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. From 1 January 2026, the annual lump sum tax for new entrants to Italy’s Flat Tax Regime is €300,000. Transitional rules apply for certain individuals who transferred their tax residence before that date.

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

The Italian Lump Sum Tax Regime (legally known as the New Resident Regime) is designed for internationally mobile individuals and expats who become Italian tax residents and wish to simplify the taxation of their qualifying foreign-source income.

The regime may apply to most categories of foreign-source income, including:

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

From 1 January 2026, new entrants to the regime generally pay a fixed annual substitute tax of €300,000, instead of being taxed on their qualifying foreign-source income at Italy’s ordinary progressive income tax rates, which range from 23% to 43%.

Individuals who transferred their tax residence to Italy before 1 January 2026 may continue to benefit from the previous €200,000 annual amount, subject to the applicable transitional rules.

Individuals who entered the Lump Sum Tax Regime before 10 August 2024 remain grandfathered under the previous annual levy of €100,000. Subject to the applicable transitional provisions, this amount continues to apply for the remainder of their 15-year election period and is not affected by subsequent increases to the annual substitute tax.

The regime is available for up to 15 tax years, provided the annual substitute tax is paid on time.

Eligible family members may also elect into the regime by paying an additional annual substitute tax of €50,000 per person. A reduced annual amount of €25,000 may continue to apply where the main applicant transferred their tax residence before 1 January 2026, subject to the applicable transitional rules.

If a participating family member no longer satisfies the qualifying conditions, this does not automatically end the main applicant’s regime. However, if the main applicant’s regime ends, the regime also ceases for participating family members.

The Lump Sum Tax Regime applies only to qualifying foreign-source income. Italian-source income remains subject to Italy’s ordinary income tax rules, together with any applicable regional and municipal income taxes based on where you are resident.

The annual substitute tax does not give rise to a foreign tax credit. However, taxpayers may elect to exclude income arising from one or more specific countries from the regime. Income from those countries is instead taxed under Italy’s ordinary tax rules, allowing foreign tax credits to be considered where available.

Capital gains realised on qualifying shareholdings during the first five tax years of the regime are excluded from the Lump Sum Tax Regime and are generally taxed under Italy’s ordinary tax rules.

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

To qualify for Italy’s Lump Sum Tax Regime, you must meet the following general requirements:

1. You must not have been tax resident in Italy for at least nine of the ten tax years preceding your first year of application.
2. You must become an Italian tax resident in the year you elect into the regime.

Italian tax residency is determined under Article 2(2) of the Italian Income Tax Code (TUIR) rather than through a statutory residence test, as used in some other jurisdictions.

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

• You are registered in the Italian register of the resident population (Anagrafe).
• Your domicile is in Italy, meaning your principal centre of personal and economic interests is located there.
• Your residence is in Italy, meaning your habitual place of abode under Article 43 of the Italian Civil Code.
• From 2024, the Italian tax residence rules were amended, with physical presence in Italy becoming one of the relevant criteria when determining tax residence.

Which Family Members Can Be Included in Italy’s Lump Sum Tax Regime?

Eligible family members may elect into the regime by paying an additional annual substitute tax of €50,000 per person, provided they also become Italian tax residents and satisfy the same nine-out-of-ten-year non-residence requirement.

Individuals who transferred their tax residence to Italy before 1 January 2026 may continue to benefit from the previous €25,000 annual amount for eligible family members, subject to the applicable transitional rules.

Family members typically eligible include:

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

If a participating family member no longer satisfies the qualifying conditions, this does not automatically end the main applicant’s regime. However, if the main applicant’s regime ends, the regime also ceases for all participating family members.

Extending the regime to eligible family members may be particularly beneficial where multiple family members receive significant foreign-source income, as each participating individual can benefit from the fixed annual substitute tax while simplifying their Italian tax reporting obligations.

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 relocate to Italy through one of two main visa routes and, if you meet the applicable residence and tax residency requirements, become an Italian tax resident:

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, eligible immediate family members may apply for accompanying family visas without making separate qualifying investments, provided they satisfy the applicable immigration requirements.

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 minimum income threshold. However, applicants must demonstrate sufficient stable, recurring passive income to support themselves without working in Italy. The level of income expected may vary between Italian consulates and according to the applicant’s personal circumstances.

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 level of passive income expected is generally higher and will depend on the number of accompanying family members and the requirements of the relevant Italian consulate.

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 is important to note that capital gains realised on qualifying shareholdings during the first five tax years are excluded from the Lump Sum Tax Regime and are generally taxed under Italy’s ordinary tax 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 that you were not tax resident in Italy for at least nine of the previous ten tax 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 Italian Revenue Agency. 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 applicable statutory filing deadline. The substitute tax (€300,000 for new entrants from 1 January 2026, €200,000 for qualifying transitional entrants, 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 Tax Regime is generally suited to high-net-worth individuals with significant foreign-source income or assets, whereas the 7% Flat Tax Regime is designed for qualifying foreign pensioners who relocate to eligible municipalities in southern Italy.