Italy's flat tax: fixed tax on foreign income for new residents

What Italy's flat tax is in simple terms

Usually an Italian tax resident pays income tax (IRPEF) onall worldwide incomeon the progressive scale - the larger the income, the higher the rate, up to 43% plus regional and municipal surcharges. For a person with large capital abroad this means dividends from a London portfolio, rent from a villa in France, and profit from selling shares somewhere in Singapore - all fall under Italian progression.

Italy's special tax regime for the wealthy changes the logic. Instead of a percentage of foreign income, a person paysone fixed payment a year- and all foreign income is covered by that, however much there is. Legally this is a regime for new tax residents, set out in article 24-bis of the Italian tax code (TUIR). Worldwide it's called the Italian non-dom regime - by analogy with the British system, which Italy largely copied, luring wealthy people to itself.

The logic is simple: the state gets a guaranteed large payment and attracts capital, real estate, and the spending of wealthy families into the country. The person gets predictability - they know their tax burden years ahead of time, with no surprises.

Italy's fixed tax 200,000 - and why it's now 300,000

The payment amount has changed over the years, and it's important not to get confused here - this is exactly where mistakes are most common. In brief, the history looks like this:

• 2017-2024 (before August 10):the rate100,000 eurosa year.
• From August 10, 2024:for everyone transferring residency after this date, the rate has doubled to200,000 eurosa year.
• From January 1, 2026:for those moving now, the rate has been raised to300,000 eurosa year under the 2026 budget law.

The key point is -the grandfather clause(grandfathering). The rate is fixed at the time of your move and holds for the whole term. That is, a person who arranged the regime before August 2024 continues paying 100,000 euros until the end of their 15 years. Someone who moved in 2024-2025 pays 200,000 euros going forward, the increase to 300,000 doesn't concern them. But new applicants from 2026 already enter at the 300,000 euro rate.

So the phrase 'Italy fixed tax 200,000' is still relevant - but specifically for those who managed to transfer residency in the August 2024 - December 2025 window. For those moving now the bar is 300,000 euros. This is the picture for 2026, and the move should be planned from it.

Who it's advantageous for: crunching the numbers

The regime makes sense only with genuinely large foreign income. The logic is arithmetic: the fixed payment is advantageous when it's less than what a person would pay on the regular scale from the same income.

A rough benchmark: at a 300,000 euro rate and an effective burden of roughly 30-40% under the regular system, the regime starts winning roughly from1 million euros of foreign income a yearand above. The larger the income - the more noticeable the benefit, because the payment doesn't grow: whether at 1 million or 10 million of foreign income, the Italian bill is the same.

An example to understand. Say a person has 3 million euros of dividends and capital gains abroad. Under the regular Italian system that's dozens of percent in tax - hundreds of thousands, or even more than a million euros a year. Under the flat tax - 300,000 euros, period. The difference is exactly the point of the regime.

But for a person with foreign income of, say, 200,000 euros a year, the regime isn't advantageous: it's simpler to pay on the regular scale, because the 300,000 euro fixed payment would be more than the real tax. So this is a tool specifically for the wealthy - those whose passive capital works on a large scale.

Conditions: who can enter the regime

The main requirement is beingnewa tax resident. The person must not have been an Italian tax resident for at least9 of the last 10 tax yearsbefore the year in which the regime starts applying. That is, the regime is closed to those who've recently lived in Italy anyway - it's designed to attract capital from outside, not give a benefit to locals.

What's important to consider:

• Citizenship doesn't matter.Both a foreigner and an Italian citizen who's lived abroad for a long time and is returning can enter - as long as the 9-of-10-years rule is met.
• You need to become an Italian tax resident- that is, genuinely move the center of vital interests to the country (usually more than 183 days a year, or the main tie of family and affairs to Italy).
• The regime is arranged through a tax return- an application (option) is filed to apply article 24-bis. A preliminary tax ruling (interpello) can be requested in advance to confirm eligibility.
• The payment is annual.Missing a payment leads to the regime ending early.

Citizenship and tax residency are different things: the flat tax gives a tax benefit, but doesn't itself grant an Italian passport. We write separately about the relationship between statuses in our article ontaxes in Italy.

Family: plus 50,000 euros for each

The regime can be extended to family members. An additional fixed tax is paid for each family member - and its amount has also grown along with the main one:

• before -25,000 eurosa year per family member;
• from January 1, 2026 for new applicants -50,000 eurosa year for each.

