Italy's €100,000 Flat Tax Regime: Article 24-bis TUIR Explained

The Italian Flat Tax Regime: Background

Italy introduced a special tax regime for high-net-worth individuals in 2017, codified in Article 24-bis of the Testo Unico delle Imposte sui Redditi (TUIR), the consolidated income tax legislation. The regime allows qualifying individuals who become Italian tax resident to substitute Italian tax on all foreign-sourced income and gains with a fixed annual charge of €100,000, regardless of the amount of that foreign income.

The regime was designed to attract wealthy individuals — particularly from the UK, Switzerland, and non-EU countries — to establish Italian residence without the deterrent effect of Italian progressive income tax rates (which reach 43% on income above €50,000, plus regional and municipal surtaxes). It draws deliberate inspiration from the UK remittance basis and the Swiss lump-sum taxation system, but is simpler in operation than either.

Unlike the UK remittance basis, there is no requirement to keep foreign income offshore. The regime covers all foreign income without restriction on remittance. Unlike the Swiss lump-sum system, the charge is a fixed amount rather than a multiple of deemed living expenses.

Qualifying Conditions

Prior Non-Residence Requirement

The individual must not have been Italian tax resident in at least 9 of the 10 tax years immediately preceding the first year for which the regime applies. Italian tax residence is determined under Article 2 TUIR, which treats an individual as Italian resident if they are registered in the Anagrafe (civil registry), have their domicile in Italy, or have their habitual residence in Italy for the greater part of the tax year (more than 183 days).

This is a meaningful condition. A person who was briefly resident in Italy — even for a single year — in the preceding decade may be disqualified.

Formal Opt-In

The regime is not automatic. The individual must formally opt in by submitting an advance ruling request (interpello) to the Agenzia delle Entrate (the Italian Revenue Agency) or, alternatively, by making the election on their Italian tax return for the first year of residence.

The interpello route is preferable for significant situations — it provides advance certainty from the tax authority before the individual reorganises their affairs around Italian residence.

Italian Establishment

There is no specific wealth threshold or investment requirement. Any individual who meets the non-residence test and makes the formal election can benefit. Italy imposes no requirement to purchase property or make financial investments, unlike many citizenship and residence by investment programmes.

What the €100,000 Regime Covers

The regime substitutes all Italian taxes that would otherwise arise on foreign-sourced income and gains — including:

• Foreign dividends and interest
• Foreign rental income
• Foreign capital gains (both shares and real estate)
• Foreign employment income
• Foreign pension income
• Income from foreign trusts as beneficiary

The €100,000 charge is fixed — it does not vary with the amount of foreign income. An individual with €10 million of foreign dividends pays the same €100,000 as an individual with €200,000 of foreign income. The charge is payable annually by 30 June of the following tax year.

Importantly, foreign income covered by the regime is not included in the individual's Italian income computation. Italy's CFC rules (Article 167 TUIR) do not apply to income sheltered by the flat tax — there is no deemed attribution of income from foreign controlled companies.

What Is Not Covered: Italian-Source Income

The flat tax covers only foreign-sourced income. Italian-source income — salary from Italian employment, Italian rental income, Italian dividends, capital gains on Italian shares or property — remains subject to ordinary Italian income tax at progressive rates up to 43%, plus surtaxes.

This is a significant limitation for individuals who plan to have Italian business activities. A tech entrepreneur who relocates to Milan and runs an Italian business will pay ordinary Italian rates on their Italian business profits, on top of the €100,000 flat charge on their foreign portfolio income.

The Family Member Extension

Spouses, civil partners, and dependant family members who also become Italian residents can be added to the flat tax regime at a reduced charge of €25,000 per person per year. There is no limit on the number of family members who can be added, but the €25,000 charge applies individually to each.

For a couple relocating together, the total annual charge is €125,000 (€100,000 for the primary applicant, €25,000 for the spouse). For a family of four (two adults, two adult children with independent incomes), the charge would be €175,000.

Regime Participant	Annual Charge
Primary applicant	€100,000
Spouse/civil partner	€25,000
Each additional family member	€25,000

Duration: The 15-Year Maximum

The regime applies for a maximum of 15 consecutive tax years. An individual who opts in for the 2025 tax year can benefit until 2039. The regime terminates automatically at the end of the 15-year period — there is no renewal or extension option.

The regime can also be terminated voluntarily before the 15-year period expires, or involuntarily if the individual ceases to meet the qualifying conditions (e.g., by ceasing to be Italian resident). Early termination does not prevent the individual from potentially re-qualifying in the future if they leave Italy and again satisfy the 9-of-10-year non-residence condition.

Opting Out of Specific Countries

A notable feature of the Article 24-bis regime is the ability to opt specific countries out of the flat tax coverage. An individual can elect to exclude particular jurisdictions from the regime, so that income from those countries remains subject to ordinary Italian taxation (including access to foreign tax credits under the bilateral tax treaties Italy has with those countries).

This is strategically useful where a country levies a significant withholding tax on income paid to Italian residents. For example, if a US dividend is subject to 15% US withholding tax under the Italy-US tax treaty, and the individual opts the USA out of the flat tax, they can credit the 15% US withholding against their Italian income tax on that dividend, potentially eliminating any additional Italian tax liability on US-source income.

Interaction with Offshore Trusts

The flat tax regime creates favourable conditions for Italian-resident beneficiaries of offshore trusts. Trust distributions received by Italian-resident beneficiaries are foreign-sourced income covered by the €100,000 regime. The Italian trust attribution rules — which would otherwise attribute trust income to the settlor or beneficiary depending on whether the trust is "opaque" or "transparent" for Italian tax purposes — do not apply to income sheltered by the flat tax.

For an individual who is both the settlor and the beneficiary of an offshore discretionary trust, the Italian tax treatment of trust distributions under the flat tax regime is significantly more straightforward than the equivalent position in the UK, where the section 87 TCGA 1992 matching rules and ITA 2007 section 628 provisions create attribution charges.

Practical Considerations: Life in Italy as a Flat Tax Resident

Italy's social security system is funded separately from income tax, and the flat tax regime does not affect Italian social security obligations for Italian-source employment. However, HNWI individuals who are genuinely not employed in Italy — living on investment income and managing affairs remotely — generally have no Italian social security exposure.

Banking in Italy for flat tax residents is straightforward. Italian banks are accustomed to the regime and OECD CRS reporting obligations are well managed. The inheritance and gift tax position is separate from the income flat tax — Italy's inheritance tax rates are low by European standards (4%-8% depending on the beneficiary relationship, with significant exemptions), but this is an Italian domestic tax entirely separate from the income flat tax.

HPT Group advises internationally mobile individuals considering Italian residence as part of a broader offshore and tax planning strategy. Italy's combination of lifestyle, EU access, bilateral treaty network, and the Article 24-bis regime makes it a compelling option for certain client profiles — particularly those with large foreign investment portfolios or offshore business income. For a comparison of Italy's regime against other European flat tax alternatives, visit our country comparison pages or contact us for a tailored analysis.