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.
What about the proposed “exit tax”?
Italy’s 2027 Budget Law, now before Parliament, introduces a new exit tax. As drafted (Article 17), anyone who moves their tax residence abroad after at least six of the previous ten years in Italy, holding financial assets worth €800,000 or more, would be taxed as if they had sold those assets on the way out. The rate is 26% on the unrealized gain, due within 180 days, with deferral available for moves inside the EU. It would apply to transfers from 1 January 2027.
The open question is whether it touches flat-tax residents at all: the bill is silent on the point, and there is a solid argument that it should not reach them, since gains on foreign assets are foreign income already covered by the regime’s annual charge. For now this is a draft, not law, and Parliament can still change it. We are following it closely and will report all concrete updates as soon as they become available.
