Increase of the Italian flat tax to €300,000

As of the entry into force of the 2026 Budget Law, Italy has increased the flat tax applicable to new tax residents from €200,000 to €300,000 per year.
The flat tax applicable to qualifying family members has also been increased from €25,000 to €50,000 per person.

The increase applies exclusively to individuals who transfer their tax residence to Italy after the effective date of the new law.

Grandfathering rules

Italian legislation expressly protects the grandfathering principle.

Individuals who transferred their tax residence to Italy before the new increase and who validly opted for the flat tax regime continue to apply the lump-sum amount in force at the time of their relocation. The increase to €300,000 has no retroactive effect on existing beneficiaries.

This aspect is frequently clarified in practice and addressed in dedicated Q&A materials focusing on transitional rules and timing of relocation.

What is the Italian flat tax regime?

The Italian flat tax regime is a special tax framework available to individuals who become Italian tax residents and who were not tax resident in Italy for at least nine out of the ten years preceding the transfer.

Under this regime, qualifying individuals may opt to pay a fixed annual substitute tax on foreign-sourced income, regardless of the amount generated.
The option can be exercised for a maximum period of 15 years.

Who can apply for the flat tax regime

The regime is available to individuals who:

  • transfer their tax residence to Italy under Italian tax law
  • were not tax resident in Italy for at least 9 of the previous 10 years
  • submit a valid option for the regime

There are no nationality restrictions, and the regime is available to both EU and non-EU citizens.

Taxation of income under the flat tax regime

Under the Italian flat tax:

  • foreign-sourced income is subject to a fixed annual lump-sum tax
  • Italian-sourced income remains subject to ordinary Italian taxation
  • the lump-sum tax replaces IRPEF and related surtaxes on foreign income

Further practical examples and recurring questions on income classification are addressed in our dedicated Q&A to the Italian flat tax regime.

Treatment of assets held abroad

Individuals applying the flat tax regime benefit from significant simplifications with respect to foreign assets.

In particular:

  • foreign assets are exempt from Italian wealth taxes
  • foreign assets are not subject to Italian reporting obligations
  • income generated abroad is not subject to ordinary progressive taxation

These rules apply for the duration of the regime, provided the flat tax option remains valid.

Inheritance and gift tax implications

A key feature of the Italian flat tax regime concerns succession planning.

During the application of the regime, foreign assets transferred by way of gift or inheritance are not subject to Italian inheritance or gift tax. Italian inheritance and gift tax remains applicable only to Italian-situated assets.

Family members included in the regime

The flat tax regime may be extended to qualifying family members, including spouses and certain relatives.

Each family member included is subject to a separate flat tax, which, following the 2026 reform, amounts to €50,000 per year per person.

Duration and termination of the regime

The flat tax regime can be applied for a maximum of 15 years.

The regime may be terminated early if the taxpayer:

  • revokes the option
  • fails to pay the flat tax
  • ceases to meet the tax residence requirements

Once terminated, the regime cannot be reactivated.

Final overview

The Italian flat tax regime provides a simplified and predictable taxation system for new tax residents with foreign income. The increase to €300,000 confirms the regime’s current structure, while the confirmation of grandfathering preserves continuity for existing beneficiaries. A clear understanding of eligibility, residence rules and scope of application is essential, and detailed Q&A resources can support this assessment.

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