Italy’s substitute tax for new residents was introduced at €100,000 a year on foreign income. It rose to €200,000 for those opting in from the 2025 tax period, and the 2026 Budget Law took it to €300,000 for individuals transferring residence from 1 January 2026. The price of an Italian tax residence has tripled in roughly two years.
What the regime does
The Italian Revenue Agency allows individuals moving tax residence to Italy to pay a flat substitute tax on foreign income instead of ordinary Italian taxation on it. The option runs for up to 15 years and can be extended to family members for an additional amount each. Access is by advance ruling or by election in the tax return.
| Effective from | Annual substitute tax on foreign income |
|---|---|
| Introduction | €100,000 |
| 2025 tax period | €200,000 |
| Residence transferred from 1 January 2026 | €300,000 |
Tripling a price is a filter, not a deterrent
A fixed annual charge is regressive by design: the more foreign income it shelters, the lower its effective rate. Raising it from €100,000 to €300,000 does not deter the largest fortunes, for whom it remains cheap relative to ordinary rates. It removes the tier below them, for whom €300,000 is no longer obviously worth paying.
Italy has not closed the door. It has moved it upmarket, and it has done so twice in two years, which tells you something about how confident the treasury is that demand is inelastic at the top.
A fixed annual charge is regressive by design. Tripling it removes the tier below the largest fortunes, not the largest fortunes.
Rich & Richer
Read alongside the rest of Europe
Every major European regime moved in the same direction inside two years. Britain replaced indefinite shelter with a four-year window. Spain repealed its investor residence permit. Switzerland’s expenditure-based regime survives federally while several cantons have voted it away. Italy tripled its price.
None of these were coordinated. All of them respond to the same domestic politics, which is the point: the direction of travel is structural rather than jurisdictional, and a plan that assumes today’s terms will still be available in a decade is assuming the one thing recent history does not support.
The fifteen-year horizon cuts both ways
Fifteen years is a long commitment in a policy area that has been amended repeatedly. Anyone electing at €300,000 should understand which terms are locked for the duration and which are not, and should read the current text at the Revenue Agency rather than a summary, because the summaries have been wrong at every step of this repricing.
Frequently asked questions
How much is Italy’s flat tax for new residents?
€300,000 a year on foreign income for individuals transferring tax residence from 1 January 2026. It was €200,000 for those who opted in from the 2025 tax period, and €100,000 when the regime was introduced.
How long does the regime last?
Up to 15 years.
Can family members be included?
Yes, for an additional substitute tax per family member.
How is the option exercised?
By advance tax ruling to the Italian Revenue Agency, or by exercising the option in the tax return.