Italian Tax Regimes for Foreign Nationals Moving to Italy

Italy offers several special tax regimes for foreign nationals, expatriates and internationally mobile individuals who decide to transfer their tax residence to Italy.

Depending on the individual’s circumstances, these regimes can provide significant benefits for high-net-worth individuals, foreign pensioners, employees, professionals, professors and researchers.

The most appropriate regime depends on several factors, including:

* The individual’s previous tax residence.
* The nature and geographical source of their income.
* Their employment or professional activity.
* Their family and financial circumstances.
* The municipality in which they intend to reside.
* The location and structure of their investments and other assets.

This guide provides an overview of the principal Italian tax regimes available in 2026 to individuals moving to Italy.

## When Does an Individual Become Tax Resident in Italy?

Before considering any special regime, it is essential to determine whether the individual will become an Italian tax resident.

Under Italian law, an individual is generally considered tax resident in Italy when, for most of the relevant tax year, at least one of the applicable statutory residence criteria is satisfied.

Tax residence is a substantive question. Registration with an Italian municipality is relevant, but the authorities may also examine the individual’s physical presence, personal connections, family life and centre of economic interests.

Double taxation treaties must also be considered when an individual could be regarded as resident in both Italy and another country.

Once an individual becomes an Italian tax resident, Italy generally applies the principle of worldwide taxation. This means that both Italian-source and foreign-source income may need to be reported and taxed in Italy, unless a special regime or an international tax treaty provides otherwise.

## Overview of the Main Italian Tax Regimes

# The €300,000 Flat Tax for New Residents

The Italian new-residents flat tax, governed by Article 24-bis of the Italian Income Tax Code, is primarily designed for high-net-worth individuals with substantial income and assets outside Italy.

For individuals transferring their tax residence to Italy from 2026, the substitute tax is €300,000 per year.

## Who Can Apply for the Italian Flat Tax?

To qualify, an individual must:

* Transfer their tax residence to Italy.
* Have been tax resident outside Italy for at least nine of the ten tax years preceding the transfer.
* Formally exercise the option in their Italian tax return.
* Comply with the other statutory and reporting requirements.

The regime is not restricted to foreign citizens. An Italian citizen returning to Italy may also qualify if the previous foreign-residence requirement is satisfied.

An advance ruling may be submitted to the Italian Revenue Agency where confirmation is needed regarding eligibility or the treatment of particular income, assets or jurisdictions.

## What Income Is Covered?

The €300,000 annual substitute tax generally covers qualifying foreign-source income, regardless of its total amount.

This may include, depending on the circumstances:

* Foreign dividends.
* Foreign interest.
* Foreign rental income.
* Certain foreign capital gains.
* Foreign business or investment income.
* Other income arising outside Italy.

Italian-source income is not covered by the flat tax and remains subject to ordinary Italian taxation.

### Example

An individual transfers their tax residence to Italy and receives €5 million of qualifying foreign-source income during the year.

Instead of paying ordinary Italian income tax on the €5 million, the individual pays a fixed substitute tax of €300,000.

Any income produced in Italy remains taxable under the ordinary rules.

## Can Family Members Be Included?

Eligible family members can be included in the regime.

For transfers governed by the rules in force from 2026, the additional substitute tax is €50,000 per year for each family member included.

For example:

* Main taxpayer: €300,000.
* Spouse: €50,000.
* One eligible child: €50,000.
* Total annual substitute tax: €400,000.

Each family member must satisfy the relevant statutory conditions.

## Country-by-Country Exclusion

The taxpayer may exclude income arising in one or more selected countries from the flat-tax regime. This mechanism is commonly referred to as *country-by-country exclusion* or *cherry picking*.

Income arising in an excluded country is taxed under the ordinary Italian rules. Foreign taxes paid may potentially qualify for a foreign tax credit, subject to Italian law and the applicable double taxation treaty.

Once a country has been excluded, the decision should be evaluated carefully because it can affect the treatment of income arising from that jurisdiction throughout the remaining period of the regime.

## Foreign Assets, Wealth Taxes and Inheritance

During the application of the new-residents regime, important benefits may also apply to foreign assets.

