Banks & Finances Italy

Italy offers a variety of banks that are welcoming to foreigners, providing convenient conditions for opening accounts and managing finances. Here are some of the most foreigner-friendly banks:

 

UniCredit is one of the largest banks in Italy and one of the most popular among foreigners. The bank offers a wide range of services, including accounts for non-residents, internet banking services available in English, and access to international banking cards. UniCredit also provides support in multiple languages, making the process of opening accounts and customer service easier for non-Italian speakers.

 

Intesa Sanpaolo is another major Italian bank known for its openness to foreign clients. The bank offers accounts for non-residents and services in English. Intesa Sanpaolo actively works with international clients and offers specialized programs for foreign students and workers, including favorable conditions for credit cards and mortgages.

 

BancoPosta, the banking service of the Italian post office Poste Italiane, is a popular choice among foreigners due to its ease of account opening and low fees. The bank offers basic banking services, including current accounts, banking cards, and access to online banking. Although BancoPosta is not a traditional bank, it has a wide branch network and convenient access to services for foreign citizens.

 

N26 is a German mobile bank that also operates in Italy and is geared towards international clients. N26 offers a fully digital experience, allowing account opening and financial management through a mobile application. The bank does not charge fees for opening an account, offers international banking cards, and the ability to manage accounts in multiple languages, including English. This makes N26 a convenient choice for young people and digital nomads.

 

Banca Monte dei Paschi di Siena, one of the oldest in the world, also provides services to foreign clients. The bank offers access to various financial products and services, including accounts for non-residents, mortgages, and credit cards. Monte dei Paschi has a developed branch network throughout Italy and provides support services in multiple languages, making it convenient for foreigners.

Opening a bank account in Italy for foreigners is a process that may involve several steps and requires a specific set of documents. 

 

1. Choosing a bank

Before starting the account opening process, it is important to choose a bank that best meets your needs. Some banks offer special accounts for foreigners and may provide services in English.

 

2. Required documents

To open a bank account in Italy, a foreigner typically needs the following documents:

 

- Identity document: This can be a passport for non-residents or a residence permit for those who reside in Italy on a permanent basis.

- Tax code: This document is mandatory for carrying out any financial transactions in Italy. 

- Proof of address: This can be a recent utility bill or rental agreement confirming your address in Italy. Some banks also accept a consulate certificate or an official letter from your workplace.

- Documents proving the source of income: Depending on the bank, you may be asked to provide documents proving your income, such as an employment contract, a letter from your employer, or a tax return.

- Application form: The bank will provide you with an application form that needs to be filled out to open the account.

 

3. Account opening procedure

- Visiting the bank: Usually, personal presence in the bank is required to open an account, especially if it is a traditional bank. Online banks, such as N26, may allow you to open an account remotely by providing scans of the required documents and passing video verification.

- Filling out the application: Complete the account opening application and provide all necessary documents.

- Signing the agreement: After the documents have been checked and the application approved, you will be offered to sign a banking service agreement. This may include an agreement on account usage terms, fees, and services that will be provided.

- Deposit: Some banks may require an initial deposit on the new account.

 

4. Features for Non-Residents

If you are not a resident of Italy, you may be offered to open a special account for non-residents. This type of account may have some restrictions on transactions, such as access to loans or mortgages, but typically offers standard services including debit cards and online banking.

Using ATMs

- Choosing an ATM: Find an ATM that accepts your payment system’s cards (Visa, Mastercard, etc.). Most ATMs in Italy support international cards, but it is best to use ATMs from major banks like UniCredit, Intesa Sanpaolo, or BancoPosta, as they are more reliable and have fewer restrictions on transactions.

  - Entering PIN: When inserting your card, you will be prompted to enter your PIN. Ensure you enter it correctly, as several incorrect attempts may lead to the card being blocked.

