Italy Raises Flat Tax to €300,000 for New Resident Investors

In a move that is making headlines in the international investment and tax planning community, Italy has officially increased its flat tax for new residents to €300,000 per year, effective January 1, 2026. For families, the supplementary flat tax for each qualifying dependent has also doubled from €25,000 to €50,000.

This change is significant, not only because it impacts potential applicants looking to take advantage of Italy’s preferential tax regime, but because it signals a broader trend across Europe: governments are revisiting the structure and pricing of attractive tax residency programs,

For global investors, business owners, and high-net-worth individuals, understanding the implications of this increase is essential. Not only does it affect wealth structuring and tax efficiency, but it also influences strategic decisions about where to live, invest, and build a legacy.

TIntroduced in 2017, Italy’s flat tax regime was designed to attract high-net-worth individuals (HNWIs) from abroad by offering a simple, predictable tax structure on foreign income. For years, the annual flat tax was €100,000, later raised to €200,000. The 2026 increase to €300,000 marks the most significant adjustment since the program began.

Here’s how the regime works:

• It is available to individuals who transfer their tax residency to Italy and who have not been tax resident in Italy for at least nine of the previous ten years.
• It applies only to foreign-sourced income. Income sourced in Italy is taxed under regular progressive rates.
• The €300,000 payment is a fixed, annual substitute for income tax on foreign earnings, regardless of the actual amount earned abroad.
• An additional fixed payment of €50,000 per year applies for each eligible family member included in the regime.
• The regime is valid for up to 15 years.

This flat tax does not cover capital gains from the sale of qualified shareholdings within the first five years after moving to Italy, so careful planning is still required for entrepreneurs and investors with large portfolios.

The increase in Italy’s flat tax is not random, it reflects a mix of domestic economic strategy and international pressure. As Italy implements its 2026–2028 budget framework, the government is looking for ways to balance its finances while still attracting foreign capital.

Raising the flat tax achieves two objectives:

1. Target Higher Net Worth Individuals: By increasing the cost of entry, Italy is filtering for applicants with higher levels of income and investable wealth. This allows the government to retain the exclusivity and appeal of the program while ensuring it is financially meaningful for the country.
2. Boost Revenue Without Raising General Taxes: Italy, like many EU nations, is under pressure to manage debt levels while continuing to invest in social and economic programs. Wealthy new residents are viewed as a reliable revenue stream.

The new €300,000 rate applies only to new applicants whose Italian tax residency begins in 2026 or later. Those who already opted into the program under the previous €100,000 or €200,000 rates are not affected; they will continue under the conditions that were in place when they entered, this is known as “grandfathering.”

The most impacted group will be:

• Individuals currently planning a move to Italy but who have not yet established tax residency.
• Global families evaluating Italy among multiple options for residence and tax optimization.
• Business owners who plan to relocate and operate globally from a European base.

What This Means for Global Wealth Strategy

For high-net-worth individuals and investors, tax is just one piece of a larger equation that includes lifestyle, legal protections, education opportunities, healthcare access, and long-term estate planning. The €300,000 flat tax remains attractive, but it changes the cost-benefit equation.

Still Attractive, But Selectively So

Italy’s flat tax regime is still a powerful tool for simplifying international tax compliance and optimizing wealth planning. It eliminates the need for complex foreign asset reporting and shelters foreign income from Italy’s progressive income tax system, which can reach up to 43%.

For individuals earning more than €1 million in foreign income annually, the €300,000 flat tax may still represent a substantial savings and with the added benefit of residency in one of Europe’s most desirable countries.

Evaluating the Total Cost of Relocation

With the increase, applicants must now carefully evaluate their total cost of relocation:

• The flat tax itself (€300,000)
• Costs for family members (€50,000 per person)
• Real estate investments or rental housing
• Living expenses in Italy
• Legal, financial, and administrative costs to enter and maintain residency

What this means is that the threshold for Italy’s program being “worth it” is now higher. Investors must assess whether their foreign income, lifestyle preferences, and long-term plans justify the new cost.

Alternative Strategies for Global Investors

While Italy remains a desirable destination, some investors may now begin to look more actively at alternative residence or citizenship options that offer more favorable tax treatment or lower costs of entry.

Citizenship by Investment (CBI) programs, in particular, may provide:

• Greater flexibility in international mobility
• Attractive personal and corporate tax regimes
• Full citizenship rights, including the ability to live and work in multiple countries
• Easier legacy planning and asset protection

These options can be especially appealing to business owners and global entrepreneurs who need access to multiple markets or want a “Plan B” for geopolitical or financial security.

If you’re considering relocating to Italy under the flat tax regime, or simply trying to decide whether it still aligns with your overall strategy, here are some key considerations:

1. Timing:

If your plan was to establish residency in Italy under the €200,000 regime, you need to act before January 1, 2026. After that date, all new applications will fall under the €300,000 structure.

2. Income Composition:

The more of your income that is foreign-sourced (e.g., dividends, capital gains from non-Italian assets, offshore investments), the more beneficial this regime remains. If most of your income will come from Italy, the benefits diminish.

3. Family Inclusion:

Bringing family members under the flat tax now requires an additional €50,000 per person annually. Factor this into your overall financial modeling and succession planning.

4. Investment Location:

Depending on your business or asset profile, Italy’s non-inclusion of Italian-sourced income in the flat tax might encourage investors to maintain core businesses outside of Italy while enjoying the lifestyle and residency benefits.

5. Legal & Financial Advice:

Due to the complexity of cross-border taxation, estate planning, and international residency law, working with experienced advisors is essential. A well-structured plan can significantly enhance the value of your relocation and protect your wealth over the long term.

Italy’s flat tax increase may be part of a larger trend in Europe. Governments are balancing the need to remain attractive to foreign investors with growing domestic demand for tax fairness and public revenue.

For internationally mobile investors, this means more active planning and a deeper understanding of global tax systems are required. Flat tax regimes, golden visas, and citizenship programs are evolving, sometimes quickly and decisions made today may affect long-term financial outcomes.

Italy’s flat tax remains a valuable tool for the right type of investor, but the higher cost means it’s not for everyone. If you’re thinking globally, about security, access, lifestyle, and legacy, there are other options that may provide greater flexibility, lower entry costs, and long-term advantages.

Whether you’re exploring Italy or considering other jurisdictions, now is the time to evaluate your global strategy. Working with professionals who understand the nuances of tax, citizenship, and mobility can help you make decisions that protect and grow your wealth for generations.

Considering international relocation or a second citizenship? Let’s help you build a plan that aligns with your goals. Contact us today for a confidential consultation.