Tax benefits

New Resident Regime

The 2017 Budget Law introduced a preferential tax regime for new residents in Italy, known as the “new residents tax regime” or “optional regime for new residents”.

This regime was established to encourage both Italian and foreign individuals to transfer their tax residence to Italy, with a particular focus on attracting high net worth individuals.

The new residents regime, which can therefore also be considered a tax benefit for foreigners in Italy, was designed to attract investment into the country and to stimulate interest among taxpayers and their families holding significant assets.

This measure competes with similar tax incentives available in other jurisdictions, such as Switzerland, the United Kingdom and Portugal. Unlike other countries, Italian law does not require individuals to purchase real estate, deposit a minimum amount of funds in domestic bank accounts, or carry out a specific work activity in Italy.

The objective pursued by the Italian State is therefore to leave taxpayers broad discretion in determining how to integrate their tax residence within Italy.

Benefits of the new resident regime for foreigners in Italy

The new residents regime allows, for a maximum period of 15 years, the payment to the Italian tax authorities of a fixed annual substitute tax of 100,000€ on the total amount of foreign-sourced income, with the possibility to exclude specific jurisdictions, reduced to 25,000€ for family members of the main applicant. The amount has been increased to 200,000€ for individuals who transferred their residence from 10 August 2024, and the 2026 budget law provides for a further increase to 300,000€.

In essence, the different thresholds apply as follows:

200,000€ = regime applicable to transfers up to 31 December 2025
300,000€ = applicable to individuals transferring their residence from 1 January 2026

In addition, the new residents regime in Italy:

provides for a full exemption from inheritance and gift tax on assets held abroad,
provides for exemption from wealth taxes on real estate located abroad (IVIE) and on financial assets held abroad (IVAFE).

This regime therefore represents a tax benefit of clear interest for those taxpayers wishing to relocate to Italy, while avoiding that such decision may, at least for the 15-year duration of the regime, have a negative tax impact on the management of their wealth.

Who can opt for the new resident regime?

Only individuals who have not been tax resident in Italy for at least 9 out of the previous 10 tax years may access the new residents regime.

The first requirement, therefore, is the transfer of the individual’s tax residence from a foreign country to Italy pursuant to Article 2, paragraph 2, of the TUIR.

Family members of the main applicant may also benefit from the regime, even at different points in time. More specifically, each family member may access the regime in periods different from that of the main taxpayer, for example where their transfer to Italy occurs at a later stage. The extension is made through an option exercised by the main taxpayer in the tax return. It is not a fully autonomous access, but rather an extension of the original option.

The following is the practical example provided by the Italian Revenue Agency: “Consider the case of an individual who moves to Italy in 2019 and acquires tax residence in the country in the same tax period.

The same individual opts for the regime under Article 24-bis of the TUIR, as the main taxpayer, starting from 2019. In 2020, the spouse and children also move to Italy, and the main taxpayer extends the substitute tax regime to them starting from 2020. Finally, two years later, the mother also moves to Italy and therefore accesses the regime as a family member only from 2022”.

Naturally, at the end of the 15-year period from the exercise of the option by the main taxpayer, the option ceases to have effect also with respect to the family members to whom it was extended, although for them reference must be made to the date of their entry into the regime.

Requirements to access the new resident regime in Italy

Article 24-bis of Presidential Decree no. 917/1986, introduced by Article 1, paragraphs 152–159 of Law no. 232/2016, provides that this regime may be requested exclusively by taxpayers who meet all of the following conditions:

with regard to the nature of the applicant, as only individuals may access the tax benefit;
with regard to the transfer of tax residence to Italy, therefore requiring a transfer of tax residence from a foreign country to Italy;
with regard to the fact that the individual has not been resident in Italy for at least nine out of the ten tax years preceding the start of the regime;
with regard to the entry into force of the regime, which therefore applies for the first time to taxpayers who transferred their tax residence to Italy starting from the 2017 tax period.

Nationality is not a relevant factor. As clarified by the Italian Revenue Agency in Circular no. 17/E/2017, “[…] the nationality of the individual transferring residence is irrelevant, as access to the regime is granted both to foreign nationals and to Italian citizens, provided that the requirement of tax residence abroad for the period indicated by the law is met.”

Eligible foreign income under the new resident regime

As already noted, the tax benefit applies only to foreign-sourced income. Income is considered “produced abroad” based on a mirror interpretation of Article 23, used to identify income produced within the territory of the State.

The rationale of the regime is to attract to Italy individuals with substantial wealth and, at the same time, high spending and consumption capacity, capable of contributing to the growth of the national economy.

The Italian Revenue Agency itself has stated that the rationale of the legislation is to “attract high-potential individuals by reason of the availability of significant capital and financial resources that can be invested in our Country”. For this reason, “access to the benefit requires the actual transfer of the individual to Italy”.

