Italy has officially increased its special flat tax regime for wealthy new tax residents, raising the annual lump-sum tax to €300,000, effective January 1, 2026, as part of the 2026 Budget Law, which was formally approved on December 30, 2025 and published in the Official Gazette.
What Changed in the Flat Tax Regime
Under the revised rules:
- The annual flat tax for qualifying individuals who transfer their tax residence to Italy now stands at €300,000, up from €200,000.
- The supplemental flat tax for each qualifying family member has been increased to €50,000, up from €25,000.
- The new amounts apply only to individuals whose Italian tax residency begins on or after January 1, 2026.
Mechanics and Grandfathering Protection
Italy has confirmed that the higher flat tax will not apply retroactively to existing beneficiaries. Individuals who validly opted into the regime and transferred their tax residence before January 1, 2026 will continue to pay the flat tax at the rate in force at the time of their relocation — whether that was €200,000 (for 2024–25 entrants) or €100,000 (for those who joined under earlier rules).
This grandfathering provision aims to give legal certainty and protect long-term planning for internationally mobile taxpayers.
Why the Increase Matters
The increase matters because it reflects how Italy is managing a mature and well-established tax regime, rather than introducing a structural shift. Instead of changing eligibility rules or dismantling the framework, the government has chosen to adjust the financial threshold for new entrants. This approach preserves continuity and predictability for internationally mobile taxpayers, while allowing the regime to remain aligned with evolving fiscal priorities. In practical terms, it signals that Italy intends to keep the flat tax in place, but with a recalibrated entry point that reflects its long-term role within the country’s tax system.
A Clear Strategic Signal: Positioning at the Top End
By raising the flat tax to €300,000, Italy has clarified the role of the regime within its broader policy framework. The measure underscores that the flat tax is not intended to attract large numbers of new residents, but to serve a clearly defined profile: individuals and families with substantial international income and asset structures who place a premium on certainty and long-term planning.
The higher threshold supports several objectives at once. It strengthens the baseline fiscal contribution associated with new participants, reinforces the selective nature of the regime, and naturally aligns participation with taxpayers whose economic profile matches the program’s intent. Taken together, the change positions Italy firmly within the upper tier of Europe’s wealth landscape, competing on quality and stability rather than scale.
Final Take
Italy’s decision to raise its flat tax reflects a recalibration, not a retreat. By preserving the structure of the regime while increasing its cost for new entrants, the government has reinforced stability while refining the profile of participants it seeks to attract. For internationally mobile individuals and their advisors, the message is simple: the flat tax is still available and predictable, but it is now clearly a higher-end option within Europe’s tax residency choices.
