Transferring tax residence to Italy: a short guide to the available tax regimes for individuals who plan to relocate to Italy

Are you planning to move your residence from the United States, the United Kingdom or another country within or outside the EU to Italy? Italian tax law provides two preferential regimes designed specifically for those who move to Italy — or return to it — from abroad: the inbound tax regime (the so-called “regime degli impatriati”) and the flat tax for new residents (the so-called “flat tax per neoresidenti”). These are two distinct tax regimes, each intended for a different category of taxpayers, but both are available to Italian citizens returning from abroad as well as to EU and non-EU citizens who decide to transfer their residence to Italy.

This short guide sets out, in plain terms, the requirements, the advantages and the differences between the two regimes, so that you can identify which one may suit your circumstances — and which mistakes to avoid before the move.

What does tax residence in Italy mean?

As a general rule, an individual is treated as resident in Italy for tax purposes if, for the greater part of the tax period (183 days, or 184 days in leap years), he or she has in Italy either his or her residence within the meaning of the Italian Civil Code — that is, the place of habitual abode — or his or her domicile, understood as the place where personal and family relations principally develop. In addition, an individual registered with the Register of the Resident Population (“Anagrafe della popolazione residente”) for the greater part of the tax period is presumed to be resident in Italy, unless proven otherwise. Individuals who are tax resident in Italy must declare in Italy their income wherever produced, in accordance with the worldwide taxation principle.

1. The inbound tax regime (“regime degli impatriati”): reduced taxation on employment income produced in Italy

The inbound tax regime (Art. 5, Legislative Decree No. 209/2023) is designed for employees and self-employed professionals who transfer their tax residence to Italy.

1.1 What is the tax benefit and what are the access requirements?

Employment income, income treated as employment income and self-employment income produced in Italy contribute to the IRPEF (Italian personal income tax) taxable base for only 50% of their amount. In other words, half of the income is not subject to tax. The exempt portion rises to 60% (i.e. only 40% of the income is taxable) where the individual moves to Italy with at least one minor child, or where a child is born or adopted during the period in which the regime applies.

The benefit applies up to an annual income threshold of Euro 600,000 and lasts for five tax periods: it applies from the tax period in which tax residence is transferred to Italy and for the four following tax periods.

Access to the regime requires that the individual:

• was not tax resident in Italy in the three tax periods preceding the transfer (the minimum period increases to six or seven tax periods where the individual continues to work for the same employer, or for an entity belonging to the same group, for which he or she worked abroad);
• undertakes to maintain tax residence in Italy for at least four tax periods. Otherwise, the tax incentive is forfeited, and the tax benefits claimed must be repaid (administrative penalties may apply);
• performs the working activity mainly in Italy during the tax period;
• meets the high qualification or specialization requirements set out by law (a university degree or a recognized higher professional qualification).

The regime is, as a general rule, also compatible with remote working: an individual who moves to Italy and continues to work in smart working mode for a foreign employer may access the benefit, provided that the activity is performed mainly within Italian territory.

1.2 How is the regime applied in practice?

Employees must submit a written request to their employer, who then applies the reduced taxation directly through the payroll. Self-employed professionals, on the other hand, apply the benefit directly in their annual income tax return. Where the employer is a foreign entity that does not act as a withholding agent (the so-called “sostituto d’imposta”) in Italy, the benefit is likewise claimed through the income tax return.

2. The new residents tax regime: flat tax on foreign income

The new residents tax regime (Art. 24-bis of the Italian Income Tax Code, TUIR) is instead aimed at individuals with significant income and assets abroad who transfer their tax residence to Italy.

Individuals who opt for this tax regime pay an annual substitute flat tax on income produced abroad, regardless of its amount. In general, all foreign income — for example dividends, interest, capital gains, real estate income and foreign business income — is covered by the substitute flat tax, while income produced in Italy remains subject to ordinary taxation.

For individuals transferring their tax residence to Italy from 1 January 2026, the substitute tax amounts to Euro 300,000 per year. The option may be extended to family members, upon payment of a substitute tax of Euro 50,000 per year for each family member.

2.1 The advantages of the flat tax for new residents

Beyond the flat tax itself, the regime carries significant benefits that are often underestimated:

• exemption from IVIE and IVAFE (the wealth taxes on real estate and financial assets held abroad);
• exemption from the tax monitoring obligations (Section RW of the income tax return);
• exclusion of assets located abroad from Italian inheritance tax for the entire duration of the regime — a point of considerable importance in wealth and succession planning.

2.2 Requirements, duration and mechanism

The new residents tax regime is reserved for individuals who were not tax resident in Italy for at least nine of the ten tax periods preceding the transfer. It is possible — and advisable — to file an advance ruling request (the so called “istanza di interpello”) with the Italian tax agency in order to obtain certainty as to eligibility for the regime.

The option is exercised in the income tax return and has a maximum duration of fifteen tax periods. It may be revoked at any time. Failure to pay the substitute tax by the relevant deadline terminates the regime, with no possibility of remedy.

3. Inbound tax regime or new residents tax regime? A comparative overview

4. The most common mistakes to avoid

One of the most frequent mistakes is to address the tax aspects only after tax residence has already been transferred to Italy. A detailed planning in advance makes it possible to:

• verify with certainty that the requirements are met and avoid forfeiting the benefits;
• choose the optimal timing of the transfer;
• coordinate the tax exit from the country of origin (exit tax, residence certificates, double tax treaties);
• assess and compare the relative advantages of the two regimes;
• correctly manage filing obligations, advance ruling requests and dealings with the employer.

If you are planning to relocate from the United States, the United Kingdom, or another country within or outside the EU to Italy, please do not hesitate to contact us for an initial consultation. Together, we will assess your personal and financial situation and identify the tax regime and planning opportunities best suited to your needs.