Dual citizenship Italy and US: Tax rules, benefits, and requirements
Italy generally permits multiple citizenship under Law 91/1992. US law does not require a person to choose between US citizenship and another nationality, and naturalizing in Italy does not by itself end US citizenship; loss depends on a voluntary expatriating act plus intent to relinquish under its policy on dual nationality.
Italian consulates publish detailed procedures for citizenship by descent, the most common route for Americans of Italian origin.
One caveat matters before any application: Italy enacted a major reform of descent rules through Decree-Law 36/2025 (the “Tajani Decree”), converted into Law 74/2025 and effective May 24, 2025. The reform narrowed jure sanguinis eligibility, and the Italian Constitutional Court upheld the changes in judgment 63/2026.
What does dual citizenship with Italy and the US mean
A person with both passports holds full legal status in each country at the same time, and each country applies its own rules independently. US citizenship in particular triggers a worldwide income filing obligation regardless of where the person lives.
Italian-American dual citizenship is a matter of nationality law, not a tax classification. Whether income is taxable in Italy, in the US, or in both depends on residency rules, source rules, and treaty provisions, none of which turn on which passport the taxpayer carries.
This status affects 4 areas that have nothing to do with tax residency:
- Immigration and right of abode in both countries.
- Travel, including visa-free entry to Italy and the wider Schengen area as an EU citizen.
- Civic rights such as voting in each country.
- Succession and inheritance jurisdiction, which can apply differently to Italian and non-Italian assets.
The tax filing obligations that come with dual citizenship in Italy and the USA are covered in our guide on taxes for dual citizens, and the broader framework for Americans living overseas is explained in US expat taxes.
Italy dual citizenship requirements: who may qualify?
Italy recognizes 4 main paths to citizenship under Law 91/1992 and its amendments. The route a person qualifies under determines both the wait time and the volume of paperwork, with descent claims carrying the heaviest documentation burden after the 2025 reform.
The 4 common routes at a glance: descent is the most document-intensive; marriage and residency-based naturalization run on fixed waiting periods.
| Route | Who qualifies | Documentation focus | Typical authority |
|---|---|---|---|
| Jure sanguinis (descent) | Applicants meeting one of several categories under Law 74/2025, most commonly a parent or grandparent connection | Italian and US vital records, naturalization records, apostilles, certified translations | Consulate of jurisdiction or Italian comune |
| Marriage or civil union | Spouse of an Italian citizen after a 2- or 3-year waiting period (reduced if children) | Marriage certificate, residence proof, B1 language certification | Ministry of the Interior |
| Residency or naturalization | Non-EU adults after 10 years of legal residence in Italy (shorter for EU citizens and certain categories) | Residence permits, tax records, B1 language certification | Ministry of the Interior |
| Special cases | Recognition for stateless persons, former Italian citizens, and certain historical re-acquisitions | Case-specific | Consulate or comune |
Law 74/2025 changed the descent route most. Eligibility is generally capped at the grandparent generation. A born-abroad applicant must fit one of the statutory categories, such as having a parent or grandparent who held only Italian citizenship, being born in Italy to an Italian parent, or having a parent who lived in Italy for at least two consecutive years after becoming Italian and before the child's birth or adoption.
The Italian Consulate in New York publishes current citizenship requirements and document checklists, though processing rules vary by jurisdiction. Once status is granted, your US filing obligations as an Italian resident are explained in our guide on US tax preparation in Italy.
Benefits of dual citizenship in Italy
The largest advantage is the right to live and work across all 27 EU member states without a visa, secured by Italian (and therefore EU) citizenship. The remaining benefits cover consular protection, easier residence, family mobility, and succession planning.
Italian citizenship gives a US citizen 5 concrete advantages:
- EU-wide right to live, work, and study under the rights of EU citizens to live in another EU country.
- Consular protection from Italian missions in countries where the US has no presence.
- No visa renewals or residence-permit deadlines when living in Italy.
- Family mobility for non-EU spouses and minor children under EU free-movement rules.
- Simplified succession and property ownership in Italy, which often matters for clients planning real estate or inheritance in the country.
One caveat is unavoidable: none of these benefits change US filing obligations. An American who acquires Italian nationality remains a US person for tax purposes and must continue to file US returns and information reports. The full scope of what that means is covered in our guide on US citizens living abroad.
Does Italian dual citizenship make you pay taxes in Italy?
Not automatically. Italy taxes individuals based on residency, not nationality: residents are taxed on worldwide income, and nonresidents are taxed only on Italian-source income. An Italian passport on its own does not make a person an Italian tax resident.
