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Italy's lump-sum tax at 300,000 euros: who it still makes sense for

See whether Italy's 300,000 euro lump-sum tax fits your income level, with break-even maths, coverage rules and the 2026 grandfathering position.

9 min read

Italy’s lump-sum regime for new residents is the simplest headline in European tax planning: one fixed annual payment covers essentially all of your foreign income, however large it is. From 1 January 2026 that payment is 300,000 euros per year, following the 2026 Budget Law approved on 30 December 2025 (IMI Daily, accessed 16 July 2026). The price has tripled since 2017, and the maths of who benefits has shifted with it. This guide covers the current rules, the grandfathering position, and an illustrative break-even calculation.

What the regime is

Article 24-bis of the Italian tax code (TUIR) lets individuals who move their tax residence to Italy elect a substitute tax on all foreign-source income: a single lump sum per year, regardless of how much foreign income they actually earn. The regime was introduced in 2017 to attract internationally mobile wealth (Studio Genise, accessed 16 July 2026).

Eligibility rests on one core condition: you must have been tax resident outside Italy for at least 9 of the 10 tax years before the move (PwC Tax Summaries, accessed 16 July 2026). Nationality is irrelevant — the regime is open to any passport, including Italian citizens returning after a long absence.

Qualifying family members (spouse, children and certain other relatives) can join the election for a separate lump sum of 50,000 euros each per year from 2026 (IMI Daily, accessed 16 July 2026).

How the price reached 300,000 euros

The regime has been repriced twice, and each time existing users kept their original deal:

  • 2017: introduced at 100,000 euros per year (25,000 euros per family member) by the 2017 Budget Law (Studio Genise, accessed 16 July 2026).
  • August 2024: doubled to 200,000 euros by Decree-Law 113/2024 of 9 August 2024, applying to individuals who transferred residence after 10 August 2024. Those already in the regime stayed at 100,000 euros (Morri Rossetti, accessed 16 July 2026).
  • December 2025: raised to 300,000 euros (family members 50,000 euros) by the 2026 Budget Law, approved 30 December 2025 and in force from 1 January 2026 (IMI Daily, accessed 16 July 2026).

The grandfathering principle held again: anyone who moved to Italy and validly opted in before the new law took effect continues to pay the amount that applied at the time of their relocation, with no retroactive effect (IMI Daily, accessed 16 July 2026). If you became Italian tax resident in 2025 and elected the regime, your number stays 200,000 euros for the full term. The planning lesson: each repricing protected only those who had already committed.

What the substitute tax covers

For the duration of the election, the lump sum replaces Italian tax on foreign-source income and delivers several related exemptions (PwC Tax Summaries and Studio Genise, both accessed 16 July 2026):

  • All foreign-source income and gains — dividends, interest, capital gains, rental income, business profits arising abroad.
  • IVIE and IVAFE wealth taxes on foreign assets. Outside the regime these run at 1.06% per year on foreign real estate and 0.2% on foreign financial assets (0.4% for assets in listed low-tax jurisdictions) (PwC Other Taxes, accessed 16 July 2026).
  • Inheritance and gift tax on foreign-situs assets — transfers of assets held abroad are exempt while the regime is in force (Studio Genise, accessed 16 July 2026).
  • Foreign-asset reporting (quadro RW) — the annual disclosure of foreign holdings is waived (Studio Genise, accessed 16 July 2026).

One structural feature deserves attention: you may exclude specific countries from the election. Income from an excluded country is then taxed under ordinary Italian rules, with access to the foreign tax credit and treaty relief. Income covered by the lump sum carries no foreign tax credit — foreign withholding taxes on covered income are a final cost (Studio Genise, accessed 16 July 2026). Where your portfolio sits in high-withholding jurisdictions, this per-country choice can materially change the outcome and is worth modelling with your advisor before you elect.

What stays outside the regime

Two significant exclusions apply:

  • Italian-source income is taxed at ordinary progressive rates, which from the 2026 tax year are 23% up to 28,000 euros, 33% from 28,001 to 50,000 euros, and 43% above 50,000 euros (PwC Tax Summaries, accessed 16 July 2026; the 33% middle rate replaced 35% under the 2026 Budget Law), plus regional and municipal surcharges of roughly 1.2–3.3% (TaxoTax curated jurisdiction data, reviewed April 2026). Italian employment, Italian rental property and an Italian operating business all sit outside the lump sum.
  • Capital gains on qualified participations sold in the first five years of the regime are taxed under ordinary rules (PwC Tax Summaries, accessed 16 July 2026). This anti-avoidance rule targets people who would move to Italy purely to sell a substantial company stake tax-efficiently. Broadly, holdings above roughly 20% of voting rights in a private company, or 2% in a listed one, are caught (TaxoTax curated jurisdiction data, reviewed April 2026) — the precise classification of your holding is a point to confirm with your advisor before any planned disposal.

