Italy has updated its special tax regime for new residents, raising the annual flat tax on foreign-sourced income to €200,000 starting from the 2025 tax year. This regime, known as the “neo-domiciled tax regime,” is designed to attract high-net-worth individuals who transfer their tax residency to Italy.
Under the new rules, eligible individuals who become Italian tax residents can opt to pay a fixed annual tax of €200,000 on their worldwide foreign income, regardless of the actual amount earned. Family members can also benefit, each paying a flat tax of €25,000 on their own foreign-sourced income.
To qualify, applicants must not have been Italian tax residents for at least nine out of the previous ten years. The regime covers most foreign income, including interest, dividends, and capital gains (with some exceptions), and exempts participants from declaring foreign investments in their Italian tax return. The option must be exercised through the annual tax return, and it is recommended to seek a formal ruling from the Italian tax authorities to confirm eligibility.
Those who joined the regime before 2025 can continue to pay the previous flat tax rate of €100,000 for the duration of their participation.
This change positions Italy as a competitive destination for internationally mobile individuals seeking tax efficiency and lifestyle benefits.