The Italian Embassy of the Vatican is located in Italy itself.
Vatican City’s Italian Embassy is unique because it’s located in the territory of its own country. This is due to the fact that the Vatican’s territory doesn’t allow for the placement foreign representatives. That’s why Italy and the Vatican have set a bunch of agreements, according to which, all embassies accredited to the Holy See are located in Rome.
Give them a round of applause everyone, you made this happen!