Given that the payment of the flat tax is required regardless of the amount of foreign income, in the absence of specific guidance it is also due in cases where such income is equal to zero, without prejudice to the taxpayer’s right to opt out of the regime if it no longer represents a tax advantage.

The fact that the benefit is limited to foreign-sourced income encourages the new resident to substantially maintain the structure of their foreign assets unchanged; indeed, they are not required to relocate their financial holdings and may keep existing relationships with banks and asset managers active at the time of relocation.

Foreign-sourced income may include:

income derived from real estate or land located outside Italy;
capital income paid by foreign States or by non-residents;
employment income, where the activity is performed outside the Italian territory;
business income generated through a permanent establishment abroad;
capital gains arising from the disposal for consideration of shareholdings in non-resident companies;
other income derived from activities carried out abroad and from assets located abroad;
interest and other proceeds from bank deposits and current accounts paid by foreign entities.

A specific case concerns taxpayers holding foreign income through an intermediary entity. As clarified by the Italian Revenue Agency in Circular no. 17/E/2017, “if the individual holds foreign-sourced income through a foreign intermediary entity, such income will be subject exclusively to the substitute tax under Article 24-bis of the TUIR, subject to the exceptions provided therein”.

Therefore, “if an individual owns real estate located in Florida through an intermediary entity, the income derived from such property will be subject exclusively to the substitute tax”.

Conversely, income sourced in Italy remains subject to ordinary taxation based on personal income tax, calculated according to progressive rates.

It should also be noted that the new resident taxpayer, as well as their family members, may exclude from the scope of the regime income produced in a specific foreign State.

Typical scenarios / Case studies

The typical scenarios have been developed by drawing on the most significant corporate immigration cases that the firm regularly handles, with the aim of creating structured, complex examples that help the reader navigate their own situation. The case studies, by contrast, illustrate individual real-life matters, anonymised to protect client confidentiality, presented with full factual and contextual detail.

Relocation

US professional chooses Italy: elective residence obtained and future planned

American professional obtains an elective residence visa while maintaining ties with the USA. Integrated assistance from legal strategy to property search..

Application completed in approximately 3 months without additional requests

Read the full case

Business

US opera singer obtains work authorization in 7 days

American opera singer with contracts already signed with an Italian theatre. Self employment work authorization obtained on an urgent basis to meet professional commitments.

Work authorization issued within 7 days from submission of the application

Read the full case

Real Estate

US client purchases property in Rome: secure transaction

American client assisted in the purchase of a property in Rome. Urban planning issues and contractual risks identified and resolved before signing, transaction completed through notarial power of attorney.

Purchase completed within one month, entirely managed remotely

Read the full case

Business

American investor: from New York to a villa in Tuscany

Cross-border property transaction with full relocation service. Purchase of a high-end property, with tax status, residency and NHS registration handled remotely.

Complete relocation service, from property due diligence to handing over the keys

Read the full case

Retirement

Canadian couple, retirement property in Puglia

From Toronto to the Itria Valley. Purchase of a farmhouse with cadastral issues, 7% flat tax on foreign pensions, elective residence visa and healthcare transition.

7% flat tax activated, cadastral issues resolved before the deed of sale

Read the full case

Business

British entrepreneur, opening a business in Milan

Post-Brexit, a London-based tech entrepreneur establishes an operational headquarters in Milan. Immigration pathway as a non-EU national, company incorporation, and tax planning.

European operational hub established with self-employment visa successfully obtained

Read the full case

Tax Planning

Swiss retiree: 7% flat tax regime in Southern Italy

A banking executive relocates from Zurich to Calabria. Management of the Swiss occupational pension pillar, Italy-Switzerland Tax Convention, and deregistration from the cantonal tax register.

7% flat tax activated on all foreign-sourced income

Read the full case

Retirement

American couple: retirement project in Abruzzo with visa and flat tax

From Connecticut to Abruzzo. Elective residency visa, 7% flat tax coordinated with IRS and FATCA obligations, and transition from Medicare to the Italian NHS (SSN).

7% flat tax activated on Social Security and 401(k) pension income

Read the full case

Relocation

German couple, from Munich to Tropea

Retired engineers from the Bavarian automotive sector. Multi-tier pension management, Italy-Germany Tax Convention, and the 7% preferential tax regime.

Three German pension pillars optimised with Italian flat tax

Read the full case

Business

Startup tech: apertura filiale italiana per il mercato EU

A Bay Area SaaS company establishes a Milan headquarters. Innovative startup SRL, EU Blue Card for the team, transfer pricing, impatriates tax regime, and GDPR compliance.

Operational within 5 months, payroll cost −35% with impatriates tax regime

Read the full case

Business

Fashion brand, representative office in Milan

Brand premium newyorkese apre presidio a Milano. Strutturazione per evitare stabile organizzazione, trasferimento direttrice creativa e gestione showroom.

