Italy’s Flat Tax for High Earners

Italy’s Flat Tax for High Earners

In 2017. Italy introduced a flat tax regime for high-net-worth individuals to attract wealthy foreigners and former residents back to the country and boost the economy. It was originally €100,000 and in August 2024 was increased to €200,000.

Here’s a breakdown of how it works:

Flat Tax for High Earners (aka “Resident Non-Domiciled Regime”)

Who it is for:

• Individuals who become Italian tax residents, but have not been tax resident in Italy for at least 9 out of the previous 10 years.
• It is mostly aimed at foreign retirees, entrepreneurs, or wealthy individuals seeking a favourable tax environment.

How the Flat Tax Works:

• Instead of paying Italy’s progressive income tax (which can reach 43% for high incomes), these individuals can opt to pay a flat €200,000 per year on all foreign-sourced income, regardless of the amount. The flat tax therefore saves money for those with large amounts of foreign income (although anything they earn in Italy is subject to the same tax regulations as everyone else).
• Additional family members can be included in the scheme for an extra €25,000 per person, per year.

Scope of Taxation:

• The flat tax covers dividends, interest, capital gains, rental income, etc. from outside Italy.
  Italian-sourced income (e.g. from Italian properties or businesses) is still taxed under normal progressive rates.
• Exempts from wealth tax on foreign assets and from reporting foreign assets.

Duration:

• The regime lasts for up to 15 years.
• It can be revoked voluntarily or is automatically ended if taxes are not paid.

Benefits:

• There is no requirement to declare worldwide income in Italy
• No inheritance or gift tax on foreign assets.
• It does not impact the taxpayer’s global assets.
• It can be combined with special visa or residency programs (like the Elective Residency Visa).

Example:

If a foreign HNWI moves to Italy and opts in:

• They might earn €5 million per year from foreign investments.
• Instead of paying 43% (€2+ million) in taxes, they pay the flat tax of just €200,000 annually

 
Consult your accountant or international tax specialist for further information.

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