Everything HNWI need to know about the €200,000 flat tax: eligibility, family extension, inheritance exemptions, and how to apply.
Italy's flat tax regime for new residents — formally known as the regime forfettario per neo-residenti under Article 24-bis of the TUIR — has become one of Europe's most attractive tax frameworks for high-net-worth individuals. Introduced in 2017 and refined in subsequent budgets, it allows qualifying new tax residents to pay a fixed substitute tax of €200,000 per year on all foreign-sourced income, regardless of the amount. On an income of €5 million, that's an effective rate of 4%. On €20 million, it's 1%.
This guide covers everything you need to know to evaluate, plan, and apply for the regime in 2026.
The flat tax replaces Italy's ordinary progressive income tax (IRPEF), which reaches 43% on income above €50,000, with a single annual payment of €200,000 that covers all foreign-sourced income. Italian-sourced income — such as an Italian salary or rent from Italian property — remains taxed at normal progressive rates.
The regime lasts for 15 years from the date of election, provided you maintain Italian tax residency. You can revoke it at any time, but once revoked, you cannot re-elect it.
To qualify, you must meet two conditions:
The flat tax covers all categories of foreign-sourced income, including:
Critical: Income sourced from Italy is NOT covered by the flat tax and is taxed at ordinary progressive rates (up to 43%). Careful income planning is essential — structure your affairs so that value creation occurs outside Italy wherever possible.
One of the regime's most powerful features is the family extension. Each additional family member who also transfers their tax residence to Italy can be added to the flat tax regime for €25,000 per year per person. This includes your spouse, children, parents, and in-laws.
| Family Size | Annual Cost | Effective Rate on €5M | Effective Rate on €20M |
|---|---|---|---|
| Individual | €200,000 | 4.0% | 1.0% |
| Couple | €225,000 | 4.5% | 1.1% |
| Family of 4 | €275,000 | 5.5% | 1.4% |
| Extended (6) | €325,000 | 6.5% | 1.6% |
For many HNWI, the inheritance tax benefit is even more valuable than the income tax saving. Under the flat tax regime, foreign assets are exempt from Italian inheritance and gift tax. Italy's ordinary inheritance tax on non-family transfers can reach 8% with no threshold, and even direct-line transfers are taxed at 4% above €1 million per heir.
Under the regime, a €50 million foreign estate passes to heirs completely free of Italian inheritance tax. This single feature can save multi-generational families millions.
Taxpayers under the regime are also exempt from IVIE (the 0.76% tax on foreign real estate) and IVAFE (the 0.2% tax on foreign financial assets). On a €10 million investment portfolio, the IVAFE exemption alone saves €20,000 per year.
There are two routes:
Taxpayers under the flat tax regime are exempt from Quadro RW reporting obligations for the foreign assets covered by the regime. This means you do not need to declare your foreign bank accounts, investment portfolios, or real estate in the annual foreign asset disclosure. This is a significant administrative simplification and a privacy advantage.
You can exclude one or more countries from the flat tax regime and instead apply ordinary Italian tax treatment (with treaty benefits) to income from those countries. This is useful if you have income from a country where the treaty rate is lower than the flat tax would imply. The choice is made at the time of election and can be modified annually.
| Country | Regime | Duration | Cost/Rate | Key Limitation |
|---|---|---|---|---|
| Italy | Flat tax | 15 years | €200K fixed | Only foreign income |
| Portugal (ex-NHR) | Simplified | 10 years | 20% on certain income | Narrower scope since 2024 |
| Greece | Flat tax | 15 years | €100K fixed | Must invest €500K in Greek assets |
| Switzerland | Lump-sum taxation | Ongoing | Varies by canton | Cannot work in Switzerland |
| Malta | Non-dom | Ongoing | 15% minimum €5K | Remittance basis only |
| Cyprus | Non-dom | 17 years | 0% on dividends | Uncertain EU future |
Italy's regime stands out for three reasons: the 15-year duration is the longest in Europe, the inheritance tax exemption is unmatched, and Milan offers a genuine world-class city lifestyle that no other flat tax jurisdiction can match.
Yes, but income from work performed in Italy is Italian-sourced and taxed at progressive rates. The flat tax only covers foreign income. If you manage a foreign company from Milan, the key question is where the economic value is created.
Citizenship is irrelevant. The only test is tax residency. If you have Italian citizenship but have not been tax resident in Italy for 9 of the last 10 years, you qualify.
Yes. You can revoke the regime at any time. There is no clawback on previous payments. If you leave Italy entirely, the regime simply ends.
Currently no. The amount has been fixed at €200,000 since it was raised from €100,000 in 2024. Future budget laws could change this.
Disclaimer: This guide provides general information as of March 2026. Tax laws change frequently. Always consult qualified Italian tax counsel before making decisions. The Italian Gateway coordinates these professionals on your behalf but does not provide direct tax advice.