On 30 December 2025, Italy officially approved changes to its special flat tax regime for new tax residents. Under the 2026 Budget Law, the annual flat tax for eligible individuals has increased from €200,000 to €300,000, while the tax for qualifying family members has risen from €25,000 to €50,000 per person.
This is the second major increase in two years and shows Italy’s clear intention to attract ultra-high-net-worth individuals and position itself as a long-term destination for them.
What is the reason behind the Italy special tax regime increase?
Italy increased its special flat tax regime to €300,000 to ensure the program is aimed at families, and high-net-worth individuals with significant international income and assets, rather than a wide base of new tax residents.
The higher tax level allows the country to generate greater fiscal contributions from each participant while keeping the program selective and focused on quality rather than volume.
Raising the minimum financial requirement might be seen as a risky move, but Italy is signalling that it wants to be considered as one of the countries that compete at the top end of the wealth market.
This aligns the country with some of the established European UHNWI like Switzerland, which already offers an exclusive Swiss Residence Permit by Lump Sum Taxation and Monaco, where the Monaco resident permit is highly sought after due to its attractive tax benefits, including no personal income tax, no capital gains tax, and no wealth tax for most residents.
What happens if you were already under the Italy Flat Tax Regime?
The €300,000 flat tax only applies to individuals who become Italian tax residents after the new law takes effect. Anyone who relocated to Italy earlier and correctly enrolled in the flat tax regime will continue paying the amount that applied at the time they moved, with no retroactive changes. This tax regime can also be attractive to those who relocate under the Italy Golden Visa.
To qualify for the Italy flat tax regime:
- You must not have been an Italian tax resident for at least 9 of the past 10 years.
- The flat tax applies only to foreign-sourced income, while income earned in Italy is taxed under standard rules.
- The regime is open to business owners, investors, self-employed individuals, and retirees with income or assets abroad.
- Eligible family members can be included by paying an additional €50,000 per person and benefit from the same tax structure.
- Applicants must formally apply and receive approval from the Italian tax authorities before using the regime.
Does the €300,000 special tax regime increase still make it attractive?
Yes, the €300,000 flat tax regime remains attractive for ultra-high-net-worth individuals who meet the requirements. In addition to offering tax certainty through a fixed annual payment for up to 15 years, the regime provides other major benefits such as no reporting of most foreign assets, no wealth taxes on foreign financial assets, real estate, or crypto held abroad, and no inheritance or gift tax on foreign assets transferred during the regime.
When combined with the option to include family members and the lifestyle and mobility benefits of living in Italy, the flat tax regime is still a great and competitive choice for global investors.
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