- Selecting a Transaction: Choose the transaction "Prelievo" (cash withdrawal), then select the amount you wish to withdraw. Note that ATMs may offer you a choice between withdrawing the amount in euros or in your card’s currency. It is usually more advantageous to choose withdrawal in euros to avoid double conversion.

 

Fees and Limits

- Cash Withdrawal Fees: Banks usually charge a fee for withdrawing cash with a foreign card, which can vary depending on your bank and card type. It is advisable to find out in advance from your bank about possible fees for cash withdrawals abroad.

  - Withdrawal Limits: ATMs may have daily cash withdrawal limits, usually from 250 to 500 euros per day. These limits may be set by both your bank and the Italian bank that owns the ATM.

 

Currency Conversion

When withdrawing cash, you may be offered currency conversion, where the ATM immediately converts the amount into your card's currency (e.g., dollars or pounds). However, such conversion is often less favorable due to high rates, so it is recommended to choose withdrawal in euros and allow your bank to perform the conversion.

 

Security

- ATM Security: Always choose ATMs located in secure places, such as inside banks or shopping centers. Avoid ATMs on poorly lit streets or in suspicious places to minimize the risk of fraud.

 - Precautionary measures: Be aware of your surroundings and cover the keyboard when entering your PIN to avoid its duplication.

Sending money from Italy to another country can be done in several ways, each with its own characteristics and requirements. 

 

Bank Transfer

A bank transfer is one of the most popular ways to send money abroad. This method is suitable for sending large amounts and is available in all Italian banks.

- Procedure: To send a transfer, you will need to visit a bank branch or use online banking services. You must provide the recipient's details, including their name, address, international bank account (IBAN), and the recipient bank's SWIFT/BIC code.

- Fees: Fees for international bank transfers may vary depending on the bank and the transfer amount. They usually include a fixed fee and a percentage of the transfer amount. Transfers within the European Economic Area (EEA) may be cheaper and completed within a few days.

 

Online Money Transfer Services

Online platforms for money transfers have become popular due to their accessibility and low fees. These services offer fast and convenient ways to send money worldwide.

- Wise: This service offers transfers with low fees and real exchange rates. The transfer process is entirely digital, and funds can be sent to a bank account or as a mobile transfer.

- PayPal: A popular platform that allows sending money between countries using an electronic wallet. Fees depend on the sending and receiving countries and the funding source (e.g., from a bank account or credit card).

- Revolut: Another digital platform that allows sending money abroad at interbank exchange rates. Revolut offers instant transfers between users and low fees for international transfers.

 

Money Transfer Services

Money transfer services like Western Union and MoneyGram offer the ability to quickly send money to any part of the world.

- Western Union: Money can be sent online, via a mobile app, or in a physical agency. The recipient can collect the money in cash at a Western Union agency in their country.

- MoneyGram: Similar to Western Union, MoneyGram allows sending money online or through agencies. The recipient can also collect the funds in cash.

- Fees and timing: Fees for using such services can be higher than those of online platforms, but they offer the possibility of quick transfers which can take just a few minutes.

 

Postal Transfers 

Poste Italiane also provides international money transfer services through its branch network.

- Postal transfer: This service allows sending money to a bank account or for cash collection at a post office. Fees and timing depend on the destination country and the service chosen.

Foreigners in Italy can obtain a loan or mortgage, but the process can be more complicated and may require meeting certain conditions. The possibility of getting a loan or mortgage depends on various factors such as residency status, credit history, and type of credit.

 

Conditions for obtaining a loan or mortgage

Foreigners residing in Italy can obtain a loan or mortgage if they meet certain requirements. Here are the main conditions:

 

- Residency: Typically, to obtain a loan or mortgage, a foreigner must have a residence permit and legally reside in Italy. For non-residents, the mortgage application process may be more complex, and not all banks offer such services.

 

- Credit history: As in other countries, the applicant's credit history and financial stability play an important role. Banks check creditworthiness, income, and the presence of debts. Having a job with a steady income or owning a business in Italy can significantly increase the chances of loan approval.