In general, assets covered by the regime may benefit from:

* Exemption from ordinary foreign asset reporting obligations.
* Exemption from IVIE on qualifying foreign real estate.
* Exemption from IVAFE on qualifying foreign financial assets.
* A limitation of Italian inheritance and gift tax to assets situated in Italy.

The precise treatment depends on the ownership structure, the location of the assets and the scope of the option.

Special attention should be given to trusts, foreign companies, investment structures, substantial shareholdings and assets transferred before or after the acquisition of Italian tax residence.

## How Long Does the Flat Tax Last?

The regime can apply for a maximum of 15 tax years.

The taxpayer may revoke the option before the end of this period. The regime may also cease to apply following non-payment or failure to satisfy the relevant statutory requirements.

# The Inbound Workers Regime

The inbound workers regime is intended for qualifying employees and self-employed professionals who transfer their tax residence to Italy and perform their activity mainly in Italy.

Unlike the new-residents regime, it does not impose a fixed annual tax. Instead, it reduces the portion of employment or professional income included in the individual’s taxable income.

## What Is the Tax Benefit?

Under the ordinary version of the regime, only 50% of qualifying employment or professional income is taxable in Italy.

Under certain conditions involving a minor child, only 40% of qualifying income may be taxable.

The benefit applies to qualifying income up to an annual limit of €600,000.

### Example

A professional earns €200,000 from an activity performed in Italy.

Under the standard inbound workers regime:

* Total qualifying income: €200,000.
* Taxable portion: 50%.
* Income subject to ordinary Italian tax: €100,000.

If the enhanced 40% taxable-income rule applies, the amount included in taxable income would be €80,000.

The applicable percentage is not the final tax rate. Italian income tax is calculated on the reduced taxable amount.

## Principal Requirements

The individual must generally:

* Have been tax resident outside Italy for at least the previous three tax years.
* Transfer their tax residence to Italy.
* Undertake to remain tax resident in Italy for at least four years.
* Perform their work mainly within Italian territory.
* Satisfy the relevant professional qualification or specialization requirements.

Longer periods of previous foreign residence may apply when the individual continues to work for the same employer, or for an entity belonging to the same corporate group for which they worked abroad.

In such cases, the required period may increase to six or seven tax years, depending on the individual’s previous employment history in Italy.

## Duration

The inbound workers regime generally applies for five tax years.

Careful planning is necessary before the transfer because the employment contract, commencement date, previous employer and corporate-group relationships can affect eligibility.

# The 7% Tax Regime for Foreign Pensioners

Italy also offers a special 7% substitute tax regime for qualifying individuals receiving a pension from abroad.

This regime is particularly relevant to foreign pensioners who wish to move to an eligible municipality in Southern Italy or another area specifically identified by the legislation.

## Who Can Qualify?

The individual must generally:

* Receive pension income paid by a foreign entity.
* Have been tax resident outside Italy for at least the previous five tax years.
* Transfer from a country that permits adequate exchange of tax information with Italy.
* Move their tax residence to an eligible Italian municipality.
* Exercise the option in their Italian tax return.

The list of eligible municipalities and the applicable population requirements must be checked at the time of the transfer.

## What Does the 7% Tax Cover?

The 7% substitute tax may cover all qualifying foreign-source income, not only the foreign pension.

Depending on the circumstances, it may therefore also cover:

* Foreign investment income.
* Foreign rental income.
* Foreign dividends and interest.
* Other qualifying income arising outside Italy.

Italian-source income generally remains subject to ordinary Italian taxation.

### Example

A pensioner receives:

* €80,000 from a foreign pension.
* €20,000 from other qualifying foreign investments.

The total foreign-source income is €100,000. The substitute tax is €7,000.

## Duration

The regime can apply for up to ten tax years, including the first year in which the option is exercised.

The municipality selected by the taxpayer is essential. A relocation to a municipality that does not qualify may prevent access to the regime or cause the benefit to cease.

# Tax Benefits for Professors and Researchers

Qualifying professors and researchers who transfer their tax residence to Italy may benefit from a substantial exemption on income derived from teaching or research activities performed in Italy.

Under this regime:

* 90% of qualifying income is exempt from Italian income tax.
* Only 10% is included in taxable income.

