What is Italy Flat Tax Regime (Lump-Sum)?

How it works

The Italy Flat Tax Regime — formally Imposta sostitutiva sui redditi prodotti all'estero per le persone fisiche che trasferiscono la residenza in Italia (Article 24-bis of the TUIR) — was introduced in 2017 to attract HNW individuals to Italy. The deal: a single annual lump-sum tax covers all foreign-source income of the new Italian resident, regardless of amount or type.

In August 2024, the Italian government doubled the lump-sum for new applicants: from €100,000 to €200,000 per year. Existing beneficiaries (those who opted in before the change) remain on the €100,000 rate.

Conditions:

1. New Italian tax resident — must not have been Italian tax resident in 9 of the prior 10 tax years (one of the strictest qualification windows in Europe).
2. Annual flat tax of €200,000 (post-Aug 2024 applicants) covers all foreign-source income.
3. Italian-source income is taxed at standard Italian progressive rates (up to ~43% national + regional surcharges).
4. Family extension: spouse, children, parents can opt in at €25,000 each per year additional flat tax.
5. Maximum duration: 15 years, after which standard Italian worldwide taxation applies.

The regime can be terminated at any time by the taxpayer; once terminated, re-entry is not possible.

What's covered (and what isn't)

Covered by the €200k flat tax:

• Foreign salary, foreign self-employment income, foreign business income.
• Foreign dividends, interest, royalties.
• Foreign capital gains (with the exception below).
• Foreign rental income.
• Worldwide investment portfolio income.

NOT covered (taxed normally at Italian rates):

• Italian-source income — salary from Italian employer, Italian rental, Italian capital gains, Italian dividends.
• Capital gains on substantial shareholdings (>2% / >25% under various tests) realised in the first 5 years of the regime — these are excluded from the lump-sum and taxed at standard Italian rates (26%).

Italian tax residency requirement

To opt in, you must first become Italian tax resident. Italian residency triggers under the new (2024) rules if any of the following apply for most of the calendar year (>183 days):

• Habitual residence in Italy.
• Domicilio civile in Italy (centre of personal/economic life).
• Registered with the Italian anagrafe (population registry).

The 2024 reform shifted from a "majority of year" test to a more presence-based test. Italian residency is annual, so opting in mid-year typically requires either full-year Italian residence or specific election rules.

Process

1. Become Italian tax resident.
2. File the Article 24-bis election with the Italian Revenue Agency (Agenzia delle Entrate) by the standard tax-return deadline (30 November of the year following the move, with extension procedures available).
3. Pay €200,000 by the standard tax payment deadline.
4. File annually each year of the regime.
5. Family member elections filed separately, each at €25k/year.

The regime is not revocable retroactively — once filed, the year is locked in.

Examples

• Tech-IPO HNW relocates from London to Milan. Net worth €50M, foreign-source dividends and capital gains of €5M/year. Pre-2024 UK non-dom abolition forces a move. Italy lump-sum (€200k post-Aug 2024) → effective rate on €5M = 4%. Vs. UK FIG 4-year window or Greece €100k. Saving easily €1-2M/year on tax bill.
• French entrepreneur post-business sale. Sells French startup for €15M, then moves to Italy. Becomes Italian-resident year 1. Capital gain on the substantial shareholding realised pre-move = covered by France (subject to French exit tax under article 167 bis CGI). Going forward: Italian lump-sum on €15M reinvested portfolio income = €200k/year vs. ~26% on dividends + capital gains under standard Italian rates.

Common mistakes

• Assuming €100k still applies for new applicants. Doubled to €200k in August 2024. Many guides still cite the old rate.
• Ignoring the 9-of-10-year qualification. Returning Italians who were resident in any of the last 10 years (with limited carve-outs) can be ineligible.
• Forgetting the 5-year substantial-shareholding carve-out. Capital gains on substantial shareholdings during the first 5 years are taxed normally — important for founders selling stakes early in the regime.
• Skipping source-country exit planning. France art. 167 bis CGI exit tax, Germany Wegzugsbesteuerung, UK FIG cushion — all interact with the move into Italy. Sequence matters.