ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
Kingdom, Greece, Israel, the United States and Swe - den) and one for both inheritance and gift tax pur - poses (with France). Special Tax Regimes for New Tax Resident Individuals Italian legislation provides for different favourable tax regimes for individuals transferring their tax residence to Italy. Flat tax regime for HNWIs (the “Flat Tax Regime”) The Flat Tax Regime is available to all individuals, regardless of their nationality, who: • become Italian tax residents; and • were non-Italian tax residents for income tax purposes for nine out of ten years preceding their relocation to Italy. Under the Flat Tax Regime: • Income sourced from foreign jurisdictions is sub - ject to an annual substitutive tax of EUR300,000. The Flat Tax Regime is available to close family members of the applicant if they meet the eligibility requirements. Each family member included in the election is required to pay an annual substitute tax of EUR50,000. • The taxpayer is not required to disclose foreign income and assets in the Italian income tax return. • The taxpayer is exempted from the payment of IVIE and IVAFE. • Italian inheritance and gift tax is due only in relation to goods and rights existing in Italy. • An anti-abuse provision applies regarding capital gains realised in the first five years of validity of the Flat Tax Regime from the sale of “qualified” share - holdings (as defined above). In such a case, capital gains realised within the first five years are subject to Italian ordinary taxation. • It is possible to opt out on a country-by-country basis. Income from excluded jurisdictions is sub - ject to Italian ordinary tax rules, and it would be possible to claim for a tax credit and for the ben - efits of the relevant double taxation treaty (if any).
The Flat Tax Regime terminates after 15 years. The applicant can revoke the election at any time in his/ her tax return. It is possible to file a preliminary tax ruling request to the Italian tax authorities to seek official confirmation in relation to the applicant’s eligibility for the Flat Tax Regime. Circular No 17/E of 23 May 2017 of the Italian tax authorities clarified that individuals who acquire Ital - ian tax residence under the Flat Tax Regime are to be regarded as residents for the purposes of the double taxation treaties, and are thus eligible to claim treaty benefits. Nevertheless, an assessment on a case-by- case basis remains necessary. The annual substitute tax under the special flat tax regime was originally set at EUR100,000, increased to EUR200,000 for individuals transferring their residence to Italy after 10 August 2024, and to EUR300,000 for those relocating on or after 1 January 2026 under the 2026 Budget Law. The annual substitute tax applicable to qualifying fam - ily members has also been increased from EUR25,000 to EUR50,000 per person. The amendments are subject to grandfathering: indi - viduals who became eligible before 1 January 2026 continue to pay the substitute tax applicable at the time of their relocation (EUR100,000 or EUR200,000). Flat tax regime for new resident pensioners (the “Pensioners’ Regime”) The Pensioners’ Regime is available to all individuals, regardless of their nationality, who: • have a pension income from a foreign (non-Italian) source; • transfer their residence in Italy to one of the munici - palities located in the regions of Southern Italy, or to a municipality included among those affected by seismic events, with no more than 30,000 inhabit - ants (the threshold was amended with effect from 7 April 2026; previously, it was 20,000 inhabitants.); • have been non-Italian tax residents for five years preceding their relocation to Italy; and
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