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Key points:
- Increase of Italy’s lump sum tax from €200,000 to €300,000
- Effective date: 1 January 2026
- Applicability to new tax residents only
- Scope of income covered under the regime
Italy’s Flat Tax Increase and the Search for Alternative European Regimes
Italy’s lump sum (flat tax) regime for new residents was originally introduced at €100,000 per annum, positioning Italy, alongside Malta, Portugal, Greece and Cyprus, as one of Europe’s most competitive jurisdictions for high-net-worth individuals considering relocation. In 2024, the annual tax charge was increased to €200,000, and as of 1 January 2026, it has now risen further to €300,000.
The tax system applies to individuals who become Italian tax resident after a qualifying period of non-residence and, subject to election, replaces ordinary taxation on foreign-source income with a fixed annual payment. The flat tax may also be extended to certain family members for an additional charge. Italian-source income and gains remain taxable under ordinary Italian tax rules.
This latest increase materially alters the cost-benefit analysis for internationally mobile individuals and families assessing Italy as a long-term tax residence. As a result, interest is growing in alternative European regimes, including jurisdictions offering resident non-dom frameworks, greater flexibility, and lower effective annual tax exposure.
