Italy Raises Lump Sum Tax to €300,000

2026 Reform Reshapes European Tax Residency Landscape

From 1 January 2026, Italy will increase its annual lump sum tax for new tax residents to €300,000. Initially introduced in 2017 at €100,000 and later raised to €200,000 for new entrants, the regime was designed to attract internationally mobile high-net-worth individuals. The latest increase repositions Italy within the premium tier of European tax residency frameworks.

Existing participants remain protected under grandfathering provisions, provided statutory conditions continue to be met. At the same time, the substitute tax for qualifying family members will rise from €25,000 to €50,000 per person per year.

Structure of Italy’s Lump Sum Regime

The Italian regime substitutes ordinary taxation on foreign-source income and capital gains with a fixed annual charge for up to 15 years. Eligibility requires prior non-residence in Italy for a qualifying period before relocation.

By raising the annual charge to €300,000, Italy effectively transitions from a competitive entry-level regime to a high-commitment, premium option. This development materially alters Italy’s comparative positioning in the European tax residency market.

A Broader European Recalibration

Italy’s reform reflects a wider European reassessment of tax-efficient residency frameworks. Governments across the continent are recalibrating incentive systems to enhance fiscal sustainability, political defensibility, and long-term policy stability.

Emerging themes include higher baseline fiscal contributions for new entrants, differentiation between legacy participants and future applicants, and a shift from aggressive competitiveness toward durable structural models.

For HNWIs, tax residence decisions are increasingly multi-dimensional, integrating legal certainty, mobility considerations, succession planning, and global asset structuring.

Comparative European Perspectives

Switzerland continues to offer expenditure-based taxation, with tax calculated on lifestyle expenditure rather than actual income. While stable, negotiated tax bases frequently result in high six-figure effective liabilities, positioning Switzerland within the upper cost tier.

Portugal has replaced its former Non-Habitual Resident regime with the more targeted IFICI framework, focusing on scientific research and innovation-related professionals. This narrower approach illustrates Europe’s move toward selective incentives.

Ireland maintains residence and domicile principles grounded in common law traditions, though evolving international compliance expectations require careful structuring.

Malta’s Resident Non-Dom System

Malta’s resident non-domiciled tax system operates within its domestic income tax framework and is based on residence and domicile principles rather than a standalone incentive. Taxation follows a source and remittance basis, meaning foreign income is taxable only when remitted to Malta, while foreign capital gains are not subject to Maltese tax even if remitted.

The regime is not tied to a single immigration pathway and may apply under various lawful residence routes. Taxation depends on residence and domicile rather than citizenship alone.

Strategic Implications for HNWIs

Italy’s €300,000 threshold reinforces segmentation within Europe’s tax residency market. Decisions increasingly prioritize structural certainty, avoidance of unintended worldwide taxation, and long-term policy continuity.

Jurisdictions offering principle-based taxation and flexible mobility frameworks are likely to remain central to sophisticated cross-border residency strategies.

As reported by experts at International Investment, Italy’s increase of the lump sum tax to €300,000 signals a structural evolution of European tax residency systems toward higher thresholds and greater policy durability, making long-term strategic planning essential for internationally mobile individuals