IVAFE and IVIE: A Complete Guide to Taxes on Financial Activities and Real Estate Abroad

Anyone who lives in Italy and owns an apartment in Panama, a bank account in Switzerland, or even just a deposit on Wise must contend with two often confusing property taxes: IVAFE and IVIE. The former applies to financial assets held outside of Italy (accounts, shares, funds, bonds, policies), while the latter affects real estate abroad. Both were introduced with the Monti budget of 2011—Article 19 of Legislative Decree 201/2011, converted into Law 214/2011—and have since undergone several revisions. The latest, far from negligible, came with the 2024 Budget Law (Law 213/2023), which increased the IVIE rate from 0.76% to 1.06% and doubled the IVAFE for those holding financial products in tax havens. The Sanctions Decree (Legislative Decree 87/2024) has reduced the penalty for those who fail to pay on time from 30% to 25%. These are declared in Section RW of the Personal Income Tax Form—or, starting in 2024, in Section W of the 730 Form, a new regulation that has simplified the lives of many employees. And most importantly: the obligation ends when tax residency is actually transferred abroad.

In our practice in Panama, we receive questions about these two taxes almost every week. How much IVIE do I pay on the apartment I bought in Panama City? Does my Panamanian bank account need to be declared? What happens if I move? This guide covers everything: taxable bases, updated rates for 2026, tax credits for taxes already paid abroad, F24 tax codes, deadlines, methods for calculating the advance payment, penalties (including those specific to the RW Form), voluntary disclosure with legal interest at 1.60%, and, of course, concrete calculation examples for those who own property in Panama, a Panamanian bank account , or a share in a Panamanian joint stock company.

IVIE and IVAFE compared

Before going into detail, it's worth clarifying the overall picture. The two taxes share the same legislative origin and the same reporting mechanism (RW Form), but they function quite differently.

IVIE: Tax on the Value of Real Estate Located Abroad

Who must pay the IVIE?

The scope of those subject to the tax is broad. All individuals residing in Italy who own property abroad pay IVIE—not only through full ownership, but also through usufruct, use, habitation, emphyteusis, or surface leases. The same rule applies to simple partnerships, non-commercial entities, and trusts with Italian tax residence. It makes no difference whether the property is a vacation home, a leased investment, or a vacant commercial space. IVIE is payable regardless. The same logic applies to properties inherited, received as a gift, or purchased through leasing: in the latter case, the lessee is the taxable person for the entire duration of the lease. Who owns a joint share of a property? They declare and pay in proportion to their share.

IVIE taxable base

Here things get a little more complicated, because the rules change depending on where the property is located.

If the property is in an EU or EEA country (with appropriate information exchange—including Norway and Iceland), the basis for calculating the IVIE is the cadastral value used by that country for its property or income taxes. Circular No. 28/E/2012 of the Italian Revenue Agency lists the applicable tax for each country. If a cadastral value does not exist, the basis is the purchase price or, ultimately, the market value.

For non-EU properties —which includes Panama, the USA, Switzerland, the UK (post-Brexit), Ecuador, Mexico, and the rest of Latin America—the starting point is the purchase price indicated in the deed. If the property was built directly by the owner, the total construction cost is taken into account. Only when any documentation is missing is the market value used.

IVIE rates and exemptions

Thestandard rate is 1.06%, effective from the 2024 tax period after the increase introduced by the 2024 Budget Law (Law 213/2023, art. 1, paragraph 91). Previously, it was 0.76%. The tax is calculated in proportion to the share of ownership and the months of the year during which the property was owned—a full month is counted if ownership lasted at least 15 days.

There's one point, however, that few sites mention: the primary, non-luxury residence is completely exempt. If an Italian living and working abroad (without having changed their tax residency) permanently resides in a foreign property that doesn't fall into categories A/1, A/8, or A/9, they don't have to pay anything. The exemption, in effect since 2016, also covers the marital home assigned after a separation.

For luxury primary residences (A/1, A/8, A/9), the rate drops to 0.4% and a deduction of 200 euros is applicable, to be calculated on the basis of the months of use as a habitual residence and divided among the co-owners.

Finally, the €200 exemption threshold. If the tax calculated on the entire value of the property—before applying any pro-rata for each share or months of ownership, and before the tax credit—does not exceed €200, no tax is paid. Let's take a quick example: a plot of land abroad worth €18,000 generates an IVIE of €190.80 (18,000 × 1.06%). This is below the threshold: no tax is due, regardless of the share owned.

