Italy Flat Tax Regime

Italy introduced the "Regime dei Neo-Residenti" (New Resident Regime) in 2017 under Article 24-bis of the Italian Tax Code (TUIR) to attract high-net-worth individuals. The regime allows qualifying individuals to pay a flat lump-sum tax on all foreign-source income, regardless of the actual amount earned abroad.

The flat tax was originally set at EUR 100K per year. In August 2024, Law Decree No. 113 doubled this to EUR 200K for new applicants.

With the 2026 Budget Law, the flat tax increases to EUR 300K from 2026. Grandfathering applies: those who entered the regime earlier continue paying the rate in effect at the time of their entry.

Family members (spouse and children) can be included under the regime for an additional flat fee: EUR 25K per person under the 2024 rules, increasing to EUR 50K per person from 2026.

Key Benefits

Key benefits include: no Italian tax on foreign-source income beyond the flat fee; exemption from IVAFE (0.2% tax on foreign financial assets) and IVIE (1.06% tax on foreign real estate); exemption from inheritance and gift taxes on foreign assets; no requirement to report foreign asset holdings.

Critical Limitation: Qualified Shareholdings

Important: Capital gains from "qualified shareholdings" (partecipazioni qualificate) sold during the first five years of the regime are excluded from the flat tax and taxed at the standard 26% rate.

A qualified shareholding is defined as:

• Listed companies: >2% voting rights OR >5% of capital
• Unlisted companies: >20% voting rights OR >25% of capital

12-Month Rule: According to Italian Revenue Agency Circular 52/E (2004), all sales within any 12-month period are aggregated to determine if a shareholding is qualified. The determination is based on whether you held a qualified amount at any point during that period.

Example: If you own 30% of your company and sell 20%, that sale is treated as a qualified shareholding disposal because you held >25% during the 12-month period. The entire gain is taxed at 26%, not covered by the flat tax.

Who This Regime Is For

Ideal candidates:

• Investors with diversified portfolios (minority stakes <25% per company)
• Entrepreneurs who have already exited their businesses before relocating
• Rentiers receiving dividends from multiple foreign investments
• Family offices with global passive income streams
• High-earning professionals (executives, athletes, artists, designers)
• Retirees with substantial foreign pension and investment income

Not suitable for:

• Business owners with >25% stakes planning exit within 5 years
• Startup founders pre-exit seeking quick relocation and sale
• Anyone planning immediate sale of controlling interests

Notable Participants

Since its launch in 2017, nearly 4,000 high-net-worth individuals have adopted this regime. Notable participants include:

• Nassef Sawiris – Egypt's richest man and co-owner of Aston Villa Football Club
• Richard Gnodde – Former Vice-Chairman of Goldman Sachs International

According to Henley & Partners, approximately 3,600 HNWIs relocated to Italy in 2025 alone, with Milan emerging as the primary destination for wealthy international residents.