{"id":150,"date":"2017-02-09T12:05:01","date_gmt":"2017-02-09T12:05:01","guid":{"rendered":"http:\/\/159.65.127.138\/?p=150"},"modified":"2026-02-13T22:06:15","modified_gmt":"2026-02-13T21:06:15","slug":"new-italian-tax-regime-encourage-high-net-worth-individuals","status":"publish","type":"post","link":"https:\/\/taxing.it\/it\/new-italian-tax-regime-encourage-high-net-worth-individuals\/","title":{"rendered":"Italian tax regime to encourage high net worth individuals to move to Italy"},"content":{"rendered":"\t\t
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Background<\/h2>

Italy’s 2017 Finance Law introduced a tax regime designed to compete with other special tax regimes around Europe that provide a special tax regime to attract people to come and live in the country offering the regime.<\/p>

The Italian regime is targeted at attracting high net worth individuals to Italy. \u00a0It required, a the outset, a lump-sum payment of Euro 100,000 per annum in lieu of income tax at normal rates<\/a> (and wealth tax<\/a>)\u00a0 for individuals. These rules applied to individuals shifting their tax residence to Italy from FY 2018 onward.\u00a0 The special regime excludes non-Italian income and gains from the normal charge to tax, while tax will be due at the usual rates (up to 43% plus local income taxes) on Italian source income and gains. As mentioned above the annual tax was raised to Euro 200,000 in August 2024 and is set to rise to Euro 300,000 annually, from FY 2026.<\/p>

Individuals opting for the regime will also be exempt from the requirements for the tax reporting of foreign income and assets. There is also exemption for the annual wealth taxes on foreign real estate and financial assets (IVIE & IVAFE) and from Italian inheritance tax on non-Italian situated assets.<\/p>

A circular from the Tax Agency has been issued containing implementing procedures – the taxpayer may obtain an advance ruling for admission to the new regime – completing\u00a0 a\u00a0form<\/a>\u00a0to be submitted to the authorities in advance for confirmation that the regime will apply. Differently from the UK’s regime there will be no problem in actually bringing funds (remittance) from abroad into Italy even where those funds have not been taxed in full. Indeed the intention of the legislator is to foster investment in Italian businesses and assets. However, like the UK rules, income from an Italian source or deemed to be Italian source income, will generally be liable to Italian tax under normal rules and not covered by the annual flat tax.<\/p>

If you are interested in understanding whether you qualify for this regime and discussing if it is suited to your circumstances, please contact us here<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Italian 2026 Finance Law<\/h2>

Increase of Annual Tax<\/h3>

Under the 2026 Italian Legge di Bilancio (Law No. 199\/2025<\/a>), published in the Gazzetta Ufficiale on 30 December 2025 and in force from 1 January 2026, the annual substitute tax under Article 24-bis of the Italian Tax Code (TUIR) has been increased from \u20ac200,000 to \u20ac300,000 for principal taxpayers who exercise the option in connection with a transfer of tax residence to Italy on or after 1 January 2026. The additional substitute tax for each qualifying family member opting into the regime has likewise been raised from Euro 25,000 to Euro 50,000. Taxpayers who validly opted into the regime prior to 1 January 2026 retain the previous amounts.<\/p>

This is a further increase of flat tax which was increased from Euro 100,000 to 200,000 in August 2024. That earlier increase\u00a0 made no provision for adjustment of the flat Euro 25,000 due annually by family members of those who move to Italy and opt for the flat tax regime.<\/p>

The increase therefore applies to anyone transferring their civil<\/a> residence, <\/a>as defined in the Italian Civil Code, on or after 1 January 2026.<\/p>

Definition of Civil Residence<\/strong><\/h3>

Art 43 of the Civil code states simply:<\/p>

“Residence is at the place where the person has his or her habitual abode”<\/em><\/p>

The reference is thus not to the definition of tax residence under Art 2 of the Income Tax Code<\/a> which provides a wider series of tests of tax residence (physical presence, centre of family interests, habitual abode and registration as resident).\u00a0 Nor is the reference specifically to the date of registration as resident in the list of the resident population (“Anagrafe<\/a>“).<\/p>

On the basis of this concept of habitual abode, it is arguable that anyone who has already, before the 2026 Finance Act enters into force,\u00a0 made arrangements for accommodation (purchased, rented or occupied as a licensee) in Italy which may fall within the definition of a habitual<\/strong> abode can still access the Euro 200,000\/25,000 substitute tax for the standard duration of the special flat tax regime. The concept of “habitual” means that whether accommodation constitutes an habitual abode may only be determined after a certain period of time.\u00a0<\/p>

In other words access to the annual Euro 200,000\/25,000 for the duration of the relief, would appear limited to where the facts and circumstances\u00a0 support the existence of a habitual abode in Italy before 1 January 2026 supported by, for example, residential real estate purchase documents, registered rental agreements etc. and evidence such as utility bills or other proof that the property was actually being utilised as a residential dwelling up to that date of entry into force.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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