Tax credit for taxes paid abroad

If a property tax has already been paid in the foreign country where the property is located, that cost is deductible from the Italian IVIE—but only up to the amount due in Italy. For properties in EU/EEA countries, there is an additional advantage: the income taxes levied on the property can also be deducted, provided they have not already been discounted with the credit pursuant to Article 165 of the TUIR. For properties outside the EU—including Panama—the credit covers only the property tax, like the Panamanian Impuesto de Inmueble.

IVAFE: Tax on the Value of Financial Assets Held Abroad

Who must pay IVAFE?

The same categories of individuals required for IVIE pay IVAFE: individuals, partnerships, non-profit entities, and trusts resident in Italy. The determining factor is whether they hold—directly or indirectly—financial products, current accounts, or savings accounts with non-Italian intermediaries. Starting in 2020, the obligation also extends to those working abroad for the Italian government or international organizations.

Activities subject to IVAFE

The list is long, and it's worth reading carefully because it also includes instruments that many don't consider "foreign." IVAFE covers: current accounts and savings books outside Italy (including Wise, Revolut, N26, PayPal, Payoneer, as well as, of course, bank accounts in Panama, the USA, Switzerland, or Singapore), holdings in non-resident companies—listed or unlisted—, foreign bonds and debt securities, government securities of other countries, shares in non-harmonized funds and ETFs, life insurance policies with foreign companies, derivatives traded outside Italy, stock options on foreign shares, loans to non-residents, and even precious metals in their raw or minted state. Cryptocurrencies deserve a separate chapter: starting in 2023, they have their own tax (the IVCA, with a rate of 2‰) and are no longer subject to IVAFE. However, they must still be declared in the RW section.

IVAFE rates

For financial products, is applied 0.2% tax rate to the market value as of December 31st—or the date of termination of ownership, if the asset was sold before the end of the year. There is one important exception: for those holding financial products in countries with preferential tax regimes (the list in the Ministerial Decree of May 4, 1999, periodically updated), the rate doubles to 0.4% (0.4%). To put the evolution into perspective: it was 0.1% in 2011-2012, 0.15% in 2013, and 0.2% since 2014. The doubling of the rate for tax havens is a new addition to the 2024 Budget Law.

For current accounts and savings accounts, the logic is different. A proportional rate is not applied, but a flat tax: €34.20 per account (individuals) or €100 (institutions and trusts). The tax is only due if the average annual balance—calculated by adding the daily balances and dividing by 365—exceeds €5,000 with the same intermediary. Below this threshold, there is no IVAFE (VAT). Be careful with joint accounts: the balance is divided pro rata among the joint account holders.

Unlike the IVIE (which has a €200 threshold), there is no minimum exemption for the IVAFE on financial products. Even a few euros of tax must be paid.

Tax credit for foreign property taxes

If an equivalent wealth tax (stamp duty, deposit tax) is paid in the country where the financial assets are held, that amount is deductible from the Italian IVAFE, up to the limit. In Panama, however, there are no such taxes on bank deposits: the tax credit is therefore zero for Panamanian accounts.

Connection with Quadro RW and Quadro W

Both taxes are calculated and declared in Section RW of the Personal Income Tax Form. However, for several years now, those filing the 730 form are no longer required to also complete the Personal Income Tax Form just to declare foreign assets: starting with the 2024 tax period, Section W of the 730 form allows for both tax monitoring and the calculation of IVIE and IVAFE (a new feature introduced by Legislative Decree 1/2024). Section RW retains its dual purpose: on the one hand, it serves to track capital abroad (monitoring obligation), on the other, it is the basis for calculating wealth taxes. The monitoring obligation is triggered when the total value of foreign assets exceeds €15,000 annually, but Section RW must be completed even below this threshold if IVIE or IVAFE are due. The advance payment is due when the amount in lines RW7 (IVIE) or RW6 (IVAFE) exceeds 51.65 euros.

F24 tax codes

IVIE: 4041 (balance), 4044 (first installment advance payment or lump sum), 4045 (second installment advance payment or lump sum). For those who must pay with voluntary disclosure: 8942 (penalties), 1942 (interest).

IVAFE: 4043 (balance), 4047 (first installment advance payment or lump sum), 4048 (second installment advance payment or lump sum). For voluntary disclosure: 8943 (penalties), 1943 (interest).

Payment deadlines and advance payment calculation

The deadlines mirror those for personal income tax (IRPEF). The balance and the first advance payment are due by June 30, 2026 (or by July 30, with a 0.40% surcharge). The second advance payment is due by November 30, 2026. The advance payment is due only if the previous year's tax exceeds €51.65, and is equal to 100% of that amount.

