The Italian neo-resident regime (Article 24-bis of the TUIR, Consolidated Tax Law) offers individuals transferring their tax residence to Italy the option of subjecting all their foreign-source income to a flat annual tax.
The allowance has been increased to €200,000 per year since Decree-Law 113/2024, compared to €100,000 for beneficiaries registered before this change. An additional €25,000 per year is provided for each member of the extended family household who is also a beneficiary.
Income from Italian sources remains taxed according to the standard tax rates. This regime applies for a maximum period of fifteen years.
Main conditions: non-residence for Italian tax purposes for 9 of the 10 years preceding the application, actual transfer of residence to Italy, and formal application to the Italian tax authorities. The scheme is particularly suited to individuals with very high financial assets generating significant foreign passive income (exceeding €1.5 million per year), for whom the flat tax represents a negligible marginal tax burden.
Architecture of the neo-residenti regime
The Italian setting is best appreciated in light of all local factors: our page expatriation to Italy It details the wealth implications.
Created in 2017 on the model of the British non-domiciled residence (non-dom regime), the Italian neo-residenti regime operates on the principle of the foreign tax box.
The foreign-sourced income of the beneficiary taxpayer is excluded from the ordinary Italian tax base and subject to a flat-rate annual withholding tax. Income from Italian sources (rental income from Italian properties, salaries and wages from work performed in Italy, dividends from Italian companies) remains taxed according to the standard Italian tax scale.
The initial allowance was €100,000 per year since 2017. It was increased to €200,000 per year for new beneficiaries by Decree-Law No. 113/2024 of August 9, 2024 (which must be enacted into law within 60 days). Beneficiaries already registered before this date retain the €100,000 allowance (grandfathering clause).
Eligibility requirements
Condition 1 — Non-Italian tax residency for 9 of the last 10 years.
The applicant must not have been an Italian tax resident, as defined in Article 2 of the TUIR, for at least 9 of the 10 tax years preceding their application. This condition excludes any cyclical return of an Italian expatriate.
Condition 2 — Effective transfer of residence to Italy.
Registration with the AIRE (Anagrafe Nazionale della Popolazione Residente all'Estero) and in the Italian municipal register. Physical presence of more than 183 days in 12 consecutive months or center of vital interests in Italy as defined in Article 2 of the TUIR.
Condition 3 — Formal request to opt for the scheme.
The request must be submitted to the Agenzia delle Entrate (Italian Revenue Agency) on the Italian income tax return for the first year of residence (generally filed at the end of June of the following year). This option commits the taxpayer for a minimum period.
Condition 4 — Annual payment of the package.
The flat-rate tax is due every year, regardless of whether there is foreign income. For a taxpayer whose foreign income is zero in a given year, the flat-rate tax remains due and therefore constitutes a fixed cost.
Comparative taxation: France vs. the neo-resident regime
Typical case: seller profile having placed 12 million euros in portfolio generating an average annual return of 4 % (480,000 € in dividends and capital gains from foreign portfolio), with an additional Italian rental income of 60,000 €.
| Source of income | French tax regime PFU 30 % + CEHR | Italian neo-resident regime |
| Foreign dividends/capital gains: €480,000 | €144,000 (PFU 30 %) | Included in package |
| CEHR 4 % above €500k | According to cumulative RFR | Not applicable |
| Italian income €60,000 | Not applicable (in France) | Italian scale (approximate marginal value of ~36 %) |
| Annual package for new residents | Not applicable | 200 000 € |
| Approximate annual total | ≈ €144,000 to €200,000 | ≈ €222,000 (flat rate + local Italian tax) |
Comparative reading: for a foreign income of €480,000, the Italian neo-residenti regime is more expensive than the French PFU.
The economic tipping point is around €700,000 to €800,000 of annual foreign income: below this threshold, France's flat tax rate (PFU) remains competitive; above it, Italy becomes progressively more efficient, with a significant net advantage for incomes exceeding €2 million annually. For foreign income of €3 million, France's flat tax rate (PFU) costs €900,000, while Italy's costs for new residents are €200,000 (a saving of €700,000 per year).
Additional benefits of the plan
Exemption from IVIE and IVAFE
New residents are exempt from the two Italian taxes on assets held abroad: IVIE (Imposta sul Valore degli Immobili all'Estero, 0.76 % on the value of foreign real estate) and IVAFE (Imposta sul Valore delle Attività Finanziarie all'Estero, 0.2 % on the value of foreign financial assets).
