Italy Lump Sum Tax: What Expats Need to Know About Eligibility, Benefits, and Deadlines

Italy’s lump sum tax regime offers a fixed-amount substitute tax as an alternative to ordinary progressive taxation, providing simplification and potential savings for high-net-worth individuals. It can also offer estate planning advantages through exemptions on foreign-situs assets.

This article explains what Italy’s lump sum tax regime is, how it works, and who qualifies for it. It also summarises recent 2024–25 updates to the regime and outlines the key application steps, eligibility rules, and important caveats for expats and retirees.

What Is the Italian Lump Sum Tax Regime and How Does It Work?

The Italian lump sum tax regime (known legally as the “new resident” regime) is designed for expats seeking to cap, simplify, and regularise the taxation of their foreign-sourced income while living in Italy.

The regime may cover most categories of non-Italian income, including:

• Foreign-sourced dividends, interest, rent, and capital gains.
• Foreign business income and pensions.
• Foreign-situs real estate and other assets for inheritance and gift tax purposes.

As of 2025, new entrants who become Italian tax residents after 10 August 2024 pay a fixed annual substitute tax of €200,000, instead of being taxed on their foreign income at the ordinary Italian progressive rates, which range between 23% and 43%. The regime is available for up to 15 years, subject to timely payment of the substitute tax each year.

Family members can be included under the same regime by paying an additional €25,000 per person, per year, provided each qualifies as a family member under Article 433 of the Italian Civil Code and becomes an Italian tax resident.

Individuals who entered the lump sum tax regime before 10th August 2024 remain grandfathered under the previous annual levy of €100,000, which continues to apply for the duration of their 15-year term regardless of future rate increases.

Note that the lump sum regime applies only to foreign-sourced income. Italian-sourced income is taxed under ordinary progressive rates, and you will also be liable for regional income tax (typically between 1.23% and 3.33%) and a municipal tax (generally up to 0.8%, or 0.9% in Rome) depending on where you reside.

Capital gains on qualified shareholdings realised within the first five tax years are excluded from the regime and taxed at ordinary rates.

What Are the Eligibility Criteria for the Italian Lump Sum Regime?

To qualify for Italy’s lump sum tax program, you have to meet the following general requirements:

1. You must have been non-resident in Italy for tax purposes for at least nine of the ten tax years preceding the first year of application.
2. You must become an Italian tax resident in the year you opt for the regime.

Italian tax residency is determined under Article 2(2) of the Italian Income Tax Code (TUIR), not through a “Statutory Test” as used in some other countries.

You are considered tax resident in Italy if, for more than 183 days in a calendar year, any one of the following conditions applies:

• You are registered in the Italian register of the resident population (Anagrafe).
• You have your domicile in Italy (that is, your principal centre of personal and economic interests).
• You have your residence in Italy (your habitual abode under Article 43 of the Civil Code).
• From 2024 onwards, the Italian tax authority also recognises physical presence as a practical indicator of residence.

Which Family Members Are Eligible for the Lump Sum Tax in Italy?

Eligible family members may be included under the main applicant’s regime by paying an additional annual substitute tax of €25,000 per person, provided they also become Italian tax residents and meet the nine-of-ten non-residence requirement.

Family members typically eligible include:

• A spouse or civil partner.
• Children (minor or adult).
• Parents and other ascendants.
• Siblings.

The extension may be particularly beneficial for families with significant foreign-source income, as it allows each participating member to apply the fixed substitute tax to their own foreign-sourced income, helping to preserve family wealth while simplifying reporting.

How Can You Qualify for Residency in Italy as an HNW Expat?

While many expats secure Italian tax residency through employment, affluent individuals typically relocate for lifestyle or financial reasons. As a high-net-worth (HNW) expat, you can obtain Italian tax residency by securing one of two main visa routes:

1. Investor visa (commonly known as the “golden visa”)
2. Elective residence visa

Investor (Golden) Visa

The Italian golden visa is available to individuals who make a qualifying investment or donation in Italy. The main investment thresholds are:

• €2,000,000 invested in Italian government bonds.
• €500,000 invested in shares or bonds of an Italian company (reduced to €250,000 for investments in an innovative start-up).
• €1,000,000 donated to support a public-interest project in areas such as education, culture, research, or environmental sustainability.

