Flat Tax for High Net Worth Individuals

Overview

Italy's flat tax regime for high-net-worth individuals (the regime forfettario per neo-residenti) allows new tax residents to pay a fixed annual substitute tax of €200,000 on ALL worldwide income, regardless of the total amount. This replaces the standard Italian progressive income tax system, which can reach rates of up to 43%.

Eligibility

• Must not have been an Italian tax resident for at least 9 of the previous 10 tax years
• Must transfer tax residence to Italy

Family Extension

The flat tax regime can be extended to additional family members who also transfer their tax residence to Italy. Each additional family member pays a substitute tax of €25,000 per year, covering their worldwide income under the same terms.

Duration

The flat tax regime is available for up to 15 years from the first year of Italian tax residency. Taxpayers can revoke the election at any time and switch to ordinary progressive taxation.

Benefits

• No obligation to declare foreign assets in your Italian tax return
• Exemption from IVIE (tax on foreign-held real estate)
• Exemption from IVAFE (tax on foreign financial assets)
• No inheritance or gift tax on foreign assets
• No RW Form (Quadro RW) reporting requirements for foreign asset monitoring

Italian-Source Income

Ideal For

• Entrepreneurs with foreign business income
• Executives receiving compensation from foreign companies
• Investors with significant foreign investment portfolios
• Wealthy individuals with multiple foreign income streams seeking a predictable, capped tax liability

How to Apply

The election for the flat tax regime can be made in two ways: directly in your annual Italian tax return for the first year of tax residency, or through an advance ruling (interpello) submitted to the Italian Revenue Agency (Agenzia delle Entrate) before transferring your residence. The advance ruling provides certainty and is recommended for complex situations.