Italian tax monitoring obligations for foreign real estate, investments and financial assets

Prepared by F.D.T. Consulting S.R.L.S.
Updated: 22 September 2026

Subject. This report examines the Italian legal principle under which an individual who is tax resident in Italy may be required to report investments, real estate and financial assets held abroad in the annual Italian tax return. It also explains that these reporting obligations are legally distinct from any exemption that may apply to a specific category of income, including, where the relevant requirements are met, remuneration received in connection with employment at a diplomatic mission.

1. General principle: Italian tax residence and foreign asset monitoring

The principal provision is Article 4(1) of Decree-Law No. 167 of 28 June 1990, converted into Law No. 227 of 4 August 1990. The provision establishes reporting obligations for individuals resident in Italy who, during the tax year, hold investments abroad, foreign financial assets or crypto-assets capable of generating income taxable in Italy. The rules may also apply to the beneficial owner even where the relevant asset is not held directly.

Practical consequence: Italian tax residence is the key subjective condition. Once Italian tax residence has been established, foreign property and financial assets must be reviewed separately to determine whether foreign asset monitoring obligations arise.

2. Form RW and Form W

Under the Italian Revenue Agency instructions applicable to the 2026 filing season, Form RW of the Modello Redditi PF is used by individuals resident in Italy to report foreign investments and foreign financial assets held by way of ownership or another relevant right, subject to the applicable statutory rules and exemptions. The same section is also used for the calculation of IVIE and IVAFE where due.

Individuals filing the Italian Modello 730 may use Form W for the corresponding disclosure of foreign financial and patrimonial assets and for the calculation of the related taxes, where applicable.

3. Real estate located abroad

Real estate situated outside Italy, such as a house or apartment owned in Albania, constitutes a foreign patrimonial asset that must be considered for Italian tax monitoring purposes. The fact that the property is not rented out or does not generate an actual cash income during the year does not, by itself, exclude the reporting obligation.

IVIE. In addition to the monitoring obligation, the possible application of the Italian tax on the value of real estate situated abroad (IVIE) must be examined. IVIE is governed principally by Article 19 of Decree-Law No. 201 of 6 December 2011, as converted into Law No. 214 of 22 December 2011 and subsequently amended.

4. Foreign bank accounts, deposits and financial investments

Foreign bank accounts and deposits, securities, investment funds, ETFs, shareholdings and other financial assets held outside Italy must likewise be reviewed. For foreign bank accounts and deposits, a specific exemption from monitoring may apply where the aggregate maximum value reached during the tax year does not exceed EUR 15,000. This threshold concerns the monitoring requirement; the position must still be examined separately for IVAFE purposes.

IVAFE. Foreign financial products, bank accounts and savings accounts may also fall within the scope of IVAFE, the Italian tax on the value of financial assets held abroad, according to the rules applicable to the relevant type of asset.

5. Independence from any exemption applicable to Embassy remuneration

The tax treatment of employment income must be distinguished from the reporting of foreign assets. Any exemption from Italian income taxation applicable to remuneration received by an employee of an Embassy or other diplomatic mission, where the legal conditions for that exemption are actually satisfied, concerns that specific item of income.

Such an income exemption does not automatically create a general exemption from foreign asset monitoring. Accordingly, where the individual is tax resident in Italy, foreign real estate, bank accounts, investments and other assets must be assessed separately under Article 4 of Decree-Law No. 167/1990.

6. Practical application to an employee of the Albanian Embassy in Italy

Item

Required review

Relevant principle

Italian tax residence

Essential

Determines whether the individual falls within the personal scope of the monitoring rules

House/property in Albania

Yes, if the statutory conditions are met

Foreign asset monitoring; IVIE review

Bank account in Albania

Review balances and maximum value

EUR 15,000 monitoring threshold; separate IVAFE review

Foreign financial investments

Yes

Monitoring and possible IVAFE

Embassy salary

Separate analysis

Any income exemption does not automatically remove foreign asset reporting obligations

Therefore, if an employee of the Albanian Embassy is tax resident in Italy and owns real estate and/or financial assets in Albania, those assets must be assessed for disclosure in Form RW or Form W independently of the tax treatment applicable to the employee's Embassy remuneration.

7. Documentation to be obtained

• evidence relevant to Italian tax residence and, where applicable, diplomatic or consular status;

• purchase deed or other title relating to foreign real estate, ownership percentage and period of ownership;

• the relevant value of the foreign property and evidence of any foreign property taxes paid;

• foreign bank statements showing the year-end balance, average balance and maximum balance/value reached during the year;

• statements and valuations for foreign financial investments;

• evidence of any foreign taxes paid that may be relevant under Italian law.

8. Conclusions

Professional conclusion. For an individual who is tax resident in Italy, the foreign asset monitoring principle contained in Article 4 of Decree-Law No. 167/1990 requires a review and, where applicable, disclosure of investments and patrimonial or financial assets held abroad. Consequently, an exemption from Italian income tax that may apply to salary received from an Embassy is not, by itself, sufficient to exclude reporting obligations relating to foreign real estate, bank accounts or investments. Any IVIE and IVAFE liabilities must also be assessed separately.

The final filing treatment must be determined on the basis of the taxpayer's actual circumstances, including tax residence, legal and beneficial ownership, values, periods of ownership, account balances and any specific statutory exemption.

Main legal and administrative references

• Article 4, Decree-Law No. 167 of 28 June 1990, converted into Law No. 227 of 4 August 1990 - foreign investment and asset reporting.

• Article 19, Decree-Law No. 201 of 6 December 2011, converted into Law No. 214 of 22 December 2011 - IVIE and IVAFE, as subsequently amended.

• Italian Revenue Agency, Modello Redditi Persone Fisiche 2026 instructions - Form RW.

• Italian Revenue Agency, Modello 730/2026 instructions - Form W.

• Official legislation database (Normattiva): www.normattiva.it.

• Italian Revenue Agency - foreign asset monitoring guidance: infoprecompilata.agenziaentrate.gov.it.

F.D.T. CONSULTING S.R.L.S.
Dr Francesco Di Tommaso
Chartered Accountant - Statutory Auditor

Disclaimer: This memorandum is intended as a general professional tax analysis. Application to an individual taxpayer requires verification of the taxpayer's residence, personal status, ownership of the assets, applicable values and supporting documentation.