Flat Tax for New Residents in Italy

In March 2017, in order to encourage foreign investment, Italy introduced a special tax regime known as the Flat Tax for new residents, aimed at attracting wealthy foreign individuals willing to become tax residents in the country. Under this system - updated in 2024 - foreign individuals who transfer their tax residence to Italy may benefit from a comprehensive flat tax of Euro 200.000,00 (two hundred thousand) on income earned abroad, regardless of the actual amount.
This means that foreign citizens transferring their tax residence to Italy, instead of being subject to standard Italian taxation - which may reach up to 43% on worldwide income - can opt to pay a fixed annual tax of Euro 200.000,00.

Key Features and Requirements of the Regime

The Flat Tax for new residents is a substitute tax on income generated abroad, targeted at High Net Worth Individuals who, while transferring their tax residence to Italy, wish to avoid the ordinary worldwide taxation principle applied to Italian tax residents.
Originally set at Euro 100.000,00, the flat tax was increased to Euro 200.000,00 in 2024, although the eligibility criteria for accessing the regime remain unchanged. 
To qualify for the regime, the following key conditions must be met:

• The applicant must not have been a tax resident in Italy for at least 9 out of the 10 years preceding their move. In other words, the scheme is not available to individuals who have already been Italian tax residents for more than one year prior to the application.
• The applicant must transfer their tax residence to Italy, indicate the intention to apply the Flat Tax regime in their annual tax return, and pay the substitute tax within the standard tax deadlines (e.g., by September 30, 2025, for the 2024 tax year).

It is important to note that the Flat Tax applies exclusively to income earned abroad. Any income derived from professional or business activity carried out in Italy remains subject to the country's ordinary progressive income tax rates.
The regime is valid for a maximum of 15 years, and is automatically renewed each year upon full payment of the flat tax amount. The Euro 200.000,00 must be paid in a single installment per tax year.
The Flat Tax regime offers further significant tax exemptions to its beneficiaries:

• Exemption from inheritance and gift tax on assets held abroad;
• No obligation to file the RW form (Modello Redditi) normally required to report foreign-held assets;
• Exemption from IVAFE, the tax on financial assets held abroad;
• Exemption from IVIE, the tax on foreign real estate.

Advance Ruling Procedure

To ensure eligibility, applicants may submit a formal ruling request to the Italian Tax Authority (Agenzia delle Entrate). The tax authorities will issue a binding ruling - typically within 120 days -confirming whether the applicant meets the requirements for the regime.
This option provides legal certainty and helps avoid future tax audits or challenges regarding eligibility.

Duration and Extension to Family Members

As noted, the Euro 200.000,00 Flat Tax regime is valid for up to 15 years. The taxpayer may voluntarily withdraw from the regime at any time, but once exited, it cannot be reactivated.
A key benefit of the regime is the option to extend it to family members. Each additional eligible family member may be included by paying an additional Euro 25.000,00 (twenty five thousand) per year. Eligible family members include:

• Spouses or civil partners;
• Children, including adult children;
• Parents and other direct ascendants;
• Siblings.

Conclusion

The Italian Flat Tax regime presents an appealing fiscal opportunity for high-net-worth individuals seeking tax residence in Italy while maintaining substantial foreign income. With its fixed annual tax of Euro 200.000,00 multiple reporting and filing exemptions, and the possibility to include family members, the regime is structured to simplify compliance and promote foreign investment.