Italy Flat Tax for New Residents 2026: The €300,000 Lump Sum Regime Explained

Italy has one of Europe's most striking tax incentives for wealthy newcomers: a flat substitute tax that replaces normal Italian income tax on all foreign-source income, no matter how large. You pay a single annual lump sum — €300,000 for opt-ins from 1 January 2026 — and owe nothing further on your overseas income.

The regime sits in Article 24-bis of Italy's Tax Code (TUIR) and was originally introduced in 2017 at €100,000/year. Italy raised it to €200,000 in August 2023 and then to €300,000 in the 2026 Budget Law. Existing participants are grandfathered at the rate applicable when they opted in.

This guide covers who qualifies, how the three-tier rate structure works, what the regime covers (and what it doesn't), how to apply, and how it stacks up against Portugal's IFICI regime and the UK's FIG regime for returning non-doms.

How the Three-Tier Rate Structure Works in 2026

The annual lump sum depends on when you first opted into the regime:

Crucially, existing participants keep the rate from when they entered. If you opted in before August 2023 and pay €100,000/year, the 2026 increase does not affect you for the remainder of your 15-year window.

New applicants from 1 January 2026 onwards pay €300,000. At first glance this looks high — but if your foreign income exceeds around €750,000/year, Italy's top marginal rate of 43% would cost you more than the flat sum.

Eligibility: Who Can Apply

The rules are deliberately broad to attract international wealth. You qualify if:

• Prior residency: You have not been an Italian tax resident in at least 9 of the 10 tax years immediately before the year the option takes effect. This is a fresh-start test, not a citizenship test — any nationality is eligible.
• No income threshold: There is no minimum asset or income requirement in the statute, though the economics only make sense for those with substantial foreign income.
• Family extension: Each qualifying family member (spouse, children, other dependants) can also opt in for an additional €50,000/year (from 2026), covering their foreign income under the same regime.

You do not need to be retired, a pensioner, or from a specific country. The regime is open to entrepreneurs, investors, executives, digital nomads with high foreign earnings, and anyone else who meets the prior non-residency test.

What the Flat Tax Covers — and What It Doesn't

The substitute tax covers all foreign-source income you earn while an Italian resident: foreign dividends, foreign rental income, foreign capital gains (with one key exception), foreign employment income, foreign business income, foreign interest.

What is NOT covered:

• Italian-source income — taxed at normal IRPEF rates (23%–43%) as if you were any other Italian resident.
• Capital gains on qualified shareholdings in Italian companies during the first 5 years — these remain subject to ordinary Italian tax even under the flat tax regime.
• Inheritance and gift taxes on Italian assets — also excluded from the substitute tax.

What is also replaced: Beyond IRPEF, the flat sum also substitutes regional and municipal surtaxes on foreign income, and — importantly — inheritance and gift taxes on foreign assets and shareholdings. This is a significant estate planning benefit for HNWIs with cross-border portfolios.

Practical example: You opt in from January 2026. You receive €500,000 in foreign dividends and €200,000 from Italian rental properties. You pay €300,000 flat on the dividends. The rental income is taxed at normal Italian rates, adding approximately €86,000. Total Italian tax: ~€386,000 vs approximately €301,000 (43%) + €86,000 = €387,000 at ordinary rates — roughly break-even at that income level. The regime becomes significantly favourable above ~€800,000 in foreign income.

How to Apply: Filing and the Advance Ruling Option

There are two routes to opt into the regime:

Option 1: File with your first Italian tax return

The election is made in the Modello Redditi PF (personal income tax return) for the first year of Italian residence. You tick the relevant box and pay the lump sum by 30 June of that year (single instalment, no payment plan available). If you miss the payment deadline, the regime lapses for that year.

Option 2: Advance Ruling (Interpello)

Before transferring residency to Italy, you can file an interpello (advance ruling request) with the Agenzia delle Entrate. This gives you a written confirmation of eligibility before you move, eliminating uncertainty. The interpello is optional but widely recommended for those with complex circumstances or significant foreign assets.

Annual renewal: The lump sum must be paid each year by 30 June. Missing a payment terminates the regime — there is no reinstatement.

Voluntary exit: You can opt out at any time. If you exit before the 15-year window closes, you cannot re-enter the regime.

Official source: Agenzia delle Entrate, Art. 24-bis TUIR (Presidential Decree No. 917/1986, as amended by the 2026 Budget Law). Implementing guidance: Circular No. 17/E of 23 May 2017.

How It Compares: Italy vs Portugal IFICI vs UK FIG Regime

Italy is not alone in competing for mobile wealth. Here is how the three leading European regimes compare for a new 2026 resident with €500,000/year in foreign income:

The key distinction: Italy's regime is a fixed cost regardless of income — predictable but expensive at lower income levels. Portugal's IFICI is a percentage rate (20% on qualifying income), which can be cheaper for those with moderate foreign earnings. The UK FIG regime requires careful remittance planning and ends abruptly at 15 years with a deemed remittance charge.

For very high earners (€1M+ foreign income), Italy's fixed €300,000 is typically the cheapest European option in absolute terms.