The Italian tax system provides for special tax regimes aimed at attracting foreign resident individuals. Such regimes are very competitive compared to those in force in other European countries. Italy can be a safe and tax-efficient destination also for employees on “smart working” arrangements who are willing to settle in the Italian territory.

The existing tax regimes for foreign resident individuals relocating to Italy are:

i) The “New Resident” regime (Flat tax), a special tax regime for passive income earners who are High-Net-Worth Individuals (HNWIs);

ii) The “Impatriate” regime (Expat tax breaks), recently amended with effect from 2024;

iii) Special tax regime for Professors and Researchers resident abroad who move to Italy (“brain gain” regime);

iv) Special tax regime for “Foreign Retirees” (Pensioner tax breaks), a special tax regime for pensioners and retirees.

The “New Resident” regime (Flat tax)

For individuals moving to Italy starting from fiscal year 2026, the mechanism is very
simple:

• new tax resident individuals who opt for the regime shall pay an annual flat tax of € 300,000, that encompasses and replaces any (income and wealth) tax on non-Italian sourced income and assets (e.g. financial, real estate and work-related income), even if remitted to Ital
• conversely, Italian-sourced income is taxable under ordinary rules.

The regime lasts for a maximum of 15 calendar years.

Nevertheless, an anti-avoidance rule is applicable to gains deriving from sales of
significant holdings in foreign companies within the last 5 years.

HNWIs can also elect to exclude from the flat tax regime income sourced from selected
Countries, that becomes fully taxable in Italy, thus benefiting from foreign tax credit rules.

Individuals can elect to apply the regime if they have been resident outside of Italy for tax purposes for 9 out of 10 of the previous calendar years (needless to say, the regime
applies to individuals that have never been resident in Italy).

This flat tax regime is available for Italian and non-Italian citizens who transfer their tax residency to Italy and meet the set requirements. If you are a non-EU citizen requiring a long-term visa to secure a residence permit, one popular option is the Investor Visa.

Qualifying requires making a significant investment into the Italian economy, starting at €250,000.

Individuals applying for the regime can extend it, on a voluntary basis, to some or all of
their family members (the definition of family member is quite broad): in this event, an
additional flat of €50,000 is due for each additional member.

To apply for the regime, individuals have to file a specific ruling request with the Italian tax authorities, which can include family members.

As an alternative to the ruling request, an election can be made in the tax return. The
ruling request can be filed before becoming Italian tax resident and, although not
mandatory, is strongly advisable. Tax authorities provide an answer within 90 days.

“Impatriate” regime (Expat tax breaks)

The special tax regime applies to “inbound workers” (i.e. expats transferring to Italy for
work reasons) and entails a beneficial tax treatment of Italian-sourced employment or
self-employment income.

The Impatriate regime provides that, under certain conditions, employment or self-employment income derived from Italian activities by individuals who transfer their tax
residence to Italy is taxable as to 50% of its amount (with the other 50% being exempt), up to a maximum annual income of euro 600,000.

The application of the Impatriate regime is subject to the following requirements:

• the employee must meet certain high qualifications or specialization requirements as defined by the law - the employee must not have been tax resident in Italy in three tax periods preceding the first tax period of Italian tax residence, and
• in each tax period, the employee must perform his or her working activity on the Italian territory for more than 183 days.

However, if the employee carries out work in Italy for the same entity (employer) which
employed him or her abroad before the relocation or for an entity (employer) belonging to the same group, the requirement of past foreign residency is longer and is, respectively:

1. six tax periods if the employee has not previously been employed in Italy by the same company or by a company belonging to the same group; or
2. seven tax periods if the employee, prior to moving abroad, was employed in Italy by the same company or by a company belonging to the same group.

The Impatriate regime applies for a maximum of five tax periods, including the first year of tax residence and the following four. The regime provides for a recapture mechanism if the beneficiary does not remain an Italian tax resident for at least four years (including the first year of tax residence).

Pursuant to the recapture mechanism, the beneficiary is obliged to pay the taxes that have not been paid, with interest. The tax benefit is directly applied by the employer, that upon payment of the salary shall levy the employee’s withholding taxes on the reduced taxable base.

A specific communication to the employer is required. Alternatively, an election can be made in the income tax return. The portion of taxable employment/self-employment income is reduced to 40% (with the other 60% being exempt) if the worker moves to Italy with a minor child or in case of birth of a child during the period of application of the regime.

In this case, the higher exemption (60% in lieu of the ordinary 50%) will start applying from the tax period in which birth occurs. In any case, it is required that the minor child remains an Italian tax resident throughout the period of application of the regime.

“Brain gain” regime

This is a temporary tax benefit allowing eligible professors and researchers who move
their tax residence to Italy to be taxed on only 10% of their employment or self-employment income.

The income is also excluded from the IRAP tax base. The benefit applies for an initial
period of 5 years. 

The scheme is open to professors and researchers who:

• hold a university degree
• have been non-occasionally tax resident abroad
• have carried out documented teaching or research activity abroad for at least 2
  consecutive years
• transfer and maintain tax residence in Italy for the duration of the benefit
• Italian citizens not registered with AIRE may also qualify if they were tax residents in another country under a double taxation treaty for the two years before relocating.

The standard duration is 5 years, but it can be extended to:

• 8 years with at least one dependent or minor child, or upon purchasing a residential property in Italy -
• 11 years with at least two dependent/minor children
• 13 years with at least three dependent/minor children.

Those who started benefiting from the scheme before 2020 may also extend the duration under certain conditions.

Pensioner tax breaks

Retired individuals who (starting from 2019) relocate to a Region of Southern Italy (i.e.,
Abruzzo, Molise, Campania, Apulia, Calabria, Sicily, Sardinia, Basilicata) may elect to pay a 7% flat tax on their non-Italian sourced income (e.g., foreign pension, financial income, rental income, etc.), for a maximum of 9 tax periods.

Eligible individuals are retirees:

• who receive a pension or an annuity from a foreign entity, including private pension plans
• who has not been tax resident in Italy in the previous 5 years
• who relocate to a municipality (Comune) of a Region of Southern Italy (i.e., Abruzzo, Molise, Campania, Apulia, Calabria, Sicily, Sardinia, Basilicata) with a population of less than 20,000.

The election for the regime shall be made in the individual tax return.

While you don’t need to be an Italian citizen to retire and establish residence in Italy, if you are a non-EU citizen, you will need a long-term visa in order to stay longer than the 90-day stay limit for non-EU citizens.

One type of long-term visa is the Elective Residence Visa, also called the “Retirement Visa”, which is designed for those with passive income, like pensions, who meet a yearly minimum income of €31,000. Other requirements include showing proof of housing in Italy when applying for the visa, such as a property deed or rental agreement, as well as private health insurance coverage.

Individuals eligible for the Regime are exempted from Italian disclosure of foreign assets and are not subject to the payment of Italian wealth taxes on foreign assets.