The Agenzia delle Entrate sets out the relevant tests on its page covering residence for tax purposes. In practice, the interaction between dual citizenship and Italian taxes turns on 3 factors:
- How many days the person spends physically in Italy in the tax year.
- Whether the person is registered with an Italian comune or maintains a domicile (center of personal and family life) in Italy.
- Whether the income has an Italian source, such as Italian property, Italian employment, or Italian-paying clients.
Someone who never moves to Italy and earns no Italian-source income generally has no Italian filing obligation, even with an Italian passport.
The analysis flips the moment any of those factors is present, which is why holding dual citizenship in Italy without careful residency planning can create unexpected exposure.
Italy tax residency rules for dual citizens
Italy treats a person as a tax resident if, for more than 183 days in a calendar year, any one of several connection tests is met. The rules were rewritten by Legislative Decree 209/2023, which took effect on January 1, 2024, and the Agenzia delle Entrate explained the changes in Circolare 20/E of November 4, 2024.
A person becomes an Italian tax resident in a given year if any 1 of these 4 conditions is met for more than 183 days:
- Physical presence in Italy, a new standalone trigger after the 2024 reform.
- Residence (residenza) in Italy under the Civil Code.
- Domicile in Italy, redefined as the center of personal and family interests.
- Registration with the Italian resident population register (Anagrafe).
The 2024 reform shifted the analysis in two practical ways. Physical presence alone can now establish residency, even without registration. AIRE registration (the registry of Italians abroad) is no longer treated as conclusive proof of non-residency; substance overrides registry status.
For the US-side counterpart used to claim the Foreign Earned Income Exclusion, see the physical presence test.
US tax rules for US–Italy dual citizenship
The US taxes its citizens on worldwide income regardless of where they live.
A US citizen who lives in Milan is still taxed on worldwide income, but whether they must file Form 1040 depends on their filing status, age, and gross income. Italian salary, Italian rental income, Italian investment income, and any other worldwide income are reportable on that return. The same rule applies to green card holders under IRC §7701(b).
For tax year 2025, many taxpayers under 65 must file at $15,750 if single, $31,500 if married filing jointly, and $5 if married filing separately; the actual requirement depends on filing status, age, self-employment income, and other rules per IRS Publication 54.
Self-employment net income of $400 or more generally requires a return regardless of the gross-income threshold.
A typical year for someone with dual citizenship between the USA and Italy involves 4 US filings:
- Form 1040 reporting worldwide income.
- FBAR (FinCEN Form 114) if the aggregate value of foreign financial accounts exceeds $10,000 at any point in the year.
- Form 8938 if foreign financial assets exceed the FATCA thresholds for taxpayers abroad ($200,000 end of year / $300,000 anytime for single filers; doubled for joint filers).
- Form 2555 or Form 1116 to claim relief from double taxation.
This obligation follows from citizenship-based taxation – the US taxes based on passport, not address, and our guide explains how that system works for Americans abroad.
Do US–Italian dual citizens pay taxes twice?
In most cases, no. Three mechanisms reduce or eliminate the overlap for dual citizenship in the US and Italy: the Foreign Tax Credit, the Foreign Earned Income Exclusion, and provisions of the US–Italy tax treaty. Italy is generally a higher-tax jurisdiction than the US for wages, which means the Foreign Tax Credit usually wipes out US tax on Italian-taxed income.
For a dual citizen earning Italian-taxed wages, the Foreign Tax Credit typically eliminates US tax entirely; the FEIE is more useful for self-employment income or low-tax fact patterns; treaty relief covers specific income types not handled by the first two.
| Mechanism | Form | What it covers | Best for |
|---|---|---|---|
| Foreign Tax Credit | Form 1116 | Dollar-for-dollar credit for foreign income tax paid | High-tax countries like Italy; passive income; carryover of unused credit |
| Foreign Earned Income Exclusion | Form 2555 | Excludes foreign earned income up to $130,000 per qualifying person for tax year 2025 | Lower-tax jurisdictions, self-employment in some cases |
| Treaty relief | Form 8833 disclosure when required | Specific income types (pensions, dependent personal services, students) | Situations the FTC and FEIE do not reach |
The choice between Foreign Tax Credit and Foreign Earned Income Exclusion matters beyond a single year. FEIE excludes income from US tax entirely, which means there is no foreign tax credit carryforward. FTC preserves carryforwards for 10 years and tends to work better for clients whose Italian tax bill exceeds their US tax bill on the same income.
We compare both strategies in detail in our guide on Foreign Tax Credit vs Foreign Earned Income Exclusion.
