Italy Flat Tax 2026: Who, What, and How It Works

What’s changed?

From 1 January 2026, Italy’s flat tax for new residents will rise from €200,000 to €300,000, and from €25,000 to €50,000 for each qualifying family member. The increase applies only to those establishing residency from 2026 onwards; existing beneficiaries retain their current rate.

How does it work?

Introduced under the 2017 Budget Law (Article 24), the regime allows new residents to replace personal income tax (IRPEF) on foreign-source income with a single fixed annual payment, regardless of the amount earned. Italian-source income remains taxed at normal rates.

Eligibility requires that an applicant has not been fiscally resident in Italy for at least nine of the previous ten years. The regime runs for 15 years and can be extended to close family members by paying a reduced annual contribution.

Additional advantages

In addition to simplified taxation, the regime provides:

• Exemption from IVIE and IVAFE (wealth taxes on assets held abroad by Italian tax residents) as well as taxes on crypto-assets
• Exemption from foreign asset reporting obligations
• Exemption from inheritance and gift taxes on assets and rights located abroad

Context and rationale

Italy’s adjustment comes amid efforts to balance fiscal stability with competitiveness. 

As highlighted in the European Lifestyle Report, global wealth remains increasingly mobile and “in flux”, and Italy has been a key beneficiary of the political, economic, and fiscal turbulence many advanced nations have faced. 

For context on migration under the scheme, see our previous article which reports on the numbers that have relocated since the flat tax’s introduction in 2017.

Those who relocate before 31 December 2025 will continue to benefit from current rates, providing a clear incentive for early movers. Italy’s blend of lifestyle, culture, and economic opportunity remains highly attractive to globally mobile individuals.

What does it mean for investors?

According to Andrew Blandford-Newson of Knight Frank, “The rise to €300,000 is unlikely to deter internationally mobile individuals seeking Italy’s unique blend of culture, lifestyle, and opportunity. The fundamentals that have made Italy one of Europe’s most appealing destinations remain firmly in place.”

Isabella Foster of Knight Frank’s Italian desk, adds: “Stability and transparency are key for global investors. Italy continues to offer both - alongside an unmatched quality of life across its cities, coasts, and countryside.”

The takeaway

HNWIs considering a move to Italy should act swiftly to secure residency under the current flat tax rates. Those already in the process of relocating - or actively exploring purchase or long-term rental options - may wish to accelerate their plans to ensure they qualify for the €200,000 flat tax rate (and €25,000 for family members) before the 31 December 2025 cutoff.

Acting now not only locks in the existing rates but also provides certainty amid evolving fiscal policies, allowing investors to fully plan their lifestyle, property acquisition, and wealth structuring with confidence.

For guidance on the updated regime and relocation opportunities, contact our International Residential team or contact the Traverse International Finance team for finance enquiries or a guide to Italian property finance. 

You can also download our Tuscany Insight Report or our Italian Homes publication.