There are two ways to calculate it. The historical method, which is the most common, takes 100% of the previous year's tax and divides it into two installments: 40% at the first due date and 60% at the second. If the total amount is less than €257.52, it is paid in one lump sum in November.

The forecast method is more flexible: it estimates the tax you'll actually have to pay for the current year and calculates the advance payment based on that amount. It's useful when you've sold a foreign property or closed an account—in practice, whenever your taxable income is lower than the previous year. Be careful, though: if the forecast is too low, the difference is subject to a penalty for underpayment.

Penalties for failure to pay and for RW form

Penalties for failure to pay or insufficient payment of IVIE and IVAFE

The Sanctions Decree (Legislative Decree 87/2024) has relaxed the penalty framework for violations committed from September 1, 2024, onward. The basic penalty for failure to pay has been reduced from 30% to 25% of the unpaid tax. For late payments within 90 days, the penalty is 12.5% ​​instead of the previous 15%. For violations committed before September 1, 2024, the old penalty rates remain in effect.

Penalties for failure to complete or incorrect completion of the RW form

Anyone who fails to complete the RW Form —or completes it incompletely—risks heavy penalties, which are added to those for any failure to pay the tax. These range from 3% to 15% of the value of undeclared assets if the assets are located in White List countries. For assets located in former tax havens (Black List), the percentages double: from 6% to 30%. These are two separate tracks that run together: the penalty for monitoring and the penalty for failure to pay are cumulative, making late regularization particularly onerous.

IVIE and IVAFE voluntary disclosure

Those who notice their error in time have a way out: voluntary disclosure (Article 13, Legislative Decree 472/1997, amended by the Sanctions Decree). The principle is simple—the sooner you regularize your tax returns, the less you pay—and as of January 1, 2026, the legal interest rate has dropped to 1.60% per year (it was 2% in 2025, as per the Ministerial Decree of December 10, 2025). Tax, reduced penalty, and interest are paid together in a single payment via F24.

For violations starting September 1, 2024 (Legislative Decree 87/2024), the reductions work as follows: within 14 days, 0.083% is paid for each day of delay (rapid repentance); between 15 and 30 days, 1.25%; between 31 and 90 days, 1.39%; within one year or the subsequent tax return, 3.125% (one-eighth of the basic penalty); within two years, 3.57% (one-seventh); and after two years, 4.17% (one-sixth). Repentance is precluded if the violation has already been formally contested or if inspections, audits, or audits have begun of which the taxpayer has been informed.

Regulatory news 2024-2026

How to reset IVIE and IVAFE: transferring your tax residence

This is the point that most concerns our clients, and one we can speak to with full knowledge of the facts. IVIE and IVAFE only apply to tax residents in Italy. When you transfer your residence abroad—with AIRErequirements RW Form and the risk of foreignization for controlled companies also cease.

Reference legislation

Art. 19, paragraphs 13-17, DL 201/2011 (L. 214/2011)

Establishment of the IVIE, taxable persons, taxable base, rates, and tax credit for foreign properties.

Art. 19, paragraphs 18-23, DL 201/2011 (L. 214/2011)

Establishment of the IVAFE (Italian VAT Tax), taxable persons, taxable base, rates, and tax credit for foreign financial activities.

Law 213/2023, art. 1, paragraph 91 (2024 Budget Law)

Increase in the IVIE tax rate from 0.76% to 1.06% and introduction of a strengthened IVAFE rate of 4‰ for tax havens.

Legislative Decree 87/2024 (Sanctions Decree)

Reduction of penalty for failure to pay from 30% to 25% and from 15% to 12.5% ​​within 90 days (from 1 September 2024).

Legislative Decree 1/2024 (Compliance Decree)

Introduction of Section W in Form 730 for the declaration of foreign activities without the obligation to file an Income Tax Form.

Revenue Agency Circular No. 28/E of July 2, 2012

Operational clarifications on IVIE and IVAFE, determining taxable income by country, and a list of deductible foreign taxes.

Art. 4, DL 167/1990 (L. 227/1990)

Obligation to monitor foreign activities for tax purposes (RW Framework).

Art. 165, TUIR (Presidential Decree 917/1986)

Tax credit for income earned abroad.

Art. 13, Legislative Decree 472/1997

Active repentance.

Ministerial Decree 10 December 2025

Legal interest rate of 1.60% per annum from January 1, 2026.

Frequently Asked Questions: IVAFE and IVIE

Also find out how to fill out the RW form, purchase a property in Panama, register with AIRE, avoid foreign investiture, open an account in Panama, and set up a Private Interest Foundation.