### Example

A researcher earns €100,000 from qualifying research activity performed in Italy.

Only €10,000 is included in their taxable income and taxed according to the applicable ordinary rates.

## Main Requirements

The professor or researcher must generally:

* Hold an appropriate academic qualification.
* Have carried out documented teaching or research activity abroad.
* Transfer their tax residence to Italy.
* Perform teaching or research activity in Italy.

The ordinary duration is generally six tax years. Extensions may be available under specific conditions, including circumstances involving dependent children or the purchase of residential property in Italy.

# What Happens If No Special Regime Applies?

An individual who becomes an Italian tax resident without electing or qualifying for a special regime is generally subject to ordinary Italian taxation on worldwide income.

The ordinary system may include:

* Personal income tax at progressive rates of 23%, 35% and 43%.
* Regional and municipal surcharges.
* Reporting of foreign investments and assets in the RW section of the Italian tax return.
* IVIE on foreign real estate.
* IVAFE on foreign financial assets.
* Taxation of foreign dividends, interest, rental income and capital gains.
* Potential foreign tax credits.
* Application of the relevant double taxation treaties.

The ordinary regime is not necessarily disadvantageous in every case. The result depends on the individual’s income, available deductions, family situation, foreign taxes and treaty position.

# Which Italian Tax Regime Is the Most Appropriate?

There is no single regime suitable for everyone.

As a general guide:

* Individuals with very high foreign income may consider the €300,000 new-residents flat tax.
* Employees and professionals working mainly in Italy may consider the inbound workers regime.
* Foreign pensioners may consider the 7% substitute tax if they are willing to reside in an eligible municipality.
* Professors and researchers may qualify for the 90% income exemption.
* Individuals who do not qualify for a special regime will generally be taxed under the ordinary worldwide-income rules.

The comparison should be completed before the individual transfers their tax residence to Italy. The timing of the relocation, realization of capital gains, payment of dividends, restructuring of investments and transfer of family assets can materially affect the final tax position.

# Frequently Asked Questions

## Does the €300,000 flat tax cover income earned in Italy?

No. The flat tax generally covers qualifying foreign-source income. Italian-source income remains subject to ordinary Italian taxation.

## Is the €300,000 amount a tax rate?

No. It is a fixed annual substitute tax. The same amount is payable regardless of the total foreign income covered by the regime.

## Can a spouse use the new-residents regime?

Yes, provided the spouse satisfies the applicable requirements. From 2026, the substitute tax for each eligible family member included in the regime is €50,000 per year.

## Can an Italian citizen qualify for these regimes?

Potentially, yes. Eligibility generally depends on previous tax residence and the other statutory requirements, rather than citizenship alone.

## Is buying property in Italy enough to become tax resident?

Not necessarily. Property ownership is only one factor. Tax residence depends on the individual’s registration, presence, personal relationships and overall circumstances.

## Can a foreign pensioner live anywhere in Italy and pay 7%?

No. The individual must transfer their residence to a municipality that qualifies under the legislation in force.

## Can the flat tax and the inbound workers regime be combined?

The interaction between different regimes must be examined carefully. They apply to different categories and sources of income, and their compatibility cannot be assumed automatically.

## When should tax planning begin?

Ideally, before the transfer to Italy. Transactions completed before or after acquiring Italian tax residence may receive very different tax treatment.

# Legal and Tax Assistance for Relocating to Italy

Cecatiello International Family Law assists foreign nationals, expatriates and internationally mobile families relocating to Italy.

A relocation frequently involves more than tax residence. It may also require coordinated advice regarding:

* Family and matrimonial property regimes.
* Ownership and protection of assets.
* International succession planning.
* Trusts and family wealth structures.
* Property purchases in Italy.
* Immigration and residence requirements.
* Recognition of foreign documents and family status.
* Coordination with Italian and international tax advisers.

Planning these aspects before the transfer can help protect the client’s family, assets and long-term interests.

**Contact Cecatiello International Family Law to discuss the legal, family and financial aspects of relocating to Italy.**

*This article provides general information and does not constitute legal or tax advice. Tax rules, qualifying municipalities and administrative interpretations may change. Each case requires an individual assessment under Italian law and the applicable double taxation treaties.*