Italy’s Flat Tax Regimes for New Residents Explained: 2026 Update

Italy introduced its first flat tax regime in 2017 in an effort to compete with the non-domiciled and lump-sum tax programs already present in some European countries, including the U.K., Switzerland, and Cyprus. 

Since then, the country has continued to build on the strategy. It introduced a second regime in 2019 to target people with foreign pensions and has made several changes to both programs, most recently in 2026. Currently, a proposal for a third regime is under review in the Senate. 

In this article, we’ll explore three of Italy’s flat tax regimes: 

• The EUR 300,000 lump-sum tax regime for high-net-worth individuals
• The 7% flat tax regime for holders of foreign pensions
• The proposed 4% flat tax regime for holders of Italian pensions

Italy’s Flat Tax Regimes: A Quick Overview

The following table provides a quick overview of the key features of the current and proposed Italian flat tax regimes:

Feature	EUR 300k Flat Tax	7% Flat Tax	4% Flat Tax
Status	In force	In force	Pending bill
Target audience	High-net-worth individuals	Retirees with a foreign pension	Retirees with an Italian pension
Tax rate	EUR 300,000/year, lump sum	7% flat rate	4% flat rate
Relocation requirements	None	Southern Italy, fewer than 30,000 inhabitants	SNAI-classified municipalities, fewer than 5,000 inhabitants
Duration	Up to 15 years	Up to 10 years	Up to 15 years

Italy’s EUR 300,000 Flat Tax Regime for New Residents

Italy’s first flat tax regime for new residents was introduced in 2017 to attract high-net-worth individuals to relocate to the country, offering a fixed annual payment instead of the country’s progressive tax on foreign income for a period of 15 years.

The program became known as “Italy’s EUR 100,000 flat tax”, as this was the original lump-sum tax obligation. Since 2017, however, the country has raised the rate twice:

1. In 2024, to EUR 200,000 
2. In 2026, to EUR 300,000 

Both earlier rates were grandfathered in, allowing beneficiaries who already joined the program to keep the sum they originally signed up for. 

Who Qualifies for the Flat Tax Regime

Italy’s EUR 300,000 flat tax program is open to any newly registered Italian tax resident who hasn’t been an Italian tax resident for at least nine of the 10 tax periods preceding the year the option takes effect. The regime has no source-of-income requirements or restrictions on municipalities to which the applicants can relocate.

The regime can also be extended to family members. They have to meet the same requirement for previous tax residence and are liable to pay a yearly EUR 50,000 lump-sum tax under the regime.

How the Regime Works

The lump-sum annual payment replaces the ordinary tax on all foreign-sourced income, regardless of its amount. Any income generated in Italy remains subject to the regular income tax. The program also provides an option to exclude foreign income from specific jurisdictions, allowing applicants to benefit from foreign tax credits or tax treaties. 

Capital gains might be subject to different treatment under certain circumstances. Any qualified shareholdings relinquished during the first five years of tax residence in Italy fall outside the flat tax regime and are treated according to the country’s regular tax. 

In addition to the lump-sum tax option, the program offers the following benefits: 

• Exemption from Italy’s wealth tax on foreign real estate
• Exemption from the country’s gift or inheritance tax on foreign assets (domestic assets remain subject to the tax)
• Exemption from foreign asset reporting requirements 

These benefits apply only to jurisdictions covered by the flat tax regime. If an applicant decides to exclude a jurisdiction, they also forfeit the additional benefits. 

How To Apply for the Flat Tax Regime

Before activating the program, applicants for Italy’s EUR 300,000 flat tax regime can file an advance ruling request with Italy’s Revenue Agency to confirm their eligibility. This isn’t a requirement but is often recommended. 

Participation in the program is formalised within the first tax return submitted after moving residence to Italy. Once activated, the option is tacitly renewed every year. Beneficiaries have the right to revoke it and transfer to the regular tax regime. The option can also be forfeited by missing tax payments or making partial payments.

Italy’s 7% Flat Tax Regime for Foreign Pensioners

Italy’s 7% flat tax regime was originally introduced in the 2019 Budget Law as a measure to attract new residents to smaller and economically disadvantaged municipalities in the south of the country. 

Who Qualifies for the 7% Flat Tax Regime?

To qualify for the 7% flat tax regime, applicants need to meet the following requirements:

• Hold a pension from a foreign private or public entity
• Not be a tax resident in Italy in the five years preceding the relocation
• Move to one of the designated municipalities

Eligible municipalities for relocation include those located in the following regions in Southern Italy: 

• Sicily
• Calabria
• Sardinia
• Campania
• Basilicata
• Abruzzo
• Molise
• Puglia

Municipalities affected by the 2009 L’Aquila earthquake and the 2016 Central Italy earthquake are also eligible for relocation under the program. 

Originally, only municipalities with fewer than 20,000 were eligible destinations for the flat tax regime. However, in 2026, the threshold was changed to fewer than 30,000 inhabitants, significantly increasing relocation options for qualifying applicants. 

How the Regime Works 

The 7% substitute tax applies to all foreign-sourced income and is in effect for nine years, including the year in which tax residence in Italy is established. Beneficiaries of the program can choose to exclude income from certain foreign jurisdictions, reverting to regular taxation instead.

