There are circumstances when a simple grazie (thanks) is just not enough!
Maybe you were asking for directions to an Italian man who didn't speak English but went out of his way to help and simply took you there; maybe you realised you had forgotten your bag at the restaurant and, as you turned around, saw the waiter running towards you shouting "'Signora! Signora! La borsa!"; or maybe, you had enough of taking selfies and found a sweet Nonna who took that perfect photo of you... and you really want to tell people how much you appreciated their kindness in Italian.
Here are some options:
Lei è molto gentile (formal) - Sei molto gentile (informal) = You are very kind.
Molto gentile da parte sua (formal) - Molto gentile da parte tua (informal) = Very kind of you.
or my favorite one, a simple word: Gentilissimo! (m) or Gentilissima! (f)