Exemption from tax monitoring
Exemption from the annual declaration of foreign assets (form RW), considerably simplified for beneficiaries of the scheme.
Exemption from inheritance and gift taxes on foreign assets
Assets located outside Italy are not subject to Italian inheritance tax in the event of the beneficiary's death (whereas Italian assets are).
Family extension possible
The spouse and each dependent child can benefit from the plan with an additional flat-rate payment of €25,000 per person. For a family of four, the total annual cost is €200,000 + €75,000 = €275,000.
Limitations and points of vigilance
To quantify your case, our tax mobility and expatriation simulator compare the taxation before and after departure.
Fixed cost regardless of actual income
A poor year for assets (low foreign income) maintains the fixed tax liability. The scheme becomes suboptimal for individuals with volatile incomes below €700,000 per year.
Italian-source income taxed at the Italian rate
Italian income (rent, dividends from Italian companies, salaries) is excluded from the lump sum tax and is taxed according to the ordinary rules. The structuring should avoid generating significant Italian income.
France-Italy Convention: Withholding tax on dividends
The rules for withholding tax depend on your status with regard to the French tax authorities: see taxation of non-residents.
Dividends paid by a French company to an Italian neo-resident are subject to conventional French withholding tax (15 % for shareholdings below 25 %). This withholding tax is not refunded by Italy under the neo-resident regime, unlike the standard Italian regime which would have allowed a tax credit.
Regulatory stability
The scheme was amended by decree-law in 2024 (increasing the threshold from €100,000 to €200,000). Future amendments are possible. The decree-law was to be enacted into law within 60 days of its publication in August 2024.
Balmont Reading
Italy under the neo-resident regime is currently the most efficient destination for an ultra-high-net-worth French individual with significant passive income. From €1.5 million in annual foreign income, the regime becomes economically unbeatable, and switching to the UAE/Switzerland is no longer justified by taxation.
However, choosing a diet is just one decision among many: our method for structuring one's assets while living abroad details the seven stages in which it is involved.
The firm's rule of thumb: if financial assets exceed €25 million and generate recurring dividends/capital gains, Italy is almost always the optimal destination. The differentiating advantage over Dubai: a European ecosystem, neutral inheritance tax on foreign assets, quality of life, air mobility, and unquestionable OECD compliance. The main risk: a potential increase in the lump sum tax in future Italian budget laws.
FAQ
Is the €200,000 lump sum payment retroactive?
No. If you were already a beneficiary of the scheme before August 10, 2024, you retain the €100,000 lump sum thanks to the "grandfathering" clause.
Can I exclude a specific country from the plan?
Yes, the scheme offers the "cherry picking" option. You can choose to tax income from a foreign country at the standard Italian tax rate to benefit from treaty tax credits, while keeping the rest under the flat-rate system.
Does Italy tax my real estate wealth in France?
Under the neo-resident regime, you are exempt from the French wealth tax (IVIE) on your foreign assets. However, be aware that the French real estate wealth tax (IFI) remains payable if your real estate assets in France exceed €1.3 million.
Sources & references
- Article 24-bis of the TUIR (Testo Unico delle Imposte sui Redditi) : This is the "founding" text. It introduced the alternative taxation for new residents in 2017. This is the absolute primary source.
- Article 2 of the TUIR : Essential for defining the concept of tax residence in Italy (the famous 183 days and the center of vital interests).
- Decree-Law No. 113 of August 9, 2024 (Decreto Omnibus) : This is the source of the burning issue. It is this text that amended paragraph 2 of Article 24-bis to increase the fixed penalty to 200 000 €.
- Circular No. 17/E of the Agenzia delle Entrate (May 23, 2017) : The official interpretative guide of the Italian tax administration on the application of the regime.
- IVIE & IVAFE (Law No. 214/2011) : The texts governing taxes on real estate and foreign financial assets, including the neo-resident are expressly exempt.
- France-Italy Tax Convention of October 5, 1989 : The source for dealing with the elimination of double taxation and, above all, Article 10 on the withholding tax on dividends (a major point of vigilance in our article).
- Regulation (EU) No 650/2012 (International Successions) : To support the argument for exemption from inheritance tax on worldwide assets.
