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What is an average annual balance and how stamp duty is calculated?

Living in Italy? Discover why your average annual balance matters, and how it impacts your stamp duty tax.

02 February 2022

2 min read

Knowing your average annual balance is an important tool for monitoring your finances. But what is it, how is it calculated, and how does it affect the cost of your stamp duty tax in Italy each year? Let’s find out.

What is stamp duty?

Stamp duty is a tax in Italy which you have to pay if your bank account has an average annual balance of €5,000 or more—including postal and savings accounts. So if your average annual balance is less than €5,000, you don’t have to pay stamp duty tax.

Stamp duty tax applies to bank accounts held by both individuals and legal entities—such as companies, organizations, or businesses with a VAT number. Individuals pay a stamp duty of up to €34.20 per year, which is divided and paid throughout the year—depending on how often you receive your account balance statement. Most banks in Italy charge the stamp duty from your bank account, and then forward the money to the tax authorities.

What is an average annual balance and how is it calculated?

To put it plainly, your average annual balance is the average amount of money you had in your bank account over a 365-day period, after withdrawals and payments. Looking at someone’s average annual balance—rather than the initial and final amount they had in their bank account in a year—is generally considered a more reliable benchmark for tax-evasion checks carried out by the tax office.

To calculate the average annual balance of a bank account, you must first add up all daily account balances for the year. Then, you divide the total amount by 365 to get the average—regardless of how many days you actually used your bank account. Usually, you can request this calculation directly from your bank. If you have an N26 account, find out how to request your annual account balance here.

Why do I need to know my average annual balance?

In Italy, it’s important to know your average annual balance in order to fill out your Single Self-Declaration tax form (Dichiarazione Sostitutiva Unica) and your Equivalent Economic Situation Indicator (ISEE) form. The ISEE form is particularly useful for accessing student scholarships or government bonuses such as discounts on utilities, based on your income level. You can declare the average annual balance of your bank account in the FC.2 section of the ISEE form, under “bank and postal accounts and deposits.”