Italy offers a €100,000/year flat tax on all foreign-source income for new residents. Here is who it targets, how it works, and whether it is worth it for entrepreneurs.
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Italy is rarely the first destination that comes to mind for tax optimization — yet it offers one of the most generous flat-tax regimes in Europe for high-net-worth new residents. The €100,000 annual flat tax replaces Italian tax on all foreign-source income, regardless of amount. For those earning €1M+/year from abroad, this is transformative.
FIXE GROUP assesses your eligibility for Italy's flat tax regime, manages the residency application, and integrates the Italian structure with your existing international setup.
Italy's flat tax regime for new residents (Art. 24-bis of the TUIR, introduced by Law 232/2016) allows individuals who transfer their tax residency to Italy to pay a flat €100,000 per year on all their foreign-source income, regardless of how much they earn abroad. This replaces the standard progressive Italian income tax (up to 43%) on foreign income. Italian-source income is taxed separately at progressive rates. The regime lasts up to 15 years and can be extended to family members at €25,000 per person per year.
Under Art. 24-bis of the TUIR (Testo Unico delle Imposte sui Redditi, DPR 917/1986), a new Italian tax resident who has not been resident in Italy for at least 9 of the 10 preceding tax years can elect to pay a flat €100,000 per year on all their foreign-source income. This is a substitute tax (imposta sostitutiva) — it replaces the ordinary IRPEF on foreign income entirely. The €100,000 is due annually regardless of whether foreign income is €500,000 or €10,000,000.
The breakeven point is roughly €500,000 of foreign-source income per year. At €500,000: Italian IRPEF would be approximately €210,000; flat tax is €100,000 — saving €110,000/year. At €1,000,000: Italian IRPEF would be approximately €430,000; flat tax is €100,000 — saving €330,000/year. For entrepreneurs with international portfolios, royalty streams, or company distributions above €500,000/year, the Italian flat tax is highly competitive even against zero-tax jurisdictions when lifestyle is factored in.
You must register in the municipal registry (anagrafe), spend 183+ days per year in Italy, and elect the regime in your first Italian income tax return (Modello Redditi PF). The election requires a specific filing and can be withdrawn. Importantly, Italy's flat tax regime does not exempt you from Italian tax on Italian-source income — that is taxed at progressive rates (23–43%). For entrepreneurs with predominantly foreign income, this is a minor point.
Italy's flat tax is best combined with a lifestyle genuinely centered in Italy — Rome, Milan, or the Italian countryside. It does not make financial sense for those who plan to spend less than 183 days/year in Italy. Quality of life: exceptional food, culture, healthcare (ranked among Europe's best), relatively affordable outside Milan compared to London or Paris.
Legal basis
Italy: Art. 24-bis TUIR (DPR 917/1986), introduced by Law 232/2016
Agenzia delle Entrate Circular No. 17/E of 2017 (implementation guidelines)
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