The program doesn’t require any special application procedures. In their first tax return as a tax resident, the applicant needs to provide information indicating: 

• Their previous status as a non-resident for at least five years before tax residence in Italy
• The last jurisdiction in which they were a tax resident (only jurisdictions with administrative cooperation agreements for taxation with Italy are eligible)
• Any foreign country they want excluded from the 7% tax regime
• The state of origin of their pension income
• The amount of income subject to the tax regime

Following the first tax year under the flat tax regime, it’s possible to revoke the option with the next tax return and revert to regular taxation. Any already realised benefits will remain intact. The option can also be lost if you cease to meet the requirements or miss a tax payment. 

Once the option is lost, the former beneficiary is precluded from applying for it again. 

Italy’s Proposed 4% Flat Tax Regime for Returning Pensioners

In addition to the 7% flat tax regime, the Italian Senate is considering a proposal to introduce an additional flat tax option for pension holders who want to settle in areas facing demographic challenges. 

The new flat tax would allow eligible new tax residents to opt for a 4% substitute tax rate on qualifying income instead of Italy’s standard progressive income tax rates. The exception would be valid for 15 years. 

Who Qualifies for the 4% Flat Tax Regime?

To qualify for the reduced rate, applicants have to satisfy four key conditions: 

1. They must receive pension income from an Italian social security institution, private or public
2. They must not have been a tax resident of Italy in the five tax years immediately preceding the year they would become an Italian tax resident
3. They must transfer their tax residence to a municipality with no more than 3,000–5,000 inhabitants, classified as intermediate, peripheral, or ultra-peripheral under Italy’s National Strategy for Internal Areas (SNAI)

How the Regime Works

Holders of an Italian pension who meet the requirements will be able to opt into the special regime on their tax return for the year they become tax resident. Any income that wasn’t already subject to taxation in Italy—typically foreign income and the Italian pension—will be taxed at 4%. 

Once activated, the regime will remain active for 15 consecutive tax years. Opting out is available at any point, without losing any benefits already claimed. 

The regime can also be revoked if an applicant fails to meet the requirements or misses a payment beyond the allowed one-year grace period. If the municipality they settled in exceeds the threshold population, beneficiaries of the regime will not lose access to it. 

Losing the status, either by opting out or by having it revoked, triggers a five-year ban on reapplication.

How To Become a Tax Resident in Italy

All three flat tax regimes hinge on the applicant becoming a tax resident in Italy. To be considered a tax resident in Italy, an individual must meet any of the three conditions for more than one half of the year: 

1. Residence: Having a habitual, day-to-day dwelling in the country
2. Domicile: Having one’s personal and family relationships primarily based in Italy
3. Physical presence: Being physically present in the country for at least 183 days

The law also treats registration in the country’s civil registry of the resident population (the Anagrafe) as a presumption of residency. Anyone registered for more than half of the year is treated as a tax resident, unless they prove otherwise.

What To Consider Before Applying for Italy’s Flat Tax Regime

While special tax regimes such as Italy’s EUR 300,000 lump-sum tax or the 7% flat tax rate might sound enticing, it’s worth considering the broader picture before choosing your jurisdiction. Some circumstances you should take into account include: 

• Relocation timing: Since the Italian tax year follows the calendar year and cannot be split, moving early in the year gives you more time to meet the tax residency requirements
• Tax treatment outside the regime: As the regimes generally provide preferential treatment for foreign income and assets, your local earnings and holdings can still be subject to personal and corporate income taxes, as well as the inheritance tax
• Tax obligations at home: Your home country might still tax your worldwide income if you’re from the U.S., or levy exit charges once you stop being a tax resident if you’re from Canada or Australia

You should also consider that becoming a tax resident and securing a residence permit in the country are two separate processes. Unless you’re an EU citizen, you might need a residence permit to satisfy tax residence requirements. Any delays with the permit can affect your relocation and tax residency plans. 

The most effective way to navigate both processes is to work with consultants who have hands-on experience with Italy’s immigration system. Such professionals can advise you on upcoming regulatory changes and anticipate delays before they occur. For a streamlined path to Italian residency, contact Nomad Capitalist.

Build Your International Strategy With Nomad Capitalist

Nomad Capitalist is a consultancy firm specialising in global mobility and wealth protection. We’ve helped more than 1,500 clients use programs such as Italy’s flat tax rate to achieve their strategic goals, whether they’re reducing tax liabilities, protecting and diversifying assets ( tangible and intangible), or securing a second residency or citizenship. 

Our flagship service is the Action Plan, a step-by-step blueprint that turns your global strategy into an actionable roadmap. When developing the Plan, we take into account your unique circumstances and priorities and create a clear pathway to your goals, sequenced for maximum efficiency. 

Here’s what partnering with us looks like:

1. We ask you to fill out a form to help us determine whether we’re a good match
2. We schedule a 45-minute onboarding call to learn more about your situation and needs
3. Your case manager develops an Action Plan and presents it to you for approval
4. We implement the Plan over 12 months, providing management and assistance
5. You continue receiving support from us even after the Plan is implemented

If you’re considering an EU residence, Nomad Capitalist can help you determine how Italy might fit into your plans. If it’s a good choice, we can help you through the process of obtaining residency in the country, as well as meet the requirements for Italy’s flat-tax programs. To get started, contact Nomad Capitalist now!