Italy Flat Tax for New Residents 2026: The EUR 300,000 Regime

Italy's flat tax regime for new residents, codified in Article 24-bis of the Testo Unico delle Imposte sui Redditi (TUIR) and updated by Budget Law 2026 (Law No. 199 of 30 December 2025), allows individuals who transfer their tax residence to Italy to substitute all Italian tax on foreign-source income with a single annual lump-sum payment of EUR 300,000, with an additional EUR 50,000 per qualifying family member who joins the regime. The regime lasts for up to 15 years and is available to individuals who were not resident in Italy for at least 9 of the 10 tax years preceding the transfer. Understanding the precise entry conditions, procedural steps and ongoing compliance obligations is essential before committing to a relocation decision.

Legal Basis and the 2026 Amendment

The substitute tax for new residents was introduced into Italian law through Article 24-bis TUIR and has been amended several times since inception. The most recent and significant change was made by Budget Law 2026 (Law No. 199 of 30 December 2025, Article 1(25)–(26)), which raised the annual flat payment from EUR 200,000 to EUR 300,000 and the per-family-member supplement from EUR 25,000 to EUR 50,000. These new amounts apply to individuals who transfer their tax residence to Italy from 1 January 2026 onwards.

Individuals who transferred their residence and entered the regime before that date continue to pay the amounts that were in force at the time of their entry. This grandfathering principle is material for planning: a person who established Italian residence under the prior rules is not automatically upgraded to the higher rate, nor are they required to exit the regime. Advisers should therefore identify the exact entry year when reviewing any existing or prospective arrangement.

For context on how this regime interacts with broader Italian tax structuring considerations, including anti-avoidance rules and treaty positions, the legal framework requires careful mapping at the outset rather than after residence has been established.

Core Eligibility Conditions

Eligibility is tied to a backward-looking residence test combined with a forward commitment to Italian fiscal domicile. The following conditions must all be satisfied:

• Non-residence history: the individual must not have been tax resident in Italy for at least 9 of the 10 tax years immediately preceding the first year in which the option is exercised.
• Transfer of tax residence to Italy: the individual must genuinely establish a new centre of vital interests in Italy within the meaning of Article 2 TUIR and applicable tax treaty tie-breaker rules.
• Annual payment: for entries from 1 January 2026, the substitute tax of EUR 300,000 per year must be paid by the applicable deadline for each tax year the option remains in force.
• Family extension: the regime may be extended to qualifying family members by paying an additional EUR 50,000 per member per year.
• Duration cap: the option may be maintained for a maximum of 15 tax years.
• Excluded jurisdictions: the taxpayer may elect to exclude specific foreign jurisdictions from the regime; income sourced in excluded countries remains subject to ordinary Italian taxation and ordinary foreign tax credit rules.
• No mixing with other special regimes: the flat tax cannot be combined with certain other preferential regimes available under Italian law for the same tax year.

Because the residency test relies on the domestic rules of the prior country of residence as well as Italian rules and relevant tax treaty provisions, individuals with complex prior residence histories – multiple countries, split years, or long-term expatriate assignments – should conduct a structured pre-move analysis before filing any Italian return.

Step-by-Step Procedure

The procedural pathway involves several distinct stages, each with its own documentation requirements and timing considerations.

