At least 12 people are reported to have died in the overnight siege at the Palace Park Hotel, which had between 80 to 100 people inside waiting to see a concert by a well-known Afghan singer, Altaf Hussain.
Sandro Abati, a 48-year-old from the Lombardy city of Bergamo, was staying at the hotel with his girlfriend, Aigerim Abdulayeva, 27, from Kazakhstan, who was also killed, La Repubblica reported.
The couple lived in Astana and had planned to marry this summer.
“I express condolences from the government to the family of Sandro Abati, from Lombardy, who was killed in a terrorist attack at the guesthouse in Kabul housing foreigners,” Italy's Foreign Minister Paolo Gentiloni said.
Four Indians and an American were also among the dead after gunmen stormed the downtown Kabul guesthouse, trapping dozens of people and triggering an hours-long standoff with Afghan security forces, officials said on Thursday.
The Taliban claimed responsibility for the seven-hour assault, which triggered explosions and bursts of gunfire. It comes as Afghan forces face their first fighting season against the insurgents without the full support of US-led foreign combat troops.
Kabul police chief Abdul Rahman Rahimi earlier said five people including foreigners and Afghans were killed in the attack, and at least five others wounded, but deaths confirmed by foreign governments saw the toll rise above that figure.
"Fifty-four people were rescued by security forces," Rahimi added after a large number of armed personnel swooped on the guesthouse, located in an up-market district and popular with international aid agency workers.
The militants have staged a string of attacks on compounds, restaurants and guesthouses frequented by foreigners, including two separate assaults in Kabul last November, one of which left a South African man and his two teenage children dead.
They also launched a major attack on a compound of the International Organization for Migration in 2013.
Their targets last year included the capital's most prestigious hotel, the Serena. In March 2014, four gunmen evaded security checks and opened fire there, leaving nine people dead including AFP reporter Sardar Ahmad, his wife and two of their children.
Afghan forces are now solely responsible for security in the volatile country, after Nato's combat mission formally ended in December with a small follow-up force staying on to train and support local personnel.