Italy

Italy has a split personality when it comes to tax. On one side, high income tax rates, a corporate tax plus a regional business tax, and plenty of paperwork. On the other side, some of the most generous special regimes in Europe: a fixed annual amount that covers all your foreign income, a 50% exemption for qualifying inbound workers, and a 7% flat tax for foreign pensioners who move to the south.

The regimes have been changing, too. The flat tax for new residents has tripled in a little over a year: from €100,000 to €200,000 in August 2024, and to €300,000 for people who move from 2026. The impatriate regime was cut back in 2024. The 7% regime, on the other hand, got wider in 2026.

This guide covers where things stand as of 2026.

How the Italian tax system works

Italian residents are taxed on their worldwide income. You’re resident if, for most of the tax year, you’re registered in the Italian population register, have your domicile or habitual residence in Italy, or – since 2024 – are physically present in Italy for most of the year.

The flat tax for new residents (Article 24-bis)

This is Italy’s answer to the old UK non-dom regime – and in some ways it’s simpler.

How it works

• You pay a fixed annual amount in place of Italian income tax on all your foreign income and gains, however large.
• Italian-source income is taxed normally.
• You’re exempt from the Italian taxes on foreign real estate and financial assets (IVIE and IVAFE), and from reporting foreign assets in your tax return.
• Foreign inheritances and gifts are also exempt from Italian inheritance and gift tax while the regime applies.
• The regime lasts up to 15 years and can be revoked at any time (but not re-entered).
• You can exclude specific countries from the regime, for example to claim treaty benefits there, and pay normal Italian tax on income from those countries.

Who qualifies

You must move your tax residence to Italy and not have been Italian tax resident in at least nine of the previous ten tax years. Nationality doesn’t matter – Italians returning after long periods abroad can use it too. A ruling request to the tax authority is optional but common.

How much

The amount that applies when you move is locked in for your regime period.

The impatriate regime (since 2024)

The regime for inbound workers (lavoratori impatriati) was reformed from 2024. For new beneficiaries:

• 50% of qualifying income from employment and self-employment performed in Italy is exempt from income tax, up to €600,000 a year.
• 60% if you move with at least one minor child, or a child is born or adopted during the regime.
• Duration: five tax years.
• Conditions: you must not have been Italian tax resident in the previous three tax years (longer if you previously worked for the same employer or group), commit to staying resident in Italy for at least four years, perform most of your work in Italy, and be highly qualified or specialized.

The old, more generous version (70–90% exemption) is closed to newcomers. People who entered earlier keep their existing terms.

The 7% regime for foreign pensioners

Foreign pension recipients who move to southern Italy can opt for a 7% flat tax on all foreign income – not just pensions – for ten years.

• Where: municipalities in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia, plus certain towns in central Italy affected by the 2009 and 2016 earthquakes.
• Population cap: since April 2026, the town can have up to 30,000 inhabitants (it was 20,000), which added dozens of eligible towns.
• Conditions: you receive a pension from a foreign source and weren’t Italian tax resident in the previous five tax years.

For retirees with a decent pension and investment income, 7% is hard to beat anywhere in the EU. Check whether your pension is taxable in Italy under the relevant tax treaty – government pensions, for example, are often taxed only in the paying country.

Setting up a company in Italy

The most common vehicle is the Società a responsabilità limitata (Srl).

• Share capital. From €1 (simplified Srl), or €10,000 for a standard Srl, with at least 25% paid in at formation.
• Formation. Notarial deed, registration with the Business Register, tax code, VAT number and certified email address (PEC). Usually one to three weeks.
• Costs. Notary, registration and professional fees typically come to a couple of thousand euros for a simple Srl.
• Running costs. Monthly bookkeeping, VAT filings, annual accounts and tax returns via a commercialista – usually a few thousand euros a year for a small company.

Corporate tax

Companies pay IRES at 24% plus IRAP, a regional tax on “net value of production” at a standard rate of 3.9%. Because IRAP’s tax base doesn’t allow all deductions (for example, some labour costs and interest), the effective combined burden can be a bit higher or lower than 27.9%.

Dividends to non-residents are subject to 26% withholding tax, reduced by tax treaties. Dividends to qualifying EU/EEA companies can benefit from a much lower rate or exemption.

Flat-rate regime for freelancers

Self-employed people with revenue up to €85,000 can opt for the regime forfettario: a 15% flat tax on a deemed profit percentage, with lighter bookkeeping and no VAT charged. New businesses can pay 5% for the first five years under conditions.

Residency options

EU citizens

EU citizens can move freely and register with the municipality (anagrafe) after arriving, showing employment, self-employment or sufficient funds and health insurance.

Digital nomad visa

Since April 2024, Italy offers a visa for highly qualified remote workers who work for employers or clients outside Italy. Requirements include a minimum annual income (roughly three times the minimum level for exemption from healthcare contributions, which works out at around €28,000 a year), relevant qualifications or experience, health insurance and accommodation. It is a residence route, not a tax regime – normal Italian tax rules apply unless you qualify for a special regime.

Elective residence visa

For non-EU nationals with substantial passive income who don’t work in Italy. It is often combined with the flat tax or the 7% regime.

Investor visa

Italy also offers an investor visa for non-EU nationals who invest in Italian companies, government bonds or philanthropic projects above set thresholds.

Banking

Italian banks are part of the eurozone system and generally open accounts for residents with a tax code (codice fiscale). Onboarding can be slow and paper-heavy. Many newcomers use an EU neobank at first and add an Italian bank for local payments.

Living in Italy

The good

• Quality of life. Food, culture, landscapes and a climate that ranges from Alpine to Mediterranean.
• Cost of living. Outside Milan, Rome and the tourist hot spots, very reasonable – especially in the south.
• Healthcare. A public system with good hospitals in the cities.
• Location. EU, euro, Schengen and flights everywhere.

The less good

• Bureaucracy. Legendary, and not in a good way. A good commercialista is essential.
• Language. Outside big cities, you’ll need Italian.
• Changing rules. Special regimes have been adjusted in several budgets in a row.
• Economy. Slower growth and a less dynamic job market than northern Europe.
• Southern infrastructure. Charming towns can come with limited services and transport.

Key considerations

• Timing matters. The flat tax amount depends on when you move. Future budgets may change it again.
• Know your source. Italian-source income is taxed normally under the flat tax and the 7% regime.
• Pensions and treaties. Check whether your pension is taxable in Italy at all before choosing the 7% regime.
• Your company abroad. Moving to Italy while running a foreign company can make it Italian tax resident through its place of management.

Who Italy suits – and who it doesn’t

Italy works well for

• Ultra-high-net-worth individuals with large foreign income who value certainty and the inheritance tax exemption.
• Foreign pensioners who want the 7% regime and life in a small southern town.
• Highly qualified professionals moving for work, using the impatriate regime.
• Remote workers who want an EU base via the digital nomad visa.

Italy is probably not for you if

• You want a low-tax trading company. IRES plus IRAP isn’t cheap; look at Bulgaria or Cyprus.
• Your foreign income is moderate. The €300,000 flat tax only makes sense at high income levels. Malta or Cyprus may fit better.
• You hate bureaucracy. Italy will test you.

Compare Italy with other options in the country comparison or read our guide to choosing a residency.

Rates and rules in this guide were checked in September 2026. This is general information, not tax or legal advice – get your specific situation reviewed by a qualified advisor before you act.

Sources

• Agenzia delle Entrate
• Gazzetta Ufficiale – Budget Law 2026 (Law 199/2025)
• Ministry of Foreign Affairs – visas for Italy
• PwC Worldwide Tax Summaries – Italy