American Expat's Money Guide: Italy
Transfers, banking, and US + local taxes for Americans in Italy. Currency: EUR.
The quick answer
- US tax treaty
- Yes
- Totalization (SS) agreement
- Yes
- Special expat tax regime
- 7% flat tax for foreign pensioners (Southern Italy)
- Bank account as a US citizen
- Yes
Local top marginal income-tax rate (headline): 43%. Effective rates depend on income, residency status, and any special regime. Figures here are general and can change — verify against current law before relying on them.
Informational only — not financial, tax, or legal advice. Cross-border tax is fact-specific; confirm with a qualified cross-border CPA or adviser before acting. Some links are affiliate links — we may earn a commission at no extra cost to you. Full disclaimer.
Cost of living vs. New York City
Italy is about 39% cheaper overall
Typical 1-bed city-centre rent: $1,275/mo. Compare cost of living →
Approximate — Numbeo, NYC = 100, as of 2026-06.
1 Moving your money (USD → EUR)
USD→EUR is a high-liquidity major corridor; banks bury a 1–3% spread in the exchange rate, so a mid-market FX specialist is usually far cheaper for moving a relocation lump sum.
See exactly what your amount costs across the mid-market rate, a typical bank, and a specialist — then send with the cheapest.
2 Banking as an American in Italy
You'll typically need an Italian tax code (codice fiscale), a passport, and proof of address; the codice fiscale is obtainable before you move via an Italian consulate. Non-residents can open a 'conto corrente non residenti' at some banks, but it's bank-dependent — once you have residency it becomes a standard resident account. As a US person you'll complete a FATCA self-certification. Verify current requirements with each bank.
Local banks generally accept US persons under the FATCA agreement, though some are cautious about the extra reporting.
3 Taxes — the part everyone gets wrong
The US side (you still file)
- You file a US return on worldwide income. FEIE or the Foreign Tax Credit usually prevents true double taxation — which one wins depends on your income and local rates.
- FBAR (FinCEN 114) if your foreign accounts top $10,000 combined at any point in the year.
- FATCA (Form 8938) may also apply above higher thresholds.
The Italy side
Italy offers a special regime — 7% flat tax for foreign pensioners (Southern Italy). Italy has several inbound regimes; the most relevant for American retirees is the 7% flat tax on ALL foreign-source income (including foreign pensions) for new residents who move to a qualifying town (population under ~20,000) in Southern Italy (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Puglia), for up to 10 years; requires no Italian tax residency in the prior 5 years. Two other 2024-reformed regimes exist: the 'regime impatriati' for inbound workers (cut to a 50% exemption, 40% with a minor child, up to €600,000/yr, 5 years, stricter eligibility) and a lump-sum flat tax for high-net-worth new residents on foreign income (€100,000 in 2024, €200,000 in 2025, €300,000 from 2026). All of these cut ITALIAN tax only — as a US citizen you're still taxed by the IRS on worldwide income. Verify current eligibility against Agenzia delle Entrate.
Where this gets people
- Italian and EU-domiciled mutual funds and ETFs are PFICs to the IRS — punitive tax plus a Form 8621 per fund each year — so US persons should generally hold US-domiciled investments instead.
- As an Italian tax resident you owe the IVIE wealth tax (1.06%) on foreign real estate and the IVAFE tax (0.2%) on foreign financial assets — these reach your US home and US brokerage/bank accounts, on top of your US return.
- The special regimes (7% pensioner flat tax, impatriati, HNWI lump-sum) cut ITALIAN tax only — the US still taxes your worldwide income, so a low Italian bill can leave a US bill the foreign tax credit no longer offsets.
- A "special regime" headline rate is not your effective rate — eligibility and exclusions matter a lot.
- State taxes can follow you abroad depending on the US state you left — don't assume you're done with them.
Cross-border tax is fact-specific and the penalties are real. A US-expat tax specialist handles FEIE/FTC, FBAR, and FATCA correctly.
Get expat taxes done with Bright!Tax →4 Investing & brokerage
US brokers sometimes drop customers with a non-US address. A broker that explicitly supports non-resident Americans is the standard fallback. Beware buying local (non-US) funds — PFIC (Passive Foreign Investment Company) rules make them a US tax nightmare.
Open an account with Interactive Brokers →5 Healthcare & insurance
Legal residents generally gain access to Italy's public health system, but there's usually a gap before residency and coverage kick in. Many new arrivals and nomads bridge the gap with international coverage.
See SafetyWing coverage →6 Common residency routes
Your residency route determines your tax residency and bank access — they're connected.
Frequently asked questions
Do Americans living in Italy still have to file US taxes?
Yes. US citizens file with the IRS on worldwide income no matter where they live. The US–Italy tax treaty and tools like the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit usually prevent true double taxation, but you still must file. This is general information, not tax advice.
Do I need to file an FBAR if I move to Italy?
If your foreign financial accounts add up to more than $10,000 at any point in the year, you generally must file an FBAR (FinCEN Form 114). Many expats also have FATCA (Form 8938) obligations. Penalties for missing these are steep — confirm your situation with a cross-border professional.
What's the cheapest way to move money to Italy?
For a relocation lump sum, the cost is almost entirely the exchange-rate spread, not the visible fee. Banks commonly bury 1–3% in the rate. Compare your specific amount with the transfer cost tool before sending.
Can I keep my US brokerage account after moving to Italy?
Some US brokers restrict or close accounts once you have a non-US address. A broker that explicitly supports non-resident Americans is the common fallback. Don't change your address until you've confirmed your broker's policy.
Data last verified 2026-06-04. Primary source: official reference.
Informational only — not financial, tax, or legal advice. Cross-border tax is fact-specific; confirm with a qualified cross-border CPA or adviser before acting. Some links are affiliate links — we may earn a commission at no extra cost to you. Full disclaimer.