Last update of this article: october 2024
Article 24-bis TUIR (Italian Tax Code)
What Are the Key Requirements for the Italian Flat-Tax Regime? Who Can Opt for It? What Are the Main Benefits? Are There Any Special Conditions or Exclusions?
The €200,000* Flat-Tax regime under Article 24-bis of the TUIR is designed to attract high-net-worth individuals (HNWIs) to Italy by offering a simplified and favorable tax treatment for foreign-sourced income. Here, we delve into the key aspects and benefits of this regime.
IMPORTANT UPDATE → The Italian Government, since August 2024, has increased the amount of the Flat-Tax to €200,000. Since it is now too late for taking the Italian Tax residency in 2024, this Flat-Tax will apply to new residents opting for this regime as of 2025.
* As of 2025, the Flat-Tax is augmented to €200,000 for new residents (Decreto-Legge no. 113 of August 9, 2024 – in force since August 10, 2024)
Key Requirements for the Flat-Tax Regime
To qualify for the Flat-Tax regime, individuals must meet the following criteria:
- Transfer their tax residence to Italy from abroad.
- Have not been tax residents in Italy for at least 9 of the 10 years preceding the start of the tax period in which the option is exercised.
Who Can Opt for It?
The regime is open to all individuals who meet the residency criteria, including foreigners moving to Italy and Italians returning after a long period abroad.
The option must be exercised in the tax return for the tax year in which the individual