Italian 100.000 Flat Tax for resident non-domiciled high net worth individuals

Art. 24-bis of the Italian Direct Tax Code provides a special Flat Tax regime for income produced abroad by new residents, the so-called resident non-domiciled, to attract wealthy foreign individuals to Italy and encourage new investments in this Country.

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1. Flat Tax for non-domiciled residents: characteristics of the tax regime

Art. 24-bis of the Italian Direct Tax Code provides the Flat Tax regime for non-domiciled residents in a version that seems to be inspired by the models already in force in the United Kingdom, Portugal and Malta. This tax regime allows individuals who transfer their tax residence to Italy not to pay the progressive Italian direct tax on incomes produced abroad but to pay only a substitute tax on these incomes.  Only capital gains deriving from the sale of qualified participation are excluded from this tax regime for the first five years after its adoption.

For the purposes of the Flat Tax regime’s applicability, the taxpayer must not have been resident for tax purposes in Italy for at least 9 years during the 10 years preceding the option’s entry into force.

To exercise the option, taxpayers must submit a specific request to the Tax Authority before the deadline for submitting the tax return regarding the year in which the residence was transferred to Italy, also indicating the countries where they had their last tax residence. These data allow the Tax Authority to communicate the relevant information to the respective foreign States to prevent tax evasion.

A taxpayer can also choose to apply the Flat Tax option in favor of family members and not use the resident non-domiciled tax regime for some income from particular Countries. The ordinary taxation regime of foreign income would continue to operate for the latter incomes.

Those who opt for the new regime also benefit from some advantages, such as the issue of entry visas to our Country and exemption from the obligations related to tax monitoring of activities held abroad.

The effects of the option cease in the case of:

  • choice of the taxpayer;
  • expiration of the term of 15 years from the first option;
  • omitted or insufficient payment of the substitute tax.

2. The Flat Tax

As a result of the option, taxpayers pay a substitute tax of € 100,000 each year, regardless of the foreign income produced, while their family members pay a substitute tax of € 25,000.

The payment of the substitute tax does not entitle the holder to credit for any taxes paid abroad. The credit applies only to foreign income produced in the Countries for which the taxpayer requested to apply the ordinary taxation regime while making the option for the Flat Tax.

The beneficiaries of the non-domiciled resident tax regime are exempt from paying stamp duties, IVIE and IVAFE property taxes, and inheritance and donation taxes relating to activities held abroad.

3. The advantages of the new Flat Tax regime for wealthy foreigners

The non-domiciled resident tax regime addresses the category of non-residents who hold large estates abroad and belong to the group of HNWI (“high net worth individuals”). These people, while transferring their tax residence to Italy, can avoid being subjected to the principle of taxation of income on a world basis, generally applied to taxpayers resident in Italy for tax purposes, and pay only a fixed tax lower than the ordinary one.

Taxpayers should consider applying for the non-domiciled resident tax regime based on the characteristics of the foreign tax jurisdictions in which their incomes are produced.  The taxpayer should be careful to avoid double taxation phenomena deriving from the exercise of taxing power by Italy and other countries involved, which sometimes would not always be avoided by applying the Conventions Against Double Taxation.

3.1. The Italian 100.000 Flat Tax for wealthy British people

At this moment, this regime appears even more convenient for wealthy people in the United Kingdom who, until now, have applied the English “resident non-dom” tax regime, which has allowed them to be taxed only on income and capital gains of British source, considering those produced abroad were exempt unless such income and capital gains were repatriated to the United Kingdom, according to the remittance basis principle.

With the end of this regime in the United Kingdom, the Italian Flat Tax of 100,000 euros appears to be a valid alternative for the wealthy people who want to move from the United Kingdom.

4. Pay attention to the details of the concrete case

Although the tax regime mentioned above may appear easy to understand, things are not always so clear in practice.

Each situation could have particularities that interact with the legislation involved to produce different effects.

The information provided is purely general, given that the discipline of special tax regimes is full of exceptions and derogations that cannot be underestimated.

As already mentioned, there are numerous exceptions, limitsderogations, and cases of non-applicability of the tax incentives, which, in summary, have not been discussed above and which, in the specific case, could push the Tax Authority to deny the tax advantage.

Therefore, the assessment of the tax regime’s applicability cannot disregard the examination of each concrete case.

In fact, as in all international tax analyses, it is essential to frame all the crucial details of the case examined to understand the applicability of special tax regimes.

This assessment is fundamental, on the one hand, to allow the application of the special tax regime to hypotheses that look like they don’t fall into and, on the other hand, do not apply the special tax regime to cases that only apparently fall into them.

This approach is essential to prevent the jeopardization of the special tax regime, to prevent the Tax Authority from recovering the evaded taxes, and to apply sanctions.

Any assessment by the Tax Authority of the non-applicability of the special tax regime involves not only recovering the taxes not paid because of the tax regime for each previous year of use of the special tax regime but also applying tax sanctions to erode a large part of the income produced by the taxpayer, causing severe economic damage for the latter.

5. International tax advice for the specific case

For taxpayers that would like to apply to the special tax regime, it is fundamental a verification conducted by a Professional specialized in international tax law.

This Professional can deeply assess if the special tax regime is applicable in the specific case to avoid the Tax Authority legitimately denying the special tax after several years, recovering the tax evaded as well as penalties and interests.

Again, in daily practice, the special tax regime applies to hypotheses that only apparently (in the eyes of the contributor) did not seem to be included or, on the contrary, can not apply to cases that only apparently (in the eyes of the contribution) seemed to fit into it.

For this reason, it is not advisable to apply special tax regimes without a successful in-depth analysis.

The ITAXA Law Firm has gained extensive experience in analyzing special tax regimes and an understanding of the Tax Authority’s approach to related cases, also based on unpublished Tax Authority responses.

If you wish to request international tax advice from the ITAXA Law Firm regarding the verification of the conditions for the applicability of the special tax regime in your specific case, write to us at or fill out the Contact Form.


Antonio Merola, LL.M.

Tax Lawyer specialized in International Taxation at the International Tax Center of the University of Leiden (The Netherlands) by attending the LL.M. (Master of Laws) in International Tax Law (after a University Master in International Tax Planning and a University Master in Tax Law in Italy), for several years he has been dealing with Tax Consulting and Tax Litigation in favour of Individuals and Companies.