On 30 December 2025, Italy formally approved an increase in its flat tax regime applicable to new tax residents opting for the special lump-sum system. The annual flat tax has been raised from €200,000 to €300,000 for the principal applicant, while the charge for each qualifying family member has doubled from €25,000 to €50,000.
This adjustment represents the second substantial increase within a two-year period and clearly confirms Italy’s strategic policy direction: positioning the country as a stable, long-term destination for ultra-high-net-worth individuals.
No Retroactive Effect
As with earlier amendments, Italy has strictly respected the principle of legal continuity. The new €300,000 flat tax applies exclusively to individuals who transfer their tax residence to Italy after the entry into force of the new legislation.
Taxpayers who relocated to Italy prior to this date and validly elected the flat tax regime will continue to benefit from the lump-sum amount applicable at the time of their relocation, with no retroactive adjustment.
This approach is fully consistent with the 2024 reform, which raised the flat tax from €100,000 to €200,000. In both instances, Italy demonstrated a strong commitment to legal certainty, predictability, and investor confidence—key considerations for internationally mobile individuals making long-term relocation decisions.
A Regime Designed for the Ultra-Wealthy
By increasing the annual flat tax to €300,000, Italy has clearly confirmed that the regime is not intended to attract mass relocation, but rather a very specific profile: individuals and families with substantial international income and assets.
The higher entry threshold serves multiple objectives:
- Increasing tax revenue per taxpayer,
- Enhancing the exclusivity of the regime,
- Ensuring the selection of genuinely high-net-worth and ultra-high-net-worth individuals.
Italy has therefore chosen to compete at the premium end of the market, aligning itself with jurisdictions traditionally associated with ultra-wealthy residents, such as Switzerland and Monaco.
Target Profile and Rationale
In many European countries, top marginal tax rates reach or exceed 45–50%, often accompanied by:
- Progressive taxation of dividends and capital gains,
- Wealth or net worth taxes,
- Inheritance and gift taxation,
- Extensive reporting obligations on foreign assets.
Against this background, the Italian flat tax regime remains highly attractive for individuals or families earning €1 million to €1.5 million per year or more, particularly where income is predominantly sourced outside Italy.
In addition to a fixed annual income tax liability, qualifying individuals benefit from a full exemption from Italian gift and inheritance taxes on the gratuitous transfer of foreign assets. This element is especially relevant for ultra-high-net-worth individuals engaged in long-term wealth structuring and succession planning.
Accordingly, the Italian flat tax regime offers:
- A substantial reduction in the effective overall tax burden,
- Full certainty as to annual tax exposure,
- Exemption from Italian wealth taxes on foreign assets,
- Relief from foreign asset reporting obligations,
- Exemption from Italian gift and inheritance taxes on foreign assets.
Even at €300,000 per year, the regime remains highly competitive when compared to ordinary taxation systems across most EU jurisdictions.
Family Members
The increase applicable to qualifying family members is also material. For households with consolidated annual income in the range of €2 million to €3 million, the Italian flat tax continues to represent an efficient and attractive fiscal solution.
Late Entrants Remain Protected
Individuals who transferred their tax residence to Italy before the entry into force of the new law will retain access to the €200,000 annual flat tax for the full duration of the regime, up to a maximum of 15 years.