Family members are understood broadly - spouse, children, in a number of cases parents and other relatives recognized by the relevant legislation. Each of them likewise covers all their foreign income with this fixed payment.

Let's calculate a family of four moving in 2026: 300,000 euros for the main applicant plus 50,000 each for three relatives - a total of450,000 euros a yearfor the whole family, and all their combined foreign income is covered. For comparison, at the previous rates the same family would have paid 200,000 + 3 x 25,000 = 275,000 euros. The increase is noticeable, and this is one of the reasons some wealthy families compare Italy with alternatives in Greece and Cyprus.

What exactly the flat tax exempts

The fixed payment isn't just about income tax. The regime covers several obligations at once on the foreign part of assets, and this is often underestimated.

What's included in the payment:

• All foreign income- dividends, interest, capital gains, rent from foreign real estate, income from foreign business. All of this is covered by the fixed amount, not recalculated on the regular scale.
• Tax on foreign assets.An Italian resident usually pays taxes on foreign real estate (IVIE) and on foreign financial assets (IVAFE). Under the flat tax regime these taxes on foreign property don't apply.
• Inheritance and gift tax on foreign property.Transferring assets abroad by inheritance or gift during the regime's term isn't subject to Italian inheritance and gift tax.
• Reporting on foreign assets (form RW).The obligation to annually declare foreign assets is mostly lifted (with individual exceptions - for example, reporting is still needed for qualified stakes in foreign companies).

This is what makes the regime attractive not just as a tax tool but also as a tool for confidentiality and simplified reporting for large foreign capital.

An important caveat: Italian income - under regular rules

The flat tax covers onlyforeignincome. Everything earnedinside Italy, is taxed under regular rules - that is, progressive IRPEF.

What this means in practice:

• Salary or fees for work in Italy - regular tax.
• Income from Italian real estate (rent from an apartment in Rome) - regular tax.
• Profit from Italian business or Italian assets - regular tax.

So the regime is a tool for people whose main income is formedoutside Italy: an international portfolio, foreign companies, real estate in various countries. If a person plans to actively earn inside Italy, the benefit is diluted - this part of the income doesn't fall under the fixed payment.

A separate nuance - capital gains from selling qualified foreign stakes in the first years of the regime may be taxed under regular rules. These are technical details worth checking for a specific asset structure together with a tax consultant.

Comparison with the regular IRPEF tax

To understand the scale of the benefit, it's useful to keep the regular Italian scale in mind. From 2026 IRPEF looks like this (for the national portion, excluding regional and municipal surcharges):

On top, a regional surcharge (roughly 0.7-3.3%) and a municipal one (up to 0.9%) are added. That is, on large incomes the effective rate comes close to 44-46%.

Now let's apply this to a person with 2 million euros of foreign income. On the regular scale, the top part of income is taxed at 43% plus surcharges - the bill runs into hundreds of thousands of euros, really closer to 800,000-900,000 euros a year. Under the flat tax - 300,000 euros, and all foreign income is covered. The difference in this example is half a million euros annually. This is exactly why, despite the rate increase, the regime remains competitive for large capital.

Comparison with other countries' regimes

Italy isn't the only European country attracting wealthy people with special tax terms. But the approach differs everywhere, and comparison helps see Italy's place on the map.

• Greece- a similar non-dom regime with a fixed payment of 100,000 euros a year on foreign income plus 20,000 euros per family member; term up to 15 years. Cheaper than the Italian one, but requires investment in the country.
• Cyprus- non-dom status exempts dividends and interest from tax for many years; here it's not a fixed payment, but specifically the absence of tax on certain types of passive income.
• Portugal- the former NHR regime with benefits on foreign income has mostly been wound down for new applicants, a narrower program remains for certain professions.
• UAE- zero personal income tax at all, but that's a different jurisdiction and a different lifestyle.

Italy's strength isn't cheapness, butpackage: status in a large EU and Schengen country, exemption on inheritance and foreign assets, predictability for 15 years, and a lifestyle many value separately from taxes. So the choice usually isn't only about the payment figure.

The flat tax and the residence permit: how they connect

Here it's important to separate two different questions. The flat tax istaxregime. To use it, you need to become an Italian tax resident, and for that - to legally reside in the country, which for non-EU citizens means having a residence permit.

