Italy
Guide to stock options and RSU taxation in Italy. Covers the impatriate regime, employment income treatment, and planning for tech employees.
Italy has a growing tech sector, particularly in Milan and Rome. Equity compensation is taxed as employment income, with special rules for the impatriate regime (regime degli impatriati)—a tax benefit for professionals who move to Italy.
Overview of Italian Tax System
Italy uses a progressive income tax (IRPEF) with regional and municipal surcharges:
| Income Bracket | National Rate | Typical Combined Rate |
|---|---|---|
| Up to €28,000 | 23% | ~24–25% |
| €28,000 – €50,000 | 35% | ~36–38% |
| €50,000 – €75,000 | 43% | ~44–46% |
| Over €75,000 | 43% | ~45–47% |
Regional and municipal taxes add roughly 1.5–3.5%.
The Impatriate Regime
Qualifying professionals who move to Italy can benefit from a 50% exemption on employment income (60% if they have minor children) for up to 5 years, capped at €600,000 per year. Stock options and RSUs exercised or vested while tax-resident in Italy can qualify.
Important: A 2025 ruling clarified that equity paid or exercised after you leave Italy does not qualify—even if it was earned during Italian residency. Plan your relocation and vesting timing carefully.
RSU Taxation
At Vesting
RSUs are taxed as employment income when they vest. The value at vesting is included in your taxable income and subject to IRPEF, regional tax, and social security (INPS).
| Event | Tax Treatment |
|---|---|
| Vesting | Employment income (progressive rates) |
| Social security | INPS contributions apply |
| Impatriate regime | 50% exemption if eligible |
At Sale
Capital gains on the sale of shares are taxed separately. Gains are typically taxed at 26% (including the substitute tax on financial income). Losses can offset gains.
Stock Options
Taxation at Exercise
Stock options are taxed when you exercise—the spread (FMV at exercise minus strike price) is employment income.
| Event | Tax Treatment |
|---|---|
| Grant | No tax |
| Exercise | Employment income on spread |
| Sale | Capital gains (26%) on post-exercise appreciation |
Impatriate Regime and Options
If you exercise while eligible for the impatriate regime, the employment income from the spread can benefit from the 50% exemption (up to the €600,000 cap). Dividends from the resulting shares are investment income and fall outside the regime.
Pro-Rata Taxation for International Employees
If your vesting period spans work in multiple countries, Italian tax may apply only to the portion corresponding to work days in Italy. A 2025 Supreme Court ruling confirmed that stock options are taxed in Italy only for the fraction of vesting days spent working in Italy. This matters if you relocate during a vesting period.
Key Planning Points
- Timing: Exercise or vest while resident in Italy if you want impatriate benefits.
- Relocation: If you leave Italy before vesting, the income may be taxed in your new country—and you lose the impatriate benefit for that portion.
- Documentation: Keep records of work days in each country during vesting periods.
Sources
- Italian Budget Law 2025 (Legge di Bilancio)
- Italian Revenue Agency (Agenzia delle Entrate)
- Supreme Court ruling on pro-rata taxation
Disclaimer: This guide is for educational purposes. Italian tax law is complex and changes. Consult a qualified Italian tax advisor before making decisions.
Last Updated: March 2026 | Research Team: VestingStrategy
Italy Tax FAQ
Get Expert Tax Insights
Weekly strategies for optimizing your equity compensation.