Italy Increases Flat Tax for UHNWIs to €300,000, Solidifying Its Position as a Premium European Destination

Italy has officially approved a significant increase to its special flat tax regime for new tax residents. With the approval of the 2026 Budget Law, the annual lump-sum tax for qualifying individuals has been raised from €200,000 to €300,000, while the flat tax for family members has increased from €25,000 to €50,000 per person.

Italy “Flat Tax”

The Italian “flat tax” for new residents is a special tax regime for High Net Worth Individuals (HNWIs) that allows them to pay a fixed annual tax on all non-Italian sourced income, instead of the standard progressive Italian income tax (IRPEF). This regime is designed to attract wealthy individuals and their assets to Italy.

This reform solidifies Italy’s clear and deliberate policy choice of positioning itself as a long-term hub for ultra-high-net-worth individuals (UHNWIs). The country has demonstrated a strong commitment to legal certainty, predictability, and investor confidence, making it an attractive destination for internationally mobile individuals.

This regime is generally beneficial for individuals with substantial foreign income that would otherwise be taxed at high rates under Italy’s progressive system (which can reach up to 43% plus surcharges). The fixed lump-sum payment offers predictability and significant tax savings for the right candidate.

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Italy’s flat tax regime is now tailored to UHNW households, with a higher entry cost serving multiple purposes such as increasing fiscal contribution per taxpayer, reinforcing the exclusivity of the regime, and filtering for genuinely high-income and high-net-worth profiles. This change aligns Italy with other European UHNWI destinations like Switzerland and Monaco.

Despite the increase, the Italian flat tax remains highly attractive for individuals and families earning €1 to €1.5 million per year and above, particularly when income is predominantly foreign-sourced. It offers a substantial reduction in the effective tax rate, full certainty on the annual tax burden, exemption from Italian wealth taxes and reporting obligations on foreign assets, and exemption from Italian gift and inheritance tax on foreign assets.

The increase in the flat tax for qualifying family members is equally significant, with the regime now clearly tailored to UHNW households. For couples and families with consolidated income of €2 to €3 million per year, the Italian flat tax remains a compelling and efficient solution.

Timing remains a critical factor, as individuals who transferred their tax residence to Italy before the new law’s entry into force will permanently retain access to the €200,000 regime, potentially saving up to €100,000 per year for up to 15 years. This may lead to a concentration of relocations before the legislative changes take effect.

According to ImiDaily, while this may be the last hike for the regime, further increases could risk undermining its competitiveness relative to other European destinations. However, the consistent application of grandfathering confirms that Italy understands the importance of trust and stability in attracting global capital.

Golden Visa

The “Flat Tax” and the “Golden Visa” are not the same thing.

Italy’s Flat Tax for New Residents (a lump sum on foreign income) and the Golden Visa (Investor Visa for residency via investment) are separate but often linked. The Flat Tax is a favorable tax regime for high-net-worth individuals (HNWIs) moving to Italy, while the Golden Visa grants residency through specific investments, with visa holders often qualifying to choose the Flat Tax regime for simplified taxation of their foreign earnings. A Golden Visa is not necessary to use the Flat Tax.

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