Banking, Money and Taxes in Italy
Modern banking traces its origins to the Renaissance in Italy. In fact, Banca Monte dei Paschi di Siena, the third largest bank in Italy, is the oldest surviving bank in the world and has been open since 1472.
Italy was heavily affected by the global financial crisis and this included banks. Although the country is still dealing with the effects of the crisis, the Italian banking sector is modern and efficient.
Expats will usually have to pay social security contributions and income tax in Italy as well, both of which are collected by the Italian Revenue Agency.
With a bit of research, patience and perhaps translation, expats should have no problem navigating the systems of banking and taxation in Italy.
Money in Italy
The official currency of Italy is the Euro (EUR) which is divided into 100 cents, which are also known as centimes or centesimi.
Notes: 5, 10, 20, 50, 100, 200 and 500 EUR
Coins: 1 and 2 EUR, and 1, 2, 5, 10, 20 and 50 cents
Banking in Italy
The major banks are located in and around big cities, with local branches dispersed throughout the country. The better-known banks in Italy are the Banca Nazionale del Lavoro, Cassa di Risparmio, Banca Intesa, Unicredit, Banca Monte dei Paschi di Siena and Banco di Napoli.
Banking hours are generally between 8am and 1.30pm from Monday to Friday, depending on the bank. Some banks are open for another hour in the afternoon.
Italian banks are notorious for having high interest-rate charges, so expats are advised to shop around before signing any contracts or taking out any loans.
Opening a bank account
Expats are allowed to open a bank account in Italy regardless of their citizenship. Non-resident accounts (conto corrente non residenti) are popular with expats since they usually pay interest and are not subject to local interest taxes.
The best way for expats to open a non-resident account is to go to a bank in person with their passport and codice fiscale (tax code). Applicants will have to provide personal information and fill out application forms. These are normally in Italian, however, so it may be a good idea to bring a fluent friend along.
Different banks will have different procedures, and some will be more familiar with working with foreign clientele than others. As a result, expats are advised to compare the packages and requirements on offer at different banks.
ATMs and credit cards in Italy
ATMs in Italy are known to locals as bancomat. They are widely available in cities and towns, and expats will be able to choose their preferred language at the beginning of the transaction.
As is the case in many other places, larger stores usually accept debit and credit cards in Italy. This can often be checked by credit card logos displayed on windows and at till points. The most common card companies in Italy are CartaSi, VISA and MasterCard. Diners Club and American Express are also available.
Expats should be aware that international accounts often have hefty transaction fees, especially when it comes to drawing money from a credit card.
Card cloning does occasionally occur in Italy, so expats should be vigilant when paying with credit cards or drawing money from an ATM.
Taxes in Italy
Taxes in Italy are collected by the Italian Agency of Revenue (Agenzia delle Entrate) which has offices at national, regional and provincial levels.
Expats working in Italy will require a tax code number (codice fiscale) which is needed for most paperwork, such as opening a bank account, signing official contracts and starting a new job. To get one, an expat would need to take their passport to a provincial tax office (ufficio imposte) and apply for one.
Income tax in Italy is progressive, which means that the more an expat earns, the more tax they may be subject to. Expats who are subject to taxation in Italy will have to pay direct tax to the central agency of revenue as well as local taxes which are paid at the regional level.
Foreign residents who live in Italy for more than 183 days a year are only required to pay tax on income they earn in the country, whereas permanent residents are expected to pay tax on income derived locally as well as internationally.
Italy has, however, entered into double-taxation avoidance agreements with a number of countries to ensure that foreign citizens are not taxed on their income twice.
Given the complexity of dealing with tax, especially in a different language, expats are advised to seek professional advice to navigate the system of taxation in Italy.