 

- Down payment: In the case of mortgages, banks often require a down payment, which can be from 20% to 30% of the property's value. For foreigners, especially non-residents, this percentage may be higher.

 

The process of obtaining a loan or mortgage

The process of obtaining a loan or mortgage for foreigners in Italy involves several stages:

 

- Application: The applicant must provide documents confirming identity, residence permit, source of income, tax code, and other financial documents.

  

- Bank assessment: The bank will assess the applicant's creditworthiness, including verification of income, credit history, and the value of the property being purchased (in case of a mortgage).

 

- Agreement on terms: After approval, the bank will propose the terms of the loan or mortgage, including interest rates, repayment terms, and monthly payments. It is important to carefully review the terms, as foreigners may face higher rates than Italian citizens.

 

- Contract conclusion: After agreeing on all terms, the loan or mortgage contract is signed. In the case of a mortgage, the property will be registered as collateral for the duration of the loan.

 

Popular banks offering loans and mortgages to foreigners

- UniCredit: Offers mortgage loans for both residents and non-residents, with the possibility of financing up to 80% of the property's value.

- Intesa Sanpaolo: Also provides mortgages to foreigners, taking into account their credit history and residency status.

- BNL (Gruppo BNP Paribas): Offers special programs for foreign clients, including mortgage loans for purchasing real estate in Italy.

 

It is important to carefully prepare all necessary documents and, if needed, consult with a financial advisor or the bank for more detailed information.

Bank transfer

A bank transfer is one of the most common and safest ways to pay for large purchases in Italy.

- Real estate: When buying real estate, a bank transfer is used to pay the deposit, the remaining balance, and expenses related to the purchase (taxes, notary services, etc.). All transfers must be documented and confirmed, especially when working with a notary who will register the transaction.

 

- Car: When buying a car, a bank transfer is also a preferred method. Many car dealers require the transfer of funds to their bank account before handing over the car to the buyer. This is a safe payment method that helps avoid risks associated with cash transactions.

 

Mortgage and Car Loan

Financing through a mortgage or car loan is a popular method of paying for major purchases, such as a house or a car.

- Mortgage: Most banks in Italy offer mortgage loans with various terms for purchasing real estate. To obtain a mortgage, an initial down payment is required, usually amounting to 20-30% of the property's value. The remaining sum is paid through mortgage payments over many years.

- Car Loan: Banks and car dealers often offer loans for car purchases. Such loans can cover up to 100% of the car's cost, depending on the terms. Interest rates and repayment terms vary depending on the bank and the buyer's credit history.

 

Cash Payment

While cash payment is possible, there are restrictions on the use of cash for major purchases in Italy.

- Real Estate: Paying for real estate in cash is not usually practiced and is even prohibited in some cases to prevent money laundering. The maximum amount that can be paid in cash in Italy is limited by law to 2,000 euros (this amount may vary depending on the legislation).

- Car: For buying a car, it is also preferable to use a bank transfer or car loan. Cash payment is possible, but given the limits on cash payments, this is rarely used for full payment of the cost of a new car.

 

Use of Checks

Checks, especially bank checks, can also be used for major purchases.

- Real Estate: In Italy, the assegno circolare (bank check) is often used, which guarantees payment. This type of check is issued by the bank only if there are sufficient funds in the client's account. It is often used to pay the remaining sum when transferring property ownership.

- Car: Bank checks can also be used for car payments, especially if the transaction is carried out between private individuals. This payment method is considered safe and convenient.

 

Thus, when making large purchases in Italy, it is important to choose a safe and convenient payment method. Bank transfers, mortgages, car loans, and bank checks are the primary methods used for these purposes. It is important to consider legal restrictions on the use of cash and to consult with a lawyer or financial advisor to ensure transaction security.

Italy offers a wide range of financial instruments for saving and investing, suitable for both conservative investors and those open to riskier investments.