The 15-year window and how it ends

The election runs for a maximum of 15 years and renews automatically each year within that window (Studio Genise, accessed 16 July 2026). It ends in one of three ways: the 15 years expire, you revoke it (revocation is final — there is no way back in), or you miss the annual payment, which triggers immediate forfeiture (Studio Genise, accessed 16 July 2026). The lump sum is paid in a single annual instalment by the standard 30 June balance deadline for income taxes (Studio Genise, accessed 16 July 2026).

Break-even: an illustrative calculation

The figures below are illustrative only. They assume all foreign income would otherwise face Italy’s 26% flat rate on financial income (TaxoTax curated jurisdiction data, reviewed April 2026) and ignore foreign withholding taxes, wealth-tax savings, family members and the inheritance exemption. Treat them as a first filter and confirm the real numbers with your advisor.

Annual foreign investment incomeOrdinary Italian tax at 26% (illustrative)Lump sum from 2026Cheaper option
750,000 euros~195,000 euros300,000 eurosOrdinary taxation
1,150,000 euros~300,000 euros300,000 eurosBreak-even
2,000,000 euros~520,000 euros300,000 eurosLump sum
5,000,000 euros~1,300,000 euros300,000 eurosLump sum

On these assumptions, the lump sum starts paying for itself at roughly 1.15 million euros of foreign investment income per year — at a 4% yield, an income-producing portfolio of roughly 29 million euros; at 6%, roughly 19 million euros. For income that would face the 43% top rate plus surcharges, the break-even falls to roughly 650,000–700,000 euros per year.

The cash comparison understates the regime’s full value: the wealth-tax exemption alone is worth 0.2% per year on foreign financial assets — 40,000 euros annually on a 20 million euro portfolio (rate: PwC Other Taxes, accessed 16 July 2026) — and the reporting waiver removes real compliance cost for complex structures.

The inheritance and gift tax angle

For large estates, this may be the strongest single feature. Italy’s ordinary inheritance tax for a spouse or children is 4% on value above a 1 million euro allowance per heir (PwC Other Taxes, accessed 16 July 2026) — already among Europe’s mildest. Under the lump-sum regime, foreign-situs assets are exempt entirely while the election runs (Studio Genise, accessed 16 July 2026). Illustratively, a 30 million euro foreign portfolio passing to one child during the regime avoids roughly 1.16 million euros of Italian inheritance tax. Succession planning across the 15-year window, and at its end, is a matter for coordinated legal and tax advice.

How to apply

The election is made in your Italian income tax return for the year you become resident, using the dedicated section (Studio Genise, accessed 16 July 2026). Italian tax residence itself generally follows from spending 183 days or more in Italy, or from registration and habitual abode there (TaxoTax curated jurisdiction data, reviewed April 2026).

An advance ruling (interpello) to the Italian Revenue Agency is optional. PwC recommends submitting one to obtain the authority’s formal opinion on your eligibility before relying on the regime (PwC Tax Summaries, accessed 16 July 2026) — sensible for anyone with trusts, holding companies or a residence history that needs interpretation, and it creates a documented position you can show to banks and to the tax authority of the country you are leaving.

Who the regime still fits

At 300,000 euros, the regime remains a strong fit for a narrower group than in 2017:

  • Investors and post-exit founders with foreign income comfortably above the ~1.15 million euro illustrative break-even, or highly taxed income above ~700,000 euros.
  • Large estates, where the foreign-asset inheritance exemption works on top of the income-tax saving.
  • People leaving regimes that have tightened, including UK residents after the end of the non-dom era, who value a fixed, predictable annual cost.
  • Families, where each additional member at 50,000 euros extends the coverage at a fraction of the lead applicant’s cost.

For foreign income in the low-to-mid six figures, ordinary Italian taxation — or a different jurisdiction — will usually be cheaper, and Italy’s 7% regime for foreign pensioners in southern municipalities serves retirees at a very different price point (TaxoTax curated jurisdiction data, reviewed April 2026).

Where you land depends on your income mix, your source countries and your family setup. Run your numbers through our free instant check at /#instant-check, or see exactly what an advisor-ready brief looks like in our sample report.

Sources

This guide is general information, current as of 16 July 2026. Tax outcomes depend on personal circumstances; confirm your position with a qualified Italian tax advisor before acting.

FAQ

I moved to Italy in 2025 and elected the flat tax. Do I now pay 300,000 euros? No. Anyone who moved before the 2026 Budget Law took effect and validly opted in keeps the amount in force at the time of relocation — 200,000 euros for post-August-2024 arrivals, 100,000 euros for earlier ones (IMI Daily, accessed 16 July 2026).

Does the lump sum cover income I earn inside Italy? No. Italian-source income — employment, rentals, an Italian business — is taxed at ordinary progressive rates up to 43% plus surcharges (PwC Tax Summaries, accessed 16 July 2026).

Can I sell my company shortly after moving? Capital gains on qualified participations sold within the first five years of the regime fall under ordinary taxation (PwC Tax Summaries, accessed 16 July 2026). Timing and structuring of a disposal are exactly what the advance-ruling process and your advisor should address before you commit.

How long does the regime last? Up to 15 years, renewing automatically. It ends early only if you revoke it (which is final) or miss the annual payment, which causes immediate forfeiture (Studio Genise, accessed 16 July 2026).

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