligation for that income.

For capital gains on shares or bonds sold through an Italian broker operating under the regime amministrato, the broker calculates the gain on each transaction, debits the 26 percent substitute tax directly from the account, and remits it monthly. Under regime dichiarativo, the investor declares the gain in Section RM or Section RT of the annual Modello Redditi PF and pays via Modello F24 by 30 June of the following year (first installment) and 30 November (second installment, for advance payment of the following year's estimated tax).

For foreign dividends received by Italian residents outside Italian brokerage custody, the investor reports the gross foreign dividend in Section RL of Modello Redditi PF and the substitute tax in Section RM. A foreign-tax credit under Article 165 TUIR may reduce the Italian 26 percent liability by the amount of foreign tax paid, up to the Italian tax due on the same income [1].

Consult a qualified tax professional before making investment decisions or filing Italian tax returns, as the interaction between regimes, foreign-tax credits, the IVAFE base, and treaty provisions requires individual analysis of your specific circumstances.

Italy country overview covers residency determination, IRPEF rates, and the general tax-return filing calendar.

Dividend and Investment Tax in Italy

Key points