What changed in 2026, what the lump sum covers, and a break-even calculation for the income you actually have
Italy’s flat tax for new residents began at 100,000 euros a year. It rose to 200,000 for people who transferred their residence from 10 August 2024, and to 300,000 for transfers from 1 January 2026. Three times the original price within a few years, and the family surcharge has doubled as well. Note that this price applies to new arrivals only. Existing participants are not affected.
That is the kind of news that makes people recalculate. Some conclude the regime is now only for billionaires. Others assume nothing has changed. Neither is quite right, and the answer depends less on the headline number than on what kind of income you have.
What changed in 2026
The 2026 Budget Law (Law 199/2025, Article 1, paragraph 26) amended Article 24-bis of the Italian income tax code (TUIR). The annual substitute tax for the main taxpayer rises from 200,000 to 300,000 euros. For each family member who joins the regime, it rises from 25,000 to 50,000 euros.
The new amounts apply to people who transfer their residence, in the sense of Article 43 of the Civil Code, from 1 January 2026. Earlier cohorts keep their amount if the option was validly made: 100,000 euros for transfers before 10 August 2024 and 200,000 euros for transfers between 10 August 2024 and 31 December 2025. Because the test is civil-law residence, the timing of the move, not merely the year of your first Italian tax return, can decide which amount applies.
What the three hundred thousand buy
The lump sum replaces Italian income tax on income from foreign sources: foreign dividends and interest, foreign rental income, foreign business profits, and capital gains on foreign assets, provided each item is genuinely foreign-source under Italian rules. One exception matters. Gains on the sale of a qualified shareholding are excluded for the first five tax periods of the regime. “Qualified shareholding” is a technical term based on ownership or voting-rights thresholds, not an approval for the regime, so founders planning a company sale should check this exception separately.
Alongside that come the wealth tax exemptions. Foreign property is not subject to the Italian property tax on assets abroad (IVIE), foreign financial assets are not subject to IVAFE, and the detailed reporting of foreign assets drops away. Gift and inheritance tax applies during the option period only to assets located in Italy.
The regime runs for up to 15 years. You can choose to exclude specific countries, so that income from them falls under the ordinary Italian rules, where relief for foreign tax may be available. The tax is paid in a single amount by the income tax balance deadline, normally 30 June, with the usual additional 30 days at a 0.40 percent surcharge. Check the calendar for the relevant year.
Who can get in, and how
The main condition is negative: you must not have been Italian tax resident in at least nine of the ten years before the option takes effect. There is no minimum investment and no requirement to work in Italy. But you must genuinely become Italian tax resident. Broadly, this can happen if, for most of the tax year, you have your habitual residence or the centre of your personal and family relationships in Italy, or are physically present there. Fractions of days count. Registration in the resident population register creates a rebuttable presumption of residence, and applicable tax treaties can also affect the result.
The election is made in the Italian tax return for the year of the transfer or for the following tax period. Before exercising it, you may request an optional ruling (interpello) from the Revenue Agency to confirm that you meet the entry conditions. A ruling does not replace the election in the return. The statutory response period is generally 90 days, although suspensions or requests for additional information can extend the practical timetable. Whether the ruling is worth the wait can depend on how clear your history is. A person with a clean break from Italy and a simple income picture may not need it. Someone with a complicated past may well.
The lump sum replaces Italian tax, not foreign tax
Before any calculation, one point is easy to miss. The 300,000 euros are the Italian substitute tax, not your total tax on that income. Source countries may keep taxing dividends, rent, business profits or gains, for example through withholding tax. Foreign tax on income covered by the lump sum cannot be credited against it. Every comparison below therefore ignores foreign taxes, and in your own case they can move the result.
The break-even: a worked example
Let us start with the ordinary Italian rates for 2026. Income tax is 23 percent up to 28,000 euros, 33 percent from 28,000 to 50,000 and 43 percent above that. The first 50,000 euros therefore cost 13,700 euros, and every euro above costs 43 cents. The examples assume that this is the person’s only taxable income, that all of it is subject to these progressive rates, and that there are no deductions, credits or foreign taxes. Regional and municipal surcharges, wealth taxes and social contributions are ignored. They would pull the break-even somewhat lower, so treat the figures as a round illustration, not a personal tax calculation.
Under these rates the flat tax equals the ordinary tax at foreign income of roughly 716,000 euros a year. Below that you would pay less under the normal rules. Take a founder with 500,000 euros of foreign income: ordinary tax comes to about 207,200 euros, so the lump sum would cost around 92,800 euros more. Now take a founder with one million euros: ordinary tax comes to about 422,200 euros, and the lump sum saves around 122,200. At 1.5 million the saving is about 337,000.
