Italy Flat Tax Regime for New Residents
Italy lets qualifying new residents replace ordinary tax on all foreign-source income with a fixed annual sum: €300,000 for those who move from 1 January 2026, for up to fifteen years. There is also a 7% regime for foreign pensioners moving to the South, and a partial exemption for people who come to Italy to work. This page explains each one as the law stands today — figures, conditions, and the cases where the regime is not worth it.
Figures verified 9 September 2026 · Law no. 199 of 30 December 2025 (Budget Law 2026) · Law no. 34/2026 · Decree-Law no. 38/2026
Is the lump sum worth it for you?
The €300,000 lump-sum regime, and how it got there
Introduced in 2017 at €100,000, doubled in August 2024, and raised again by the 2026 Budget Law. The amount that applies to you is fixed by the year you transfer your tax residence — not by the year you read this.
The regime is a substitute tax: instead of declaring foreign-source income and paying Italian progressive rates on it, you pay one fixed sum per year and the foreign income is settled. Italian-source income — a salary from an Italian employer, rent from an Italian flat, an Italian business — is taxed in the ordinary way, alongside.
It lasts up to fifteen tax years. You can leave earlier by revoking the option; you also lose it if a yearly payment is missed. Once revoked or lost, it cannot be taken up again.
Family members — spouse, children, parents and the other relatives listed in Article 433 of the Civil Code — can be brought in for a further €50,000 each per year, provided they meet the same non-residence test.
The transitional rules matter
The increases were not retroactive. Someone who transferred residence before 11 August 2024 continues at €100,000; between 11 August 2024 and 31 December 2025, at €200,000. The €300,000 figure applies to transfers from 1 January 2026. If you are already in Italy under the earlier amount, nothing changes for you — which is also why a person planning a move should understand exactly which date fixes the amount.
Law no. 232/2016. Family members €25,000. Still applies to those who transferred residence in this period.
Decree-Law no. 113/2024. Family members €25,000. Applies to transfers in this window.
Law no. 199 of 30 December 2025 (Budget Law 2026). Family members €50,000. This is the regime for anyone moving now.
Who qualifies — and who does not
Non-resident in Italy for 9 of the last 10 years
The test is tax residence, counted over the ten tax years before the option. One year in Italy within the decade is tolerated; two are not. Italian citizens who have lived abroad qualify like anyone else.
Actually transferring tax residence to Italy
Registration with the municipal population registry and a real centre of life here. The regime is claimed in the tax return for the first year of residence, and can be confirmed in advance through a ruling request to the Revenue Agency.
Any nationality, any visa route
The regime is a tax rule, not an immigration one. Non-EU nationals typically combine it with the Investor Visa or the Elective Residence Visa, which give the right to live in Italy; the flat tax then governs how foreign income is taxed once resident.
Not with the inbound-workers regime
Since Decree-Law no. 38/2026 the lump sum cannot be combined with the inbound-workers exemption described below. One or the other.
Not for gains on qualified shareholdings in the first five years
Capital gains on qualified participations realised in the first five years of the regime are excluded and taxed in the ordinary way — a rule aimed at people who move to sell a company.
Not worth it below a threshold
On the rate alone, €300,000 beats ordinary Italian tax above roughly €1.15 million a year of investment income (taxed at 26%) or €650,000–700,000 of income taxed at progressive rates. Below those levels ordinary taxation with treaty relief may cost less — unless the wealth-tax, monitoring and inheritance-tax exemptions tip the balance. The estimator above shows where you stand.
What the lump sum covers, and what it does not
Covered: all income produced outside Italy — dividends, interest, capital gains (with the five-year exception above), foreign rental income, foreign pensions, foreign employment or business income, royalties. You may also exclude one or more countries from the regime, so that income from those countries is taxed ordinarily and treaty credits remain available there — useful where a source country withholds tax that would otherwise be lost.
Also included: exemption from the Italian wealth taxes on foreign real estate and financial assets (IVIE and IVAFE); no obligation to report foreign assets in the tax-monitoring section of the return; and exemption from inheritance and gift tax on assets held abroad for the duration of the regime.