 

Bank Deposits

Bank deposits are one of the most conservative and reliable means of saving money. In Italy, there are several types of deposits:

 

- Savings accounts: These accounts allow you to earn a small interest on the balance, with funds available for withdrawal at any time. Interest rates on these accounts are usually low, but they provide high liquidity.

  

- Fixed-term deposits: Funds in these accounts are held for a specific period (usually from several months to several years), with higher interest rates than ordinary savings accounts. It is important to note that early withdrawal may result in the loss of some accrued interest.

 

Bonds

Bonds are debt securities issued by governments or corporations, allowing investors to earn a fixed income in the form of interest.

 

- Government bonds: The Italian government offers several types of bonds with various maturities. Government bonds are considered safe investments because they are backed by the state.

  

- Corporate bonds: Issued by companies, these bonds may offer higher interest rates but come with greater risk. These bonds are suitable for investors willing to take on additional risk for higher returns.

 

Stocks

Investing in stocks allows one to acquire shares in companies and earn income through dividends and capital appreciation.

 

- Italian Stock Market: The main stock market in Italy is Borsa Italiana. Purchasing shares of Italian companies can be an interesting option for those looking to invest in growing businesses, but it's important to be aware of risks associated with market volatility.

 

- International Stocks: Investors can also purchase shares of companies outside of Italy, diversifying their investments. This can be done through Italian brokerage firms or online platforms that provide access to international markets.

 

Investment Funds 

Investment funds allow investors to pool their resources for collective investment in diverse assets such as stocks, bonds, and real estate.

 

- Passive Funds: These are funds that track indices and are traded on the exchange like stocks. They are a popular way to diversify a portfolio with low costs.

 

- Active Funds: These funds are managed by professional managers who actively select assets to achieve the best results. Such funds may offer higher returns but also have higher fees.

 

Real Estate 

Investing in real estate remains a popular way to build capital in Italy. Purchasing residential or commercial property can provide rental income and capital growth as the property's value increases.

 

- Residential Property: Buying an apartment or house for subsequent renting is a popular investment approach, especially in tourist areas.

 

- Commercial Property: Investments in offices, shops, or warehouse space can provide higher income but require more capital and management.

Italy, as a country with a progressive tax system, imposes certain tax obligations on all residents, including foreign citizens residing in the country.

Tax Resident or Non-resident?

First of all, it’s important to determine whether you are a tax resident of Italy. A tax resident of Italy is a person who:

- Resides in Italy for more than 183 days a year.

- Registered in the Italian population registry.

- Has a primary residence or economic interests in Italy.

If you meet these criteria, you will be considered a tax resident and required to pay taxes on your worldwide income (income earned both in Italy and abroad). If you are not a tax resident, you will only pay taxes on income earned in Italy.

Income Taxation

The Italian tax system uses a progressive taxation scale, meaning tax rates increase with income growth. For 2024, income tax rates are as follows:

Up to €15,000: 23%

€15,001 to €28,000: 25%

€28,001 to €50,000: 35%

Over €50,000: 43%

If you are a tax resident, you are required to declare all your income, including salaries, investments, rental income, and other types of income earned both in Italy and abroad.

Property Taxes

If you own property in Italy, you are required to pay the following taxes:

IMU: Municipal property tax. It is applied to properties that are not primary residences.

TASI: Tax for local services, such as street lighting and street cleaning.

TARI: Waste collection tax, which is also calculated based on the size of the property and the number of residents.

These taxes are usually paid twice a year and depend on the cadastral value of the property.

Taxes on Capital and Financial Assets

Italy also levies taxes on financial assets and capital:

Financial assets tax: Imposed on foreign financial assets, such as stocks, bonds, and bank accounts. The rate is 0.2% of the asset value at the year-end.

Tax on foreign property: Applied to properties located outside Italy. The tax rate is 0.76% of the cadastral value of the property.