The application process generally takes three to six months. The golden visa is valid for two years, renewable for an additional three years, provided the investment is maintained.

If you qualify for the investor visa, your immediate family members can apply for dependent visas without the need to make separate qualifying investments.

Elective Residence Visa

The elective residence visa is intended for individuals who wish to live in Italy without engaging in any form of employment or business activity, as this route does not permit work.

To qualify, you must demonstrate that you can support yourself financially with stable, recurring passive income, such as:

• Dividends.
• Pensions.
• Royalties.
• Rental income.

There is no statutory income threshold, but Italian consulates typically require evidence of at least €31,000–€32,000 in annual passive income for a single applicant, though the amount may vary by consulate.

The visa is valid for one year and can be renewed annually without a fixed limit, provided you continue to meet the financial and accommodation requirements.

If your family intends to relocate with you, the income requirement usually increases by 100% for a spouse and around 20% for each dependent child, subject to the eligibility criteria being met.

What Are the Tax Benefits of Italy’s Lump Sum Tax Regime?

Registering under the lump sum tax regime in Italy provides the following tax benefits for expats:

However, it’s important to understand that capital gains on qualified shareholdings realised within the first five tax years are excluded from the lump sum regime and taxed at ordinary rates under Italy’s anti-avoidance rules.

How To Apply for the Lump Sum Tax Regime in Italy?

The application process for Italy’s lump sum tax regime involves the following steps:

1. Establish tax residency in Italy: To be considered an Italian tax resident, you must meet at least one of the following conditions for more than 183 days in a tax year:
   • Be registered in the Anagrafe, or
   • Have your domicile in Italy, or
   • Have your residence in Italy.
   • In practice, this typically involves obtaining an appropriate long-stay visa (such as the golden or elective residence visa), securing long-term accommodation, obtaining an Italian tax code, and opening an Italian bank account.
2. Gather the required documentation: You must provide personal identification details, financial information, and evidence confirming non-residency in Italy for at least nine of the previous ten years. Supporting documents may include foreign tax residence certificates, proof of overseas income sources, and family member details where relevant. Specific documentation may vary depending on your circumstances.
3. (Optional) Submit an advance tax ruling: This is an optional but strongly recommended step to obtain confirmation from the Italian Revenue Agency that you qualify for the regime. The ruling request, accompanied by the documentation above and details of any family members to be included, is submitted to the Central Directorate for Large Taxpayers – Division of International Rulings. The tax authority generally issues a response within 120 days.
4. Opt into the regime: Once eligibility is confirmed, you must formally elect the lump sum regime in your Italian income tax return for the first year of Italian tax residence or the following year. The election must be made by the statutory filing deadline, which is typically 31 October of the following year. The substitute tax (€200,000 or €100,000 for pre-10 August 2024 entrants) is payable in a single instalment by the ordinary tax balance deadline (usually late June or early July).
5. Monitor deadlines and ongoing compliance: You must pay the substitute tax each year on time and adhere to annual filing requirements to maintain eligibility. Failure to make timely payment or non-compliance with residency conditions will automatically terminate the regime.

Italy’s Lump Sum Tax vs. Flat Tax Regime: What Is the Difference?

The lump sum tax regime in Italy is often mistaken for the Italian flat tax regime. While both programs provide a preferential tax treatment to expats, they differ in key aspects such as their available tax rates, duration, and target audience. Consult the table below for more details:

In summary, the lump sum regime is best suited to HNW individuals with diverse foreign-source income, whereas the 7% flat tax regime targets retired foreign expats whose main income comes from foreign pensions and who are prepared to live in smaller municipalities in southern Italy