Not covered: Italian-source income of any kind, which is taxed at ordinary rates. Buying a home in Italy is not affected by the regime one way or the other; renting it out is Italian-source income.
A note for US citizens
The United States taxes its citizens on worldwide income wherever they live. Moving to Italy under the lump sum does not change that, and whether the Italian substitute tax can be credited against US tax is a question for your US adviser, not an Italian one. We work alongside US CPAs on this point and will not pretend the answer is simple.
The 7% regime for foreign pensioners moving to the South
A different regime for a different person: a retiree with a foreign pension who settles in a smaller town in one of eight southern regions pays 7% on all foreign-source income — not only the pension — for the year of transfer and the nine following years.
Applies to the year of transfer and the nine tax years after it. Ordinary rates would otherwise apply to the same income.
A municipality of up to 30,000 inhabitants
In Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia. The limit was raised from 20,000 to 30,000 by Law no. 34/2026 (Article 26), in force since 7 April 2026 — which opened a number of provincial towns that were previously excluded. Certain municipalities in the Central Italy earthquake areas are also eligible under the annexes to Decree-Law no. 189/2016.
A foreign pension, and five years abroad
- Holder of a pension paid by a foreign entity
- Not tax resident in Italy in the five tax years before the option
- Moving from a country with an administrative-cooperation agreement with Italy (the United States qualifies)
- Same extras as the lump sum: no IVIE/IVAFE, no monitoring forms, countries can be excluded
The 7% regime is often the better fit for an American retiree with a pension and investment income in the low-to-mid six figures: at that level the lump sum is far too expensive, while 7% on everything, in a town in Puglia or Sicily, is hard to beat. The constraint is geographic and real — the residence has to be there, not in Rome or Florence — and the population threshold is checked against the official census figure.
Coming to Italy to work: the inbound-workers exemption
Not a flat tax but a partial exemption, for people who move to Italy to take up employment or self-employment here. It is the regime that applies to income produced in Italy — the opposite of the two above.
Up to €600,000 of income per year. Where the worker moves with a minor child, or a child is born or adopted during the period, the exemption rises to 60%.
The year of transfer and the four following years.
- Not tax resident in Italy in the three previous tax years — longer where you keep working for the same employer or group
- Commitment to remain tax resident for at least four years
- Work performed mainly in Italy
- High qualification or specialisation requirements
Three regimes, one table
| Lump sum · Art. 24-bis | 7% pensioners · Art. 24-ter | Inbound workers · D.Lgs. 209/2023 | |
|---|---|---|---|
| Who it is for | Anyone with substantial foreign income moving to Italy | Foreign pensioners settling in the South | People moving to Italy to work here |
| What is taxed how | All foreign income: €300,000 fixed per year (€50,000 per family member) | All foreign income: 7% | Italian work income: 50% exempt (60% with a minor child), up to €600,000 |
| Duration | Up to 15 years | Year of transfer + 9 years | Year of transfer + 4 years |
| Prior non-residence | 9 of the previous 10 years | Previous 5 years | Previous 3 years (more if same employer or group) |
| Where you can live | Anywhere in Italy | Municipality ≤ 30,000 inhabitants in 8 southern regions, or listed earthquake-area municipalities | Anywhere in Italy |
| Italian-source income | Ordinary rates | Ordinary rates | This is the income the regime applies to |
| IVIE / IVAFE, monitoring | Exempt | Exempt | Ordinary rules |
| Inheritance and gift tax on foreign assets | Exempt during the regime | Ordinary rules | Ordinary rules |
| Can be combined with | Not with inbound workers (D.L. 38/2026) | — | Not with the lump sum |
| Typical visa route | Investor Visa · Elective Residence Visa | Elective Residence Visa | Work visa · EU Blue Card · Digital Nomad Visa |
How the option is exercised
The regime is not applied for at a counter. It is elected in your tax return — but the decisions that make it work are taken months before.
