Increase in Italian Flat Tax Regime

On 1 January 2026, the Law 30 December 2025, No. 199 (2026 Italian Budget Law) entered into force. Among other amendments, it provides for the increase in the annual flat tax for individuals transferring their residence to Italy (the Flat Tax Regime) from EUR 200,000 to EUR 300,000, and, for their relatives opting for the Flat Tax Regime, from EUR 25,000 to EUR 50,000.

The increase applies to individuals who transfer their residence to Italy for civil law purposes starting from 1 January 2026. According to Article 43, Paragraph 2, of the Italian Civil Code “The residence is the place where the individual has his habitual abode”. Having an habitual abode in Italy means that the individual considers Italy as his/her home country, his/her stays in other countries being merely incidental and of a temporary (although not necessarily short) nature. In addition, registration in the Official Register of the Italian resident population is a formal condition and applies as a rebuttable presumption of residence in Italy. Legal effects of registration take effect from the submission date of the enrolment request to the relevant Municipality.

Individuals who transferred their residence for civil purposes to Italy before 1 January 2026 are not affected by the amended legislation, no matter whether they have already filed a tax ruling request to apply for the Flat Tax Regime or not.

The change does not impact the other rules governing the Flat Tax Regime (eg exemption from the reporting obligations related to the holding of assets abroad, exemption from the wealth tax on financial assets or immovable properties held outside of Italy, and exemption from gift and inheritance taxes on transfer of assets held outside of Italy).

Please feel free to reach out if you have any questions or require further information.