How the US–Italy tax treaty affects dual citizens
The treaty between the US and Italy (signed in 1999, in force from January 1, 2010) coordinates taxing rights between the two countries. For anyone holding dual citizenship with Italy and the US, the most important provision is the saving clause, which preserves the US right to tax its own citizens as if the treaty did not exist, with limited exceptions.
The treaty changes 4 specific outcomes for dual citizens, even with the saving clause in place:
- The residency tie-breaker decides which country is the taxpayer's treaty residence when both countries claim residency.
- Pensions and social security receive specific sourcing rules that override the general default.
- Withholding on cross-border dividends, interest, and royalties is capped at reduced treaty rates.
- A position that relies on the treaty to reduce US tax generally requires disclosure on Form 8833 under IRC §6114.
The official treaty text and protocols are collected in the IRS Italy tax treaty documents, and the procedural rules for claiming tax treaty benefits are set out separately.
A full walk-through of the treaty's main articles is available in the US–Italy tax treaty guide.
Tax implications by scenario
Italian tax exposure and US filing exposure look very different depending on where the person lives and what they own. The 6 scenarios below cover most fact patterns and summarize the tax implications of dual citizenship in Italy for each.
Italian tax risk rises with physical presence and Italian-source assets; US filing risk stays constant for citizens and green card holders, no matter where they live.
| Scenario | Italian tax risk | US filing risk | Forms to check |
|---|---|---|---|
| American acquires Italian citizenship and stays in the US | None unless Italian-source income arises | Unchanged: full Form 1040 | 1040 |
| Dual citizen moves to Italy mid-year | High once the 183-day threshold is crossed | Full Form 1040 plus FEIE/FTC | 1040, 2555, 1116, FBAR |
| A dual citizen owns Italian real property | IMU and possible rental tax in Italy | Schedule E rental reporting | Schedule E, 1116 |
| A dual citizen works remotely from Italy for a US employer | High if Italian tax resident | Full Form 1040 plus FTC | 1040, 1116, FBAR, possibly 8938 |
| Dual citizen retires in Italy with US Social Security and private pension | Italian taxation of foreign pensions under the treaty | Continued US filing, treaty sourcing | 1040, 1116, Form 8833 if applicable |
| Dual citizen holds Italian mutual funds or brokerage accounts | Italian capital gains and IVAFE | PFIC reporting risk | 8621, 8938, FBAR |
For a full walkthrough of the filing process, see US tax preparation in Italy; if you are still planning the move itself, start with moving to Italy from the USA.
Italian property, bank accounts, and investment reporting
Italian assets create both Italian tax exposure and US reporting obligations, and the two systems operate in parallel. The US side runs on three main reports: FBAR, Form 8938, and Form 8621 for Italian mutual funds or ETFs.
A US person navigating dual citizenship and taxes in Italy typically faces 5 distinct US reporting items:
- FBAR (FinCEN Form 114) for Italian bank and brokerage accounts when the aggregate balance exceeds $10,000 at any time during the year.
- Form 8938 for higher-value foreign financial assets under FATCA.
- Form 8621 for Italian mutual funds, UCITS, and ETFs treated as Passive Foreign Investment Companies.
- Schedule E for rental income from Italian property, with foreign tax claimed on Form 1116.
- Italian property taxes such as IMU and other non-income levies generally are not creditable on Form 1116; the US foreign tax credit usually applies only to qualified foreign income taxes or taxes in lieu of income taxes.
PFIC treatment is the most expensive trap. Under IRC §1297, most Italian-domiciled mutual funds and UCITS are PFICs for US persons, and the default tax regime (Section 1291) applies punitive interest charges on distributions and gains. Many dual citizens hold these funds for years without knowing, often through Italian bank-distributed investment products.
For the purchase process itself – notary fees, imposta di registro, and ongoing Italian property taxes – see buying property in Italy as an American. If retirement is the goal, our retiring in Italy guide covers pension sourcing, healthcare, and the 7% flat-tax regime in full.
Moving to Italy after getting dual citizenship
Tax planning should happen before the move, not after.
The single biggest lever is the 183-day rule: a later move in the calendar year may help keep you under the 183-day physical-presence test, but it does not guarantee nonresidency. Italy now uses four separate residence tests, and fractions of days count toward physical presence.
Run through these 7 items before leaving the US:
- Track entry and exit days from the moment the move is planned, with a contemporaneous log.
- Decide on AIRE registration timing, knowing it no longer controls residency on its own.
- Review income sources as a US citizen living abroad for treaty sourcing and FTC/FEIE strategy.