Rischio stabile organizzazione prevenuto, presidio EU operativo

Read the full case

Corporate

Manufacturing company, ICT transfers to Italy

Multinazionale giapponese trasferisce 3 figure chiave in Piemonte. Permessi ICT per manager e specialista, coordinamento consolare e regime impatriati per tutti i dipendenti.

3 trasferimenti completati in 4 mesi e mezzo, linea produttiva avviata nei tempi previsti

Read the full case

How to access the new resident regime

The option to apply for the New Resident Regime can be finalized in two ways:

In the tax return for the tax period in which the individual transferred their tax residence to Italy.
In the tax return for the subsequent tax period.

Regarding the deadline for submitting the tax return, it is essential to consider the provisions of Presidential Decree No. 322 of July 22, 1998. According to this regulation, the “submission deadline” refers to the ordinary deadline for filing the Personal Income Tax Return (Modello Redditi Persone Fisiche).

Late Declaration and Penalty Payment

If the taxpayer paid the substitute tax by June 30 but failed to finalize the option in the relevant tax return, they can still correct the omission.

In accordance with Decree-Law No. 16 of March 2, 2012, the taxpayer may “rectify” the missing declaration by including it in the tax return for the following year, subject to a fixed penalty of €250.

Seeking Professional Assistance

The New Resident Regime involves sensitive and complex tax matters. Therefore, before applying, it is highly advisable for foreign taxpayers to consult:

A certified accountant (commercialista)
A tax attorney (avvocato tributarista)

These professionals specialize in tax laws and regulations and can provide comprehensive and personalized assistance. They will explain:

The requirements for eligibility
The benefits of the regime
The tax obligations associated with the New Resident Regime

A professional advisor ensures that the taxpayer correctly follows the procedure, maximizing the benefits while remaining fully compliant with Italian tax laws.

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Foreign pensioners in Italy: how the 7% flat tax regime works and who can access it

The 7% flat tax regime allows individuals receiving pensions from foreign entities to transfer their tax residence to a municipality in Southern Italy (with fewer than 20,000 inhabitants) and apply a 7% substitute tax on all foreign-source income for nine tax years.

Eligible municipalities are located in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia, as well as certain municipalities affected by the 2009 earthquake. The regime applies to all categories of foreign-source income. The option is exercised in the tax return, indicating the chosen municipality of residence.

Registered residence in Italy but tax residence abroad: is it possible and what does it imply?

This is a potentially risky situation. Registration in the Italian population registry creates a presumption of tax residence in Italy, with the obligation to declare worldwide income. This presumption can be rebutted by demonstrating that tax residence is abroad, including through registration with the AIRE or under applicable double taxation treaties, but the burden of proof remains on the taxpayer.

The Italian Revenue Agency may assess these situations based on objective factors. The presence of personal or economic ties in Italy may affect the determination of tax residence. It is therefore advisable to define one’s tax position in advance and prepare adequate supporting documentation, also considering tools such as advance rulings.

Health card for foreign nationals with elective residence: how to obtain it and what it covers?

Foreign nationals holding a residence permit for elective residence may enroll in the Italian National Health Service (SSN) on a voluntary basis, subject to payment of an annual contribution. Enrollment grants access to healthcare services under the same conditions as SSN beneficiaries, including general practitioners, specialist care, and hospital treatment.

The annual contribution is calculated based on total income and cannot be lower than €387.34. Alternatively, private health insurance may be used, provided it meets the requirements for residence in Italy.

New residents regime vs inbound workers regime: which is more advantageous and what are the requirements?

The new residents regime (Art. 24-bis TUIR) provides for a flat tax of €200,000 per year on all foreign-source income, regardless of the amount. The inbound workers regime (Art. 16 of Legislative Decree 147/2015) allows a reduced taxation on employment income produced in Italy. They are designed for different profiles.

The new residents regime is suitable for individuals with very high foreign income who do not work in Italy. The inbound workers regime is intended for those who move to Italy for work and have not been tax resident there in the previous two years. They are only partially compatible. The choice should be made before relocating.

Relocation: why are due diligence and real estate advisory crucial before purchasing?

Because the Italian real estate market presents specific risks that foreign buyers may not be aware of: unauthorized building works not regularized, outstanding mortgages, cadastral discrepancies, landscape restrictions, and undisclosed easements. Technical and legal due diligence carried out before signing the preliminary agreement allows these issues to be identified while it is still possible to renegotiate or withdraw.

Specialized real estate advisory for foreign clients also includes urban planning checks, verification of systems compliance, independent property valuation, and assistance in negotiations. Purchasing without these checks exposes the buyer to unexpected costs and post-acquisition disputes.