• Step 1 – Pre-move tax residency mapping: Determine the individual's residence and domicile position in the current country and identify any applicable tax treaty. Assess whether the 9-of-10-years non-residence condition is satisfied and document it with official records (certificates of residence, tax returns, electoral rolls, lease agreements).
• Step 2 – Advance ruling (optional but strongly advisable): Italy's Agenzia delle Entrate offers an advance ruling procedure specifically for Article 24-bis. Although not mandatory, obtaining a ruling before filing provides certainty on eligibility and significantly reduces tax audit risk. The ruling request must include a full description of the applicant's financial and personal situation and prior residence history.
• Step 3 – Establishing physical and administrative residence: Register with the Anagrafe (civil registry) of the relevant Italian municipality, obtain an Italian tax identification number (codice fiscale), and ensure that the centre of vital interests genuinely shifts to Italy. Corporate registrations, if the individual holds Italian business interests, should be aligned: see the corporate law framework for Italy for related S.r.l. incorporation and Registro delle Imprese registration considerations.
• Step 4 – Exercising the option in the tax return: The option is formally exercised by ticking the relevant box in the Italian individual income tax return (Modello Redditi Persone Fisiche) for the first year of Italian residence. The return must be filed within the applicable statutory deadline for that tax year.
• Step 5 – Payment of the substitute tax: The EUR 300,000 (or EUR 50,000 per family member) must be paid as a lump sum by the deadline set for balance payments under the ordinary Italian tax calendar, typically in late November following the relevant tax year. Late payment triggers forfeiture of the option for that year.
• Step 6 – Annual renewal: The option renews automatically each year provided payment is made on time. The taxpayer does not need to re-file a separate election, but must ensure payment and confirm continued Italian residence in the annual return.
• Step 7 – Ongoing monitoring and exit planning: The taxpayer must monitor any changes in foreign-source income structuring that could affect the Italian anti-avoidance rules, substance requirements in intermediate holding structures, or transfer pricing positions if business interests are involved.

Documents Typically Required

While the exact documentary checklist will depend on each individual's circumstances, the following categories of evidence recur consistently in practice:

• Certified proof of residence and tax residence in the prior country for each of the preceding 10 tax years (e.g., certificates from foreign tax authorities, electoral registration, utility contracts).
• Foreign tax returns or equivalent official records confirming the absence of Italian resident status during the relevant years.
• Proof of registration with the Italian Anagrafe and issuance of codice fiscale.
• Details of all foreign-source income streams and asset locations for the advance ruling request.
• Corporate documentation where the individual holds interests in foreign entities (particularly relevant for transfer pricing and anti-avoidance analysis).
• Details of any jurisdictions the applicant wishes to exclude from the regime.

Realistic Timelines

The timeline from initial planning to a secured position varies significantly depending on whether an advance ruling is sought and the complexity of the applicant's prior residence history.

• Pre-move analysis and document gathering: typically 4–8 weeks depending on the number of prior jurisdictions and the availability of official records from foreign authorities.
• Advance ruling procedure: the Agenzia delle Entrate has a statutory period within which to respond; in practice, complex cases may take several months. Applicants should begin this process well before the intended transfer date.
• Registration with the Anagrafe: generally completed within a few weeks of arrival, subject to municipal processing times.
• First tax return filing and payment: must be completed by the statutory deadlines applicable to the first Italian tax year of residence. Missing these deadlines forfeits the regime for that year, which cannot be recovered.

Applicants with business interests structured through foreign entities should factor in additional lead time to review transfer pricing policies and any restructuring that may be needed to avoid inadvertently triggering Italian controlled-foreign-company (CFC) rules or other anti-avoidance provisions.

Cost Drivers and Financial Planning

The principal cost of the regime is the annual substitute tax itself: EUR 300,000 for the principal applicant and EUR 50,000 per qualifying family member, payable each year for up to 15 years. These are lump-sum payments in lieu of Italian tax on all foreign-source income, irrespective of the actual amount of that income. The regime therefore creates a clear cost-benefit threshold: individuals whose foreign-source income generates a notional Italian tax liability exceeding the flat-tax amount will generally find the regime advantageous; those below that threshold require careful modelling.

Additional cost drivers include professional fees for the advance ruling procedure, ongoing compliance costs (annual returns, payment administration, monitoring of anti-avoidance rules), and potential advisory fees related to restructuring foreign holdings to ensure the Italian position is defensible in a tax audit. Individuals with interests in multiple jurisdictions should also budget for a review of any applicable tax treaty network to confirm that the flat-tax payment does not create unexpected treaty complications in the prior country of residence.

For a detailed discussion of cross-border structure considerations that can affect the economics of the regime, the analysis of cross-border mergers and Italian tax treatment provides useful context on how Italian tax rules interact with inbound restructurings.

If you are evaluating whether the flat tax regime is appropriate for your circumstances, the team at Ferraz & Whitmore can assist with a structured pre-move analysis. Please write to info@ferrazwhitmore.com or visit our contacts page to arrange an initial discussion.