Check the residence history
Ten years of tax residence reconstructed and documented. This is where most eligibility problems surface, and where they are cheapest to solve.
Ruling, if you want certainty
A ruling request to the Revenue Agency confirms eligibility before you move. It is optional; for a decision of this size we usually recommend it.
Move, and become resident
Registration with the municipality, a home, a real centre of life. The visa that gets you here is a separate procedure, handled in parallel.
Elect in the first return, pay each year
The option is exercised in the tax return for the first year of residence and the substitute tax is paid by the ordinary balance deadline, every year, for as long as you stay in the regime.
At this level the regime is rarely only a tax decision. It usually arrives with a house to buy, a will drafted under another country’s law, and assets that will one day pass to heirs in two jurisdictions. Where that is the picture we take the whole file as a private client mandate, not the election on its own.
Before you decide
I moved to Italy in 2025. Do I now owe €300,000?
No. The amount is fixed by the year of transfer. Transfers between 11 August 2024 and 31 December 2025 remain at €200,000; transfers before 11 August 2024 remain at €100,000. The €300,000 figure applies to people who transfer tax residence from 1 January 2026.
Does the flat tax give me the right to live in Italy?
No. It is a tax regime. The right to reside comes from your citizenship or from a visa and residence permit — for most of our clients the Investor Visa or the Elective Residence Visa. The two procedures run in parallel and we handle both.
Can I keep some countries outside the regime?
Yes. The law allows you to exclude one or more jurisdictions, so that income from those countries is taxed ordinarily and treaty relief stays available there. It is a decision to make with the numbers in hand, because it cannot be changed casually afterwards.
Is the lump sum worth it if my foreign income is €400,000?
Usually not. Ordinary Italian tax on €400,000 would be well under €300,000 — around €104,000 if it is investment income at 26% — and treaty credits may reduce it further. On the rate alone the regime pays for itself above roughly €1.15 million of investment income, or €650,000–700,000 of income taxed at progressive rates; earlier where the compliance, wealth-tax and inheritance-tax savings matter more than the rate. The estimator at the top gives a first orientation.
I am retired with a US pension and some investment income. Which regime?
Almost always the 7% regime, if you are prepared to live in a municipality of up to 30,000 inhabitants in one of the eight southern regions. At typical retirement income levels the €300,000 lump sum is far too expensive; 7% on everything is hard to improve on.
Can my spouse and children join?
Under the lump sum, yes — family members listed in Article 433 of the Civil Code, at €50,000 each per year (€25,000 for those who joined a regime started before 2026), each meeting the same non-residence test. The 7% and inbound-workers regimes are individual.
What happens if I leave Italy after a few years?
You simply stop being tax resident and the regime ends with your residence. There is no exit charge specific to the regime. Inheritance-tax exemption on foreign assets lasts only while you are in it.
Does the regime cover income I earn in Italy?
No. Italian-source income — salary from an Italian employer, an Italian business, rent from an Italian property — is taxed at ordinary rates, alongside the lump sum. If most of your income will be earned in Italy, look at the inbound-workers exemption instead; the two cannot be combined.
Find out which regime fits your numbers — and which visa gets you here
Tell us where you have lived in the last ten years, roughly what your foreign income looks like, and whether you are retired or still working. We will tell you which regime applies, what it would cost, and whether it is worth it.
- No cost, no obligation
- Read by an Italian lawyer
- Every message is answered
Still deciding how to move? See the Investor Visa for Italy or the Elective Residence Visa.
I moved to Italy in 2025. Do I now owe €300,000?
No. The amount is fixed by the year of transfer. Transfers between 11 August 2024 and 31 December 2025 remain at €200,000; transfers before 11 August 2024 remain at €100,000. The €300,000 figure applies to people who transfer tax residence from 1 January 2026.
Does the flat tax give me the right to live in Italy?
No. It is a tax regime. The right to reside comes from your citizenship or from a visa and residence permit — for most of our clients the Investor Visa or the Elective Residence Visa. The two procedures run in parallel and we handle both.