Italy’s flat tax for new residents now costs €300,000 per year. The increase took effect on January 1, 2026 and applies to anyone electing the regime from that date, with the annual charge for each family member doubling to €50,000. Anyone who opted in earlier keeps the rate they originally elected. This guide explains how the Italy flat tax works in 2026, who qualifies, and what the €300,000 covers. It also shows how to judge whether the regime still makes financial sense at the new price.
At a glance
- The flat tax is €300,000 per year on all foreign income for elections made from January 1, 2026
- Each family member who joins the regime pays €50,000 per year, doubled from €25,000
- Existing participants are grandfathered at the rate in force when they opted in, €100,000 or €200,000
- The regime lasts up to 15 years and sits in Article 24-bis of the Italian Tax Code (TUIR)
- Italian-source income remains taxed at ordinary IRPEF rates
- Eligibility requires non-residence in Italy for at least 9 of the previous 10 tax years
What is Italy’s flat tax for new residents?
Italy’s flat tax for new residents is an optional regime that replaces ordinary Italian income tax on foreign income with a single fixed annual payment. It sits in Article 24-bis of the Italian Tax Code (TUIR) and was introduced by the 2017 Budget Law to attract internationally mobile wealth to Italy.
The mechanics are simple. An individual who transfers tax residence to Italy can elect to pay one flat annual sum in place of Italy’s progressive income tax on everything earned outside the country. Whether that foreign income totals €1 million or €50 million in a given year, the charge is the same. Income earned inside Italy stays outside the regime and is taxed at ordinary rates.
The regime is often described as Italy’s answer to the historic non-dom arrangements of the United Kingdom and Switzerland. The UK closed its version in April 2025, and Portugal has narrowed its own incentive. That leaves Italy’s program as one of the few fixed-cost regimes of its kind in Europe.
How much does the Italy flat tax cost in 2026?
From January 1, 2026, the flat tax costs €300,000 per year for the principal taxpayer and €50,000 per year for each family member who joins the regime. The increase was set by the 2026 Budget Law and applies only to new elections made from that date.
The price has moved twice since launch:
| Election made | Annual charge | Per family member |
|---|---|---|
| 2017 to August 9, 2024 | €100,000 | €25,000 |
| August 10, 2024 to December 31, 2025 | €200,000 | €25,000 |
| From January 1, 2026 | €300,000 | €50,000 |
The tax is paid in a single annual installment by the end of June. Missing that payment causes the regime to lapse, and once lapsed it cannot be reinstated, so the payment deadline deserves the same attention as the election itself.
Who keeps the €200,000 rate?
Anyone who elected the regime before January 1, 2026 keeps the rate that was in force when they opted in, for the full duration of their 15-year window. The increases are not retroactive. A taxpayer who established Italian tax residence in 2025 and elected the regime pays €200,000 per year going forward, and someone who joined in 2019 still pays €100,000.
The grandfathering record matters beyond the individuals it protects. Italy has raised the price twice and left every existing arrangement untouched. Rules can change for future applicants; so far, they have never changed for anyone already inside.
The dividing line is the tax year in which residence transferred and the election was made, which can be a fine judgment for families who moved partway through a year. Anyone in that position should take specialist advice before assuming which rate applies.
Who qualifies for the flat tax regime?
Two conditions apply. The individual must transfer their tax residence to Italy. They must also have been non-resident for at least 9 of the 10 tax years before the regime takes effect.
Nationality is irrelevant. The regime is open to foreign citizens and to Italians returning after a long period abroad, provided the 9-of-10 test is met. Tax residence itself follows the standard Italian rules: registration with the resident population registry, or domicile or habitual abode in Italy for the greater part of the year.
The election is made in the income tax return for the year in which residence transfers, or in the following year. A binding advance ruling from the <a href=”https://www.agenziaentrate.gov.it/portale/web/english/nse/individuals/taxregime-newresidents-individuals” target=”_blank” rel=”noopener noreferrer”>Agenzia delle Entrate</a> is optional. For anything other than a simple income picture, though, it is worth requesting one before committing: the ruling confirms eligibility and how specific structures will be treated.
What does the €300,000 cover?
The flat tax covers all foreign-source income: dividends, interest, capital gains, rental income from property abroad, and business or professional income earned outside Italy. In place of Italy’s progressive rates, which reach 43% before regional and municipal surcharges, the covered income carries no further Italian tax at all.
