Italy's Special Flat Tax Regime: A Stable Opportunity for High Net Worth Individuals
Italy’s special flat tax regime for High Net Worth Individuals (HNWIs) has long been a popular choice for those looking to relocate while keeping their global income tax-efficient. Recently, the government made an important update to this regime, increasing the annual flat tax from €100,000 to €200,000 for new residents. This change is more than just a tax adjustment—it’s a clear signal of the government's intention to keep this attractive tax regime stable and reliable for the long term.
News — Italy Tax Guide High Net Worth Individual updated
Italy Tax Guide for High Net Worth Individuals and Families updated — flat tax for foreign earned income raised to €200,000 for new residents
The Tax Guide to Italy for High Net Worth Individuals and Families has been updated to take account of the increase of the flat tax to €200,000 for new residents. The Tax Guide also updates readers on the government's commitment to stability for a tax regime that is a golden opportunity for HNWIs and the government alike.
Tax stability for the government — lure of the culture for HNWIs
The increase of the flat tax rate for new residents to €200,000 has no doubt been aimed at bringing in a number of new, highly profitable residents. However, in updating the Tax Guide to Italy for High Net Worth Individuals and Families — Italian Taxation of Foreign Earned Income — we have come across the government's confirmation that stability is firmly at the heart of their policies, with a view to preserving the regime for the 15 year period currently in place.
Continued benefits for already resident HNWIs
Individuals who were already admitted to the regime before the increase are not affected: they continue to pay the original flat tax of €100,000 per annum on foreign earned income for the entire remaining duration of their 15 year period. The higher amount applies only to those transferring their tax residence to Italy after the increase took effect.
Special Flat Tax on Foreign Income for HNWIs — Why so Golden?
This special regime currently available to Italian resident HNWIs offers a number of advantages not afforded by normal tax regimes, including exemption from the normal application of foreign income rules — and in particular from CFC rules. Foreign earned income received by the individual is covered in full by the annual lump sum: no further Italian taxation applies to it, regardless of the amount earned abroad.
As outlined above, for those residents who have already qualified for the regime, the 15 year special regime will remain in place with all the advantages that the special regime on foreign earned income has to offer. The regime therefore remains an opportunity not to be missed for HNWIs with worldwide income, wanting to take advantage of a favorable and stable regime, allowing for efficient global structuring whilst benefiting from a series of special tax advantages.
For further information on the tax incentives and residency in Italy for High Net Worth Individuals and their families, MTDV is here to help. If you would like to find the most suitable tax regime in Italy for your individual circumstances, and to facilitate your relocation in the best way, please do not hesitate to contact us should you require any information or guidance on any tax incentives or on any aspect of the relocation to Italy.