Wealthy people usually enter through one of the paths:

• Investor visa- gives a residence permit for investment in a startup, a company, government bonds, or charity; with no residence requirement at the start. We cover it in detail in our article onItaly's investor visa.
• Residenza Elettiva (residence permit for the financially independent)- for those living on passive income (rent, dividends, pension) with no work in Italy. About this - in the article onresidency for the financially independent.

These statuses arrange legal residence, and the flat tax is then layered on top as a tax tool. On how the permit document itself works, we write in our article onItaly's residence permit. Citizenship, meanwhile, is a separate story, the flat tax doesn't give it.

Russians and CIS citizens: what to consider

For citizens of Russia and other CIS countries the regime is in principle available - citizenship doesn't matter, what matters is the fact of transferring tax residency and the 9-of-10-years rule. But there are nuances worth keeping in mind.

• First, legal residence.Italy's residence permit is needed (through the investor visa or residency for the financially independent) - without a legal basis for residing, tax residency can't be arranged.
• Enhanced compliance.Banks and tax authorities check the origin of funds especially thoroughly. Everything is strictly within EU law, with no circumvention of sanctions - documentary proof of the source of capital is mandatory.
• A second citizenship and residency are different things.You can become an Italian tax resident without renouncing Russian citizenship; Russia allows a second citizenship with notification to the Ministry of Internal Affairs (roughly within 60 days).
• Exiting tax residency in the former countryneeds to be arranged correctly so as not to end up a resident of two states at once. The rules of double taxation avoidance agreements apply here.

This is an area where mistakes are costly, so it makes sense to build the structure of the move and assets in advance and under specialists' supervision.

Pitfalls and what to look at

The regime looks elegant, but there are details that turn it from a benefit into extra expenses if not accounted for in advance.

• A genuine move.Tax residency isn't a stamp, it's a fact. The center of vital interests must genuinely move to Italy, otherwise the regime will be contested.
• Minimum income threshold.Below roughly a million euros of foreign income a year at the 300,000 euro rate, the regime is usually not advantageous - the regular scale is simpler.
• Term and irreversibility.The regime applies for up to 15 years and isn't extended. After it ends, the person returns to regular taxation of worldwide income.
• Italian income isn't covered.If active earning inside the country is planned, the benefit is diluted.
• Payment discipline.Missing the annual payment ends the regime - and you can't return to it later.

Separately, it's worth calculating inheritance planning in advance: the exemption on foreign property applies during the regime, and it's sensible to build the asset transfer structure specifically in this window.

How to arrange it: the procedure

The path to the regime consists of several steps, and the tax part is the final one, not the first.

1. Structuring assets.First, an audit of foreign income and property - to understand whether the regime is advantageous specifically in your case, and how best to structure asset ownership.
2. The basis for residing.Arranging the visa and residence permit - the investor visa or residency for the financially independent, depending on the situation.
3. Transferring tax residency.A genuine move of the center of vital interests to Italy within the tax year.
4. Applying for the regime.Filing the option to apply article 24-bis in the tax return; if desired - a preliminary request to the tax authority (interpello) to confirm eligibility.
5. An annual payment.Paying the fixed amount every year by the set deadline - and filing a simplified return.

Most mistakes happen at the junction of statuses - when the tax part starts being arranged before the legal basis for residing is built, or when the move turns out to be only on paper. So it's important to go through the steps in the right order.

Bottom line: who Italy's flat tax is the right choice for

Italy's flat tax is a tool for wealthy people with large foreign income who want to live in a large EU country with a predictable tax burden. It covers all foreign income with one fixed payment, removes tax on foreign assets and inheritance on foreign property, and simplifies reporting - for a term of up to 15 years.

In short, who this suits:

• foreign income from1 million euros a yearand above - then the savings are real;
• the main capital and income are formedoutside Italy;
• there's a desire for life in Italy, not just tax optimization;
• predictability and simplified reporting on foreign assets matter.

If foreign income is modest, or the main earnings are planned inside Italy - the regime most likely won't pay off, and it's more logical to look at the regular system or other countries. The decision is always individual and calculated for a specific asset portfolio. You can learn more about the relocation program itself on the pageItaly's residency through investment.

Calculate the regime's benefit for your capital

Expert comment

Below is a practitioner's view on how wealthy families should approach the Italian regime in the realities of 2026.