Family members change the arithmetic. Each one costs 50,000 euros. On the same ordinary rates, that pays for itself once the person has roughly 135,000 euros of foreign income of their own. Below that income level, adding a spouse does not pay for itself on this income tax calculation alone. The answer may still change once foreign asset taxes and inheritance or gift planning are included.
The same million, two different outcomes
Here is where the headline can mislead. The progressive rate of 43 percent is not the rate on every kind of income. Many categories of privately held investment income, including ordinary foreign dividends and most securities gains, are generally taxed in Italy at 26 percent, although exceptions apply. If your million euros is made up entirely of such income, ordinary tax would be about 260,000 euros, and the lump sum of 300,000 would cost around 40,000 more. For this type of income the break-even lies near 1.15 million euros, and a family member’s 50,000 euros pays for itself only at around 190,000 euros of their own income, before asset taxes.
That is why two people with the same income can get opposite answers. Someone living off dividends from a holding company is in a different position from someone whose foreign income is mostly business profit or rent taxed at progressive rates. Wealth taxes can change the picture again. With a large portfolio, IVAFE on foreign financial assets and IVIE on foreign property can add up to a meaningful sum that the lump sum removes.
What the flat tax does not cover
Income from Italian sources stays under ordinary rules. That includes Italian rent, Italian dividends and interest, and above all work you perform in Italy. This surprises people. Salary and professional fees for work physically performed in Italy are generally Italian-source, even if the employer or client is abroad, and the 300,000 euros do not make them go away. Dividends from a foreign company need a separate analysis. Managing a foreign company from Italy can also create company-level tax issues that the individual lump sum does not resolve.
The regime does not forbid working in Italy. But it is often more attractive for substantial foreign investment income than for someone who earns mainly from personal work where they live. If you plan to work in Italy yourself, other regimes exist, for example the simplified flat-rate system for freelancers that we described in our article on five tax and wealth advantages in Italy. Whether your situation fits is a question for a tax adviser, and the answer can differ by structure.
And what about Switzerland, Dubai and the others?
Italy is not the only place where a lump sum is on offer. Switzerland has lump-sum taxation based on living expenses, but cantons handle it differently and several, among them Zurich, no longer offer it. It generally requires that you do not work in Switzerland, and it is not a fixed annual fee: ordinary rates apply to an assessment based on your living costs, subject to minimum calculations. Dubai has no personal income tax, which is a different bargain altogether, with its own requirements around where you actually live. Spain’s Beckham Law is tied to an employment or business link and works quite differently.
We do not rank these. The right choice depends on where your income arises, how long you plan to stay, and where your family wants to live. Italy’s regime has the advantage of long duration and no employment link. Its price is now high enough that it has to be justified by numbers.
A cheaper route for retirees
If you already draw a pension from abroad, Italy has a second regime that costs far less. Under Article 24-ter of the income tax code, foreign-source income is taxed at 7 percent a year, not only the pension but, as commentators describe it, also investment income, foreign rent and gains. The condition is a move to a qualifying municipality in the south, and a recent law (March 2026) widened the eligible towns by raising the population limit from 20,000 to 30,000 inhabitants.
You need a pension from a foreign payer, no Italian residence for the five years before, and a real transfer of residence to such a town. The election runs for ten years. Italian-source income stays under ordinary rates. Our earlier article on Italian flat tax regimes for neo-domiciled HNWIs and retirees describes both regimes in more detail. It will not suit everyone, and the choice of town matters, so have an adviser check the list and the conditions before you pick a village for its view.
Leaving home properly
Whichever country you choose, your old residence has to end properly. A flat in Italy does not cancel a tax residence elsewhere if you keep a home and your centre of life there, and tax treaties can decide which country wins. Some countries also tax unrealised gains on shares when you leave. Exit rules like these can cost more than the whole Italian lump sum, so check them early. We describe how far substance requirements can reach back to your home country in our article on economic substance.
Where to start
A short list in the right order: first the sources of your income, because they decide the break-even, then the number of family members, then your past residence history, then whether to request a ruling before electing in the return. Only then the question of where in Italy.
If you want to talk it through, get in touch. We look at your income and family situation and calculate whether the 300,000 euros make sense for you. For the Italian tax details and the application itself, a licensed adviser from the Singabiz Network is the right contact, as Singabiz does not give tax advice.
Italy has tripled the entrance fee within a few years, and the espresso at the bar is still cheaper than the tax adviser. Calculate before you pack.
