Introduction

In recent years, Italy has introduced several tax regimes aimed at attracting foreign individuals, investors, and professionals to relocate. Among these, the flat tax regime for new residents—introduced by Article 24-bis of the Italian Income Tax Code (TUIR)—stands out as one of the most appealing solutions for high-net-worth individuals (HNWIs) seeking a European base with a favorable tax framework.

As of August 2024, the annual substitute tax under the regime was increased from €100,000 to €200,000 for the main applicant. The fixed amount for qualifying family members remains at €25,000 per person per year. This regime provides legal certainty, predictable taxation, and significant exemptions from Italian tax obligations on foreign income.

This guide provides a detailed explanation of how the regime works, who qualifies, and what to consider when planning your relocation.

Who Can Benefit From This Regime?

To be eligible for the Italian flat tax regime, an individual must:

  • Become an Italian tax resident, typically by spending more than 183 days in Italy during the calendar year and registering their residence with the local town hall (Comune).
  • Not have been resident in Italy for tax purposes in at least 9 out of the previous 10 years.
  • Elect the regime within the first year of Italian tax residency.

Eligible family members (including spouse, children, and other dependents) can also benefit from the regime by paying an additional fixed tax of €25,000 per person per year.

This regime is suitable for:

  • Entrepreneurs and investors with income and assets held abroad.
  • International families with passive income and diversified global holdings.
  • Retirees and digital nomads with complex international tax positions.

Understanding Italian Tax Residency

Before applying for the flat tax regime, it is essential to understand what it means to become a tax resident in Italy.

As of January 1, 2024, Italian tax residency is determined by new rules introduced in the 2023 Budget Law (Law no. 197/2022). These rules reflect updated definitions of residence and domicile under the Italian Civil Code and emphasize the need for strong personal and economic ties with Italy.

Under the revised Article 2 of the Italian Income Tax Code, an individual is considered tax resident in Italy if, for more than 183 days in a calendar year, they meet any one of the following conditions:

  1. Are registered in the Italian population register (Anagrafe)
  2. Have their domicile in Italy, defined as the place where their personal and family relationships are primarily based
  3. Have their habitual abode in Italy, meaning the place where they usually live and sleep, regardless of where they work or travel
  4. Physical presence in Italy (with fractions of days counting as full days).

These new definitions align Italian rules more closely with international standards and make it clear that residency is about more than physical presence—it’s also about where your life is centered.

Important notes:

  • Occasional visits or temporary stays in Italy do not create residency unless they reflect habitual living.
  • Registering with the Anagrafe is still considered strong evidence of residency but is not strictly necessary if other criteria are met.
  • Residency is assessed annually and must be reviewed carefully before electing the flat tax regime.

Proper planning of your move—including the timing, place of residence, and documentation—is critical for a successful and compliant transition to Italian tax residency.

How the Flat Tax Regime Works

Once the regime is elected and approved (either automatically through the tax return or via a prior tax ruling), the individual:

  • Pays a fixed substitute tax of €200,000 per year, regardless of the amount or type of foreign income.
  • Is exempt from declaring foreign income and assets in the annual Italian tax return.
  • Is exempt from IVIE and IVAFE, which are wealth taxes on foreign real estate and financial assets.
  • Is exempt from inheritance and gift tax on foreign assets passed during the regime.
  • Is not subject to CFC rules, which typically apply to foreign companies controlled by Italian residents.
  • Retains access to Italy’s network of tax treaties, helping avoid double taxation and providing clarity in cross-border situations.

The €200,000 payment replaces any other taxation on foreign-source income. This includes dividends, interest, capital gains, rental income from foreign property, trust distributions, business income, and pensions from abroad.

However, Italian-source income (e.g., rent from Italian property, salary from an Italian employer) is taxed according to ordinary progressive tax rates. This income must still be declared and taxed under the standard Italian tax system.

Duration and Revocation

The regime can be applied for a maximum of 15 years. During this time, the annual substitute tax must be paid by the standard tax deadline (typically June 30 of the following year).

The regime can be revoked voluntarily at any time, or it may terminate automatically if:

  • The payment is missed or late
  • The individual ceases to be tax resident in Italy
  • The 15-year limit is reached

Revocation is irreversible. Once you exit the regime, you cannot re-enter. Therefore, it is essential to structure your long-term plan from the outset.

Examples of Eligible Profiles

Here are a few practical scenarios where the flat tax regime would be highly beneficial:

  1. U.S. tech entrepreneur
    A U.S. citizen with equity in multiple startups sells one of his companies for €15 million. By becoming a resident in Italy and applying the flat tax regime, he can pay €200,000 per year instead of facing ordinary taxation on capital gains.
  2. British investor with foreign trust
    A UK-based investor who has a complex trust structure and receives annual distributions can avoid Italian taxation on trust income by applying the flat tax, which also simplifies reporting obligations.
  3. Swiss-based executive relocating to Milan with family
    An executive working for a multinational decides to relocate to Italy with his spouse and two children. The total annual tax under the regime would be €200,000 + €25,000 = €225,000. He is exempt from disclosing or paying taxes on his dividends and investment portfolio abroad.

Application Process: Ruling or Direct Election?

There are two ways to access the regime:

Option 1: Advance tax ruling
You may submit a request to the Italian Tax Authorities before applying the regime, asking for confirmation of eligibility. This process is especially advisable if you have:

  • A complex history of tax residency
  • Foreign structures (e.g., trusts, offshore companies)
  • Substantial income from multiple jurisdictions
  • Concerns about potential challenges from the tax office

The ruling provides legal certainty, and once granted, you may proceed with full confidence.

Option 2: Direct election via tax return
You may also opt for the regime by ticking the relevant boxes in your first Italian tax return as a resident. However, this does not guarantee approval, and the Tax Authorities may open an audit later on. This option is faster and cheaper but comes with risk.

Common Mistakes to Avoid

  • Assuming you qualify without a full review
  • Failing to plan the timing of your move
  • Relying on partial days to calculate residency
  • Overlooking global structures that may create exposure
  • Missing the annual payment deadline

Strategic Planning and Tax Optimization

Beyond the tax benefits, the flat tax regime offers a powerful planning opportunity. You can:

  • Reorganize your wealth structures while under a fixed-tax framework
  • Transfer wealth to heirs during the regime with no inheritance tax
  • Set up holding companies in foreign jurisdictions with no CFC implications
  • Choose the right timing for large liquidity events
  • Combine relocation with lifestyle planning, including residency and visa solutions

Our Support – Move to Dolce Vita

At Move to Dolce Vita, we provide a full-service approach to high-value relocations. We offer:

  • Initial tax residency and eligibility analysis
  • Written tax opinions and fiscal due diligence
  • Filing and handling of tax ruling requests
  • Support with residence registration and immigration
  • Coordination with private banks, wealth managers, and notaries
  • Ongoing tax compliance and legal support in Italy

Our founder, Marco Mesina, is a licensed Italian lawyer and international tax advisor with over 10 years of experience in assisting globally mobile individuals and families.

Ready to Move?

If you are considering a relocation to Italy and wish to benefit from the flat tax regime, contact us for a confidential consultation.

We will guide you step by step to make sure your relocation is not only smooth and compliant—but also strategically advantageous.

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