Three carve-outs matter. Italian-source income is always taxed at ordinary rates. Capital gains from selling qualified shareholdings in foreign companies stay ordinarily taxed for the first five years. This anti-avoidance rule matters most to founders planning a sale or liquidity event. And taxpayers can choose to exclude specific countries from the regime, an option sometimes used to preserve foreign tax credits, though each exclusion is irrevocable once made.
One structural point is easy to miss: because the covered income carries a substitute tax rather than ordinary tax, no foreign tax credit is available against the €300,000. Income already taxed heavily abroad does not reduce the Italian charge.
What other benefits come with the regime?
The annual charge buys more than income tax relief. During the regime, participants are exempt from Italian inheritance and gift tax on assets held abroad, which for many families is worth as much as the income tax treatment itself. Italian-situs assets remain within the inheritance tax net.
Participants are also exempt from IVIE and IVAFE, the Italian wealth taxes on foreign property and financial assets. The annual foreign asset reporting that ordinarily applies to Italian residents falls away as well. The result is a settled, predictable position: one payment, one deadline, and no annual disclosure of the global balance sheet.
The regime runs for a maximum of 15 years. It renews automatically each year, and the taxpayer can revoke it at any point, though once revoked or lapsed it cannot be recovered.
Is the flat tax still worth it at €300,000?
The regime makes financial sense when foreign income comfortably exceeds the level at which ordinary Italian taxation would cost more than the flat charge. Combined IRPEF and surcharges approach 47% at the top end. On that basis the break-even sits at very roughly €650,000 to €700,000 of annual foreign income, though foreign tax credits and income mix move the figure in every case.
Above that level the case strengthens quickly. At €2 million of foreign income the flat tax represents an effective rate of 15%; at €5 million it is 6%. For families with large foreign portfolios, the inheritance and gift tax exemption and the reporting relief add value that a simple rate comparison misses.
Below the break-even, the regime costs more than ordinary taxation would. There the decision becomes one of certainty, estate planning, and simplicity rather than headline savings. At the new price, the regime is written for foreign income that sits well into seven figures.
How does the flat tax fit with the Italy Golden Visa?
The flat tax and the Italy Golden Visa are separate instruments that are frequently combined. The visa grants non-EU investors the right to live in Italy through a qualifying investment, with applications handled through the government’s official portal. The flat tax is a tax election that becomes available once tax residence moves. Neither requires the other.
For non-EU investors the common sequence is straightforward: secure residency through one of the Golden Visa investment options, meet the visa requirements, then decide separately whether the income picture justifies electing the flat tax. For families, the visa’s own family inclusion rules allow a spouse, children, and dependent parents to join under one application, while each relative added to the flat tax pays a separate €50,000. Plenty of investor visa holders never elect it, particularly those who keep their tax residence elsewhere in the early years, since the visa itself does not force a tax residence transfer. The two decisions run on different logic, and treating them as one package is a common and expensive planning error.
For those with foreign income well above the new break-even, the combination remains one of the stronger propositions in Europe: a residence permit backed by a real investment, and a tax position that is fixed and stable for up to 15 years.
The right move depends on the numbers, the family structure, and the timing of the residence transfer. Anyone weighing the 2026 regime against their own situation can get in touch for a considered starting point before engaging tax counsel.
Frequently asked questions
What happens to people already paying the €100,000 or €200,000 flat tax?
Nothing changes for them. The 2026 increase applies only to elections made from January 1, 2026. Existing participants keep the rate in force when they opted in for the remainder of their 15-year window, provided they continue paying on time and keep their tax residence in Italy.
Can family members join the flat tax regime in 2026?
Yes. Spouses, children, and other qualifying relatives can be added to the regime, each at €50,000 per year under elections made from 2026. Family members receive the same treatment as the principal: foreign income covered, Italian income taxed normally, and the same exemptions on foreign assets. Families with mixed timing should confirm which rate applies to later additions.
Does the flat tax apply to income earned in Italy?
No. Italian-source income, including employment income, Italian rental income, and gains on Italian assets, is taxed at ordinary progressive rates. The flat tax covers foreign-source income only, which is why the regime suits people whose wealth and earnings sit largely outside Italy.
Do Golden Visa investors have to use the flat tax?
No. The Italy Golden Visa and the flat tax are independent. An investor visa holder who never becomes an Italian tax resident has no basis to elect the regime. One who does become resident can simply stay under ordinary taxation if that costs less. The flat tax is an option, never a condition of the visa.
Do US citizens benefit from the Italian flat tax?
Partially. The regime settles the Italian side only. US citizens remain subject to US federal tax on worldwide income wherever they live, and the flat tax does not sit neatly against US foreign tax credits. Americans considering the regime should model the combined position with a cross-border adviser before electing.