Italy Raises Flat Tax to €300,000

From 1 January 2026, Italy will increase the annual substitute tax under its Regime dei Nuovi Residenti. The 2026 Budget Law raises the lump-sum tax from €200,000 to €300,000 for the principal applicant and from €25,000 to €50,000 per qualifying family member. The new rates apply to individuals who become Italian tax residents on or after that date, while existing beneficiaries remain protected under their original conditions.

The Evolution of Italy’s Flat-Tax Framework

Introduced in 2017 at €100,000 per year, the regime allows eligible individuals to pay a fixed annual amount on all foreign-source income, regardless of scale. In 2024 the levy was doubled to €200,000, yet participation remained robust, with over a thousand active beneficiaries reported in 2025.

Participants benefit from exemption from ordinary Italian taxation on foreign income, exemption from wealth taxes on foreign real estate and financial assets, and exemption from inheritance and gift tax on non-Italian assets. The regime can be maintained for up to 15 years, provided the annual substitute tax is paid.

Milan’s Rise as a European Wealth Hub

Milan has strengthened its status as a discreet European wealth centre, combining access to the EU single market with a sophisticated private-banking ecosystem and high quality of life. The Italian flat-tax regime has been instrumental in this positioning, particularly as the United Kingdom prepares to abolish its non-dom regime in April 2026.

High-net-worth individuals from the UK and Northern Europe increasingly view Italy as a credible long-term relocation option. The rise to €300,000 signals a shift toward premium positioning rather than retreat from the international wealth market.

Competitiveness Despite Higher Entry Cost

Private-banking advisers note that the €300,000 levy remains competitive compared with progressive taxation in many European jurisdictions. For internationally diversified families, the regime offers predictability, eliminates the need to report foreign income in Italy, and shields non-Italian assets from Italian wealth and inheritance taxation.

The availability of advance tax rulings through the interpello procedure further enhances legal certainty, aligning Italy with established private wealth planning standards.

Implications for 2026 Mobility Trends

Advisers expect a short-term increase in applications during 2025 as prospective residents seek to secure the €200,000 rate before the deadline. Corporate mobility planners are reassessing relocation costs for executives, given that the regime offsets Italy’s top marginal income tax rate of 43 percent.

By raising the flat tax while preserving legal continuity for existing participants, Italy signals fiscal recalibration without undermining investor confidence. The move redefines the calculus for high-end mobility within Europe.

Expert Conclusion

As International Investment experts report, Italy’s decision to raise the flat-tax regime to €300,000 marks a structural consolidation of its role as a European wealth hub. Although the entry threshold increases, the framework remains one of the most strategically positioned relocation tools for globally mobile families and executives seeking long-term stability within the European Union.