Italy has approved a significant increase to its special flat tax regime as part of the 2026 Budget Law. The annual lump-sum tax for high-net-worth individuals will rise from €200,000 to €300,000, signaling a shift toward a more exclusive investment migration market.
The Italian government officially confirmed the hike on December 30, 2025. This marks the second time in two years that the tax has been adjusted, following a previous increase from €100,000 to €200,000 in late 2024.
Key Changes in the 2026 Budget Law
The new legislation introduces higher costs for both principal applicants and their family members:
- Principal Applicants: The annual flat tax increases from €200,000 to €300,000.
- Family Members: The flat tax for qualifying family members doubles from €25,000 to €50,000 per person.
Despite the higher entry cost, the core benefits of the regime remain intact. This includes a full exemption from Italian gift and inheritance taxes on foreign assets, as well as no reporting obligations on assets held outside of Italy.
Grandfathering Principle Confirmed
In a move to maintain investor confidence and legal certainty, Italy has confirmed that the new rates will not be retroactive.
- Current Residents: Individuals who transferred their tax residence to Italy before the new law took hiệu lực will continue to pay the rate that was in place at the time of their relocation.
- New Applicants: The €300,000 rate applies only to those who move to Italy after the official commencement of the 2026 Budget Law.
This commitment to “grandfathering” ensures that those who have already made long-term relocation decisions based on previous rules will have their financial planning protected.
Is Italy Still Competitive?
While the €300,000 price tag is substantial, experts suggest the regime remains highly attractive for Ultra-High-Net-Worth Individuals (UHNWIs) with annual foreign incomes exceeding €1.5 million.
When compared to standard European tax rates, which often exceed 45% plus additional wealth and inheritance taxes, Italy’s flat tax offers:
- Fiscal Certainty: A fixed, predictable annual cost regardless of income size.
- Wealth Protection: Exemption from Italian wealth taxes on foreign-sourced assets.
- Succession Planning: A major advantage for families engaged in intergenerational wealth transfer.
By raising the threshold, Italy is moving to compete directly with traditional premium destinations like Switzerland and Monaco, focusing on quality and high-value contributions rather than mass migration.
Follow us on social media and website for more insights!