- Choose between Foreign Tax Credit and Foreign Earned Income Exclusion for the first Italian year, and project the next 3 years.
- Check pension, IRA, and 401(k) treatment under the US–Italy treaty before drawing.
- Audit Italian and US brokerage accounts for PFIC exposure and US-broker restrictions on non-resident clients.
- Obtain an Italian codice fiscale (tax ID) through the local consulate or Agenzia delle Entrate once the move is committed.
Once the move is committed, apply for an Italian tax identification number through the local consulate or Agenzia delle Entrate. Your US filing obligations continue in parallel under the rules in IRS Publication 54, including worldwide income reporting.
Common tax mistakes US–Italian dual citizens make
The most expensive mistakes are quiet ones: missed FBARs and undeclared PFICs that accumulate year after year before anyone notices. Non-willful FBAR penalties run up to $16,536 per report under 31 CFR §1010.821 (as adjusted for inflation), and after the 2023 Supreme Court decision in Bittner v. United States, the cap applies per report rather than per account.
Six mistakes come up repeatedly for dual citizenship US-Italy nationals:
- Assuming an Italian passport cancels US filing obligations. It does not, under IRC §1.
- Assuming Italian residency registration means there is no US tax. The US continues to tax citizens on worldwide income.
- Ignoring FBAR and Form 8938 for Italian accounts.
- Holding Italian mutual funds, UCITS, or ETFs without a PFIC analysis under IRC §1297.
- Claiming a treaty position without filing Form 8833 when IRC §6114 requires disclosure.
- Moving to Italy mid-year without planning the day count, then discovering the entire year is treated as an Italian resident.
Filing late – or not filing at all – can trigger failure-to-file penalties, failure-to-pay penalties, and compounding interest, all of which we break down in penalties for not filing an expat tax return.
What to do if you are behind on US taxes
The IRS has a documented catch-up path for non-willful taxpayers living abroad: the Streamlined Foreign Offshore Procedures. Qualifying taxpayers file 3 years of late or amended returns plus 6 years of delinquent FBARs, certify non-willful conduct on Form 14653, and owe no failure-to-file, failure-to-pay, accuracy, or FBAR penalties.
Three IRS-documented paths are available depending on what is missing:
- Streamlined Filing Compliance Procedures for taxpayers with unreported foreign income, including the Streamlined Foreign Offshore version for those who meet the 330-day non-residency test.
- Delinquent FBAR Submission Procedures when only FBARs are missing, and there is no underlying US tax owed on the account income.
- Delinquent International Information Return Submission Procedures when only information returns like Form 8938 or Form 5471 are missing.
The process involves certifying non-willfulness, preparing amended returns, and filing up to six years of FBARs – all covered step by step in our Streamlined Filing Compliance Procedures guide.
FAQ
Yes. Italy generally permits multiple citizenship under Law 91/1992, subject to the 2025 reform of citizenship by descent enacted through Decree-Law 36/2025 and Law 74/2025.
Yes, in practical terms. Italy recognizes its citizens regardless of any other nationality they hold, and the United States does not require renunciation of foreign citizenship from its citizens. The result is mutual de facto recognition.
There are 4: descent (jure sanguinis), marriage or civil union, residency-based naturalization (generally 10 years for non-EU citizens), and special-case recognition. Descent is the most documentation-heavy and the most affected by the 2025 reform.
No, in nearly all cases. US law does not require choosing between US citizenship and another nationality; naturalizing in Italy does not by itself end US citizenship. Loss depends on a voluntary expatriating act plus intent to relinquish.
Not by itself. Italy taxes residents on worldwide income and nonresidents only on Italian-source income. The residency test turns on physical presence, registration, residence, and domicile, none of which are decided by passport.
Yes. For 2025, many taxpayers under 65 must file at $15,750 if single, $31,500 if married filing jointly, and $5 if married filing separately. Self-employment income of $400 or more can also trigger filing.
Partially. The treaty coordinates taxing rights and reduces withholding on certain income types, but the saving clause preserves the US right to tax its own citizens as if the treaty did not apply, with narrow exceptions.
Yes, once the aggregate balance of all foreign accounts exceeds $10,000 at any point in the year. The FBAR (FinCEN Form 114) deadline is April 15, with an automatic extension to October 15. Form 8938 may also apply at higher thresholds.
The Streamlined Foreign Offshore Procedures are designed for exactly this situation. Non-willful taxpayers file 3 late or amended returns and 6 years of FBARs with no penalties, provided they meet the 330-day non-residency requirement.
