Flat Tax for New Residents in Italy (Art. 24-bis TUIR): A Complete Guide

 

What is the Flat Tax for New Residents?

The flat tax for new residents, as per Article 24-bis of the TUIR (Italian Consolidated Tax Law), is an optional tax regime reserved for individuals who transfer their tax residence to Italy. It was first introduced into the Italian legal system in 2017.

As of August 10, 2024, with Legislative Decree 113/2024, the flat tax on foreign income has been increased from the original €100,000 to the current €200,000 per year, while it remains fixed at €25,000 per year for each family member who joins the scheme.

This is a scheme designed to attract expats, entrepreneurs, and international investors with high assets and incomes, offering tax certainty and simplified compliance.

Access Requirements

To access the scheme, you need to:

• transferring tax residency to Italy (registration in the civil registry, domicile or habitual residence for more than 183 days a year). 
• not having been a resident in Italy for at least 9 of the preceding 10 years.
• exercise the option in the tax return (Form 730, section NR).

In some cases, it is advisable to submit a request for clarification to the Revenue Agency, prepared by a qualified professional.

Covered and Uncovered Income

Incomes covered by the flat tax

All income from foreign sources is included: dividends, interest, capital gains, income from foreign real estate, fees, royalties, foreign pensions, and foreign business income.
Taxpayers are also exempt from the obligation to monitor their tax situation (section RW) and from paying IVIE/IVAFE taxes.

Uncovered income

Italian income remains taxed in the usual way: employment income, property income, corporate profits, and business income in Italy.

Possibility of exclusion

The taxpayer may exclude specific foreign countries from the option, subjecting the related income to ordinary Italian taxation with any applicable tax credit.

Amounts and Duration

• Main taxpayer: €200,000 annually for transfers made from August 10, 2024.
• Family members: €25,000 per year each.
• Maximum duration: 15 years, with automatic renewal.

Revocation is possible at any time (but is final). Failure to pay within the deadline results in immediate forfeiture.

Operational Requirements

• Payment of the tax: by the deadline for the IRPEF balance (June 30th) in a single payment.
• Declaration: obligation to submit the Individual Income Tax Return Form with section NR.
• Documentation: Keep proof of previous non-residency and of the actual transfer to Italy.

Advantages of the Flat Tax for Neo-Residents

• Tax certainty: a fixed amount, independent of the amount of foreign income.
• Simplification: exemption from RW, IVIE and IVAFE.
• Family planning: available to family members at a reduced rate.
• Long duration: 15 years of tax stability.
• Wealth attractiveness: advantageous for high assets and incomes.

Exemption from Inheritance and Gift Taxes

A further benefit of the regime concerns wealth planning. During the period of validity of the flat tax, new residents are exempt from paying inheritance and gift taxes on assets and rights held abroad. This means that any transfers mortis causa or inter vivos relating to assets held abroad are not subject to taxation in Italy, representing a significant advantage in terms of protecting and transmitting family wealth. However, taxation on inheritances and gifts concerning assets located in Italy remains in effect.

Limitations and Critical Issues

• Italian income taxed in the ordinary way.
• High fixed cost, not suitable for foreign income below €500,000.
• No foreign tax credit for taxes on covered income.
• Automatic expiration in case of non-payment.
• Maximum duration 15 years, not renewable.

Final Considerations

The flat tax for new residents is a competitive tool that makes Italy very attractive to expats and international HNWI (High Net Worth Individuals) investors, being particularly suitable for those who own significant assets and income abroad. With a substitute tax of €200,000 per year on foreign income and €25,000 for family members, it guarantees convenience, certainty, and simplicity for 15 years.

Despite the apparent simplicity of its application, the scheme for new residents requires a thorough assessment of the access requirements as well as the long-term effects.

Book a consultation with Studio Genise to analyze your specific case and best plan your move to Italy.

FAQ on the Flat Tax for New Residents

Who is eligible for the flat tax for new residents in Italy?

Anyone who transfers their tax residence to Italy and has not been a resident for at least 9 of the previous 10 years can participate.

How much will neo-residents pay with the flat tax starting in 2024?

The substitute tax is €200,000 per year for the primary taxpayer and €25,000 for each family member.

Does the flat tax also cover Italian income?

No. Income originating from Italy remains taxed in the usual way with IRPEF.

Do I need to declare foreign assets in section RW?

Those who adhere are exempt from the RW form and from paying IVIE/IVAFE taxes on the included foreign assets.

How long does the flat tax last for new residents?

The scheme lasts up to 15 years, with automatic annual renewal. It can be revoked or terminated for non-payment.

What happens if I don't pay the €200,000 by the deadline?

Failure to make the payment results in immediate forfeiture of the benefits of the scheme, with no possibility of reinstatement.