Common Errors by Foreign Clients

Experience in advising international individuals on this regime reveals several recurring mistakes that can lead to loss of the option, unexpected tax exposure or protracted disputes with the Agenzia delle Entrate.

• Underestimating the 9-of-10 test: clients who spent periods in Italy on long-term visas, secondments or as habitual commuters sometimes discover that their Italian resident status was established for TUIR purposes earlier than expected, failing the non-residence test. This requires careful analysis of each prior year individually.
• Delaying the advance ruling: some clients proceed directly to filing and payment without obtaining a ruling, assuming eligibility is straightforward. Where the Agenzia delle Entrate subsequently challenges eligibility in a tax audit, the absence of a ruling leaves the taxpayer in a weaker procedural position.
• Missing the payment deadline: the EUR 300,000 payment is due on a fixed date. Late payment – even by one day – causes the option to lapse for that year. There is no regularisation mechanism equivalent to a voluntary disclosure for this specific failure.
• Incorrect family extension elections: clients sometimes add or remove family members without following the formal process, or assume that minor children are automatically included. Each extension requires a specific election and separate payment.
• Ignoring anti-avoidance rules and transfer pricing: the flat tax covers foreign-source income, but if the Agenzia delle Entrate or the Corte di Cassazione determines in a subsequent audit that certain income is Italian-source (for example, because management and control of a foreign company is exercised from Italy), that income falls outside the regime and is taxable at ordinary rates. Robust substance and transfer pricing documentation for any foreign entities is therefore not optional.
• Ignoring CONSOB and regulatory considerations: individuals who relocate to Italy and hold significant positions in Italian or EU-listed vehicles may trigger CONSOB disclosure or notification obligations that are separate from the tax regime but arise simultaneously with the change of residence.
• Assuming the regime is self-executing: the flat tax does not automatically relieve the taxpayer of all Italian reporting obligations. Foreign assets must still be reported in the RW section of the Italian return, and failure to do so can result in penalties entirely separate from the substitute tax.

Checklist: Is the EUR 300,000 Regime Right for You?

The following checklist summarises the principal conditions and preparatory steps derived from the legal framework as amended by Budget Law 2026:

• You have not been tax resident in Italy in at least 9 of the 10 tax years preceding your planned transfer year.
• You are prepared to genuinely establish your tax residence in Italy and can document this with objective evidence.
• Your foreign-source income is of a nature and scale that makes the EUR 300,000 annual payment economically rational compared with ordinary Italian taxation.
• You have identified all foreign jurisdictions from which income will be derived and considered whether to exclude any from the regime.
• You have assessed whether family members will be included and budgeted for the EUR 50,000 supplement per person per year.
• You have a 15-year planning horizon and understand that the regime will expire at the end of that period, at which point ordinary Italian taxation applies to worldwide income.
• Your foreign holding structures have been reviewed for Italian CFC rules, transfer pricing exposure and the risk of income being re-characterised as Italian-source in a tax audit.
• You have obtained or are in the process of obtaining an advance ruling from the Agenzia delle Entrate.
• You have confirmed your obligations under the RW foreign-asset disclosure framework and any applicable CONSOB requirements.
• You have engaged advisers in both Italy and your prior country of residence to manage treaty interaction and exit tax issues on departure from the prior jurisdiction.

The EUR 300,000 flat tax regime can be a highly effective tool for managing the Italian tax position of internationally mobile individuals, but its benefits are only realised when the procedural requirements are met precisely and the broader anti-avoidance environment is addressed proactively. If you are at the consideration stage and would like to discuss your specific situation, please contact Ferraz & Whitmore at info@ferrazwhitmore.com or through our contacts page.

Sources

• Taxing.it, Tax Updates – Budget Law 2026 coverage: https://taxing.it/tax-updates/
• Law No. 199 of 30 December 2025 (Budget Law 2026), Article 1(25)–(26), amending Article 24-bis TUIR.

Facts last verified: 22 September 2026.

For further guidance on structuring your Italian tax and corporate position, or to discuss how the flat tax regime interacts with your existing arrangements, the Ferraz & Whitmore team is available at info@ferrazwhitmore.com or via our contacts page.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.