Double Taxation

If you receive income in other countries, there is a risk of double taxation (taxation of the same income in two countries). However, Italy has double taxation avoidance agreements with many countries, allowing you to avoid this. In such cases, you can take advantage of the foreign tax credit to reduce your tax bill in Italy.

Other Taxes

Foreigners are also required to pay taxes such as:

Value Added Tax: The standard rate is 22%, but there are reduced rates for certain goods and services.

Gift and Inheritance Tax: The rate depends on the degree of kinship with the decedent and the value of the inheritance or gift.

Social Contributions

If you work in Italy, you are required to pay social contributions. These contributions cover pensions, health insurance, and other social services. The amount of contributions depends on your income and type of employment.

Conclusion: It is recommended to consult a tax advisor to properly determine your tax status and optimize tax obligations in accordance with Italian legislation.

Tax declaration in Italy for foreigners depends on their residency status, source of income, and other factors.

Tax Residency Status

Tax Resident: Must declare and pay taxes on all their income, earned both in Italy and abroad.

Non-Resident: Must pay taxes only on income earned in Italy.

Tax Declaration

All tax residents of Italy are required to file a tax declaration if their income exceeds the established threshold or if they receive income from abroad.

Form 730 or Modello Redditi: The main forms for filing a tax declaration. Form 730 is used if you have income from wages or pensions and the tax is already withheld by the employer; Modello Redditi is used for declaring income from business, rental, investments, and income from abroad.

Deadlines for Submission: The tax declaration is usually submitted by September 30 if using Form 730, and by November 30 if using Modello Redditi.

Submission Procedure: The process of submitting a tax declaration can be done online through the Agenzia delle Entrate portal or through authorized tax services.

Tax Deductions: In Italy, there are various tax deductions and credits, such as expenses for medical care, education, mortgage interest, and charitable donations. These deductions can significantly reduce the tax amount.

Taxes on Property and Other Assets

Foreigners owning property or other assets in Italy must also declare them on their tax returns.

IMU: This is a property tax paid by all property owners in Italy. The tax rate depends on the property's value and location.

IVAFE and IVIE: These taxes apply to financial assets and property located outside Italy but owned by the country's tax residents.

It is recommended to consult a tax advisor to avoid errors and ensure compliance with Italian tax laws.

In Italy, there are special rules and benefits for self-employed individuals and freelancers that can significantly ease the life of those working for themselves.

 

Basic Rules and Tax Regimes

To start, all self-employed individuals and freelancers in Italy must register and obtain a tax number. This number is necessary to legally conduct their activities and pay taxes.

 

There are two main tax regimes for self-employed individuals and freelancers:

 

1. Ordinary Tax System: This is the standard regime where taxes are calculated based on a progressive tax scale (from 23% to 43% depending on income). In this regime, you can deduct business expenses such as office rent, utilities, and other expenses.

 

2. Regime Forfettario (Flat Rate Regime): This simplified regime is suitable for small businesses and freelancers with low incomes. In the first five years, the tax rate is only 5%, then it increases to 15%. However, in this regime, you cannot deduct expenses, and there are certain limits on maximum income—it must not exceed €85,000 per year.

 

Benefits and Special Conditions

- Regime Lavoratori Impatriati: This program allows new residents in Italy (including the self-employed) to pay taxes only on 30% of their income for the first five years. In some regions of Italy, this rate can be reduced to 10%.

 

- Reduction of Social Contributions: Under the Regime Forfettario, freelancers can receive a 35% discount on minimum social contributions, making this regime particularly attractive for those just starting their activities.

 

- No taxes with no income: If in a given month you had no income, you are not obliged to pay tax. This is particularly important for freelancers whose income might be unstable.

 

These rules and incentives make Italy an attractive place for freelancers and the self-employed, but it's important to consider all details and consult with an accountant or financial advisor to correctly choose a tax regime and avoid errors in reporting.