Italy: The flat tax for new residents, how it works
Since 2017, Italy has offered certain wealthy taxpayers a special tax regime: the flat tax for neo residenti. Its principle is simple—even appealing—but its eligibility requirements deserve careful consideration before moving to the peninsula.
**What the plan provides**
The scheme is codified in Article 24-bis of the Consolidated Income Tax Law (TUIR). It allows individuals transferring their tax residence to Italy to replace the standard taxation on their foreign-sourced income with a fixed annual allowance, regardless of the amount of that income. This allowance was €100,000 since the scheme's inception in 2017; it was increased to €200,000 for new beneficiaries by Decree-Law No. 113/2024 of August 9, 2024, and then to €300,000 for those who have been residing in Italy since January 1, 2026 (Italian Budget Law for 2026). Each beneficiary retains the allowance applicable on the date of their arrival. Each member of the household can benefit from an extension for an additional €50,000 per person (€25,000 for arrivals before 2026). Income from Italian sources, however, remains subject to the ordinary tax scale: the flat tax does not cover it.
**Who can claim it**
The main requirement is to have been a non-resident for tax purposes in Italy for at least nine of the ten years preceding entry into the scheme. The scheme therefore targets individuals with little or no recent Italian tax history. No income or asset ceiling is imposed, but the ideal profile is that of a taxpayer with significant foreign income: below a certain level of foreign income, the lump-sum tax can represent a greater burden than ordinary taxation would have been—and the increases implemented in 2024 and then 2026 raise the threshold above which the scheme becomes advantageous.
The Italian tax authorities (Agenzia delle Entrate) issue a preliminary ruling—an advance response—which secures the application of the tax regime before the actual establishment of the business. This step is not formally mandatory, but it is strongly recommended by practitioners.
**Duration, renewal and exits**
The scheme is granted for a maximum of fifteen years. It can be voluntarily abandoned or revoked by the tax authorities in the event of non-payment of the lump sum or loss of Italian tax residency. At the end of the fifteen-year period, the taxpayer automatically reverts to the standard tax regime.
One important feature to note: the regime also exempts assets held outside Italy from Italian inheritance and gift tax. This aspect can be significant in a wealth transfer strategy, but it requires a careful analysis of applicable tax treaties, particularly with France if real estate or life insurance policies are held there.
**Points to consider for a French resident contemplating this scheme**
Transferring tax residence from France to Italy is not something to be undertaken lightly. France applies strict rules to determine actual tax residence: habitual home, center of economic interests, and length of stay. A partial or poorly documented move can lead to double taxation or a French tax reassessment.
Furthermore, if departure occurs after a long period of residence in France, mechanisms such as the exit tax may apply to the unrealized capital gains on certain assets. The Franco-Italian tax treaty governs residency disputes and determines which state retains the right to tax each category of income.
Finally, life insurance or retirement savings contracts taken out in France during the period of French tax residency generally retain their characteristics, but their tax treatment in Italy should be verified. Unit-linked investments carry a risk of capital loss; the recommended holding period depends on each saver's individual circumstances.
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*This article provides a general overview of the Italian tax regime for neo-residents. As each situation is unique, specialized guidance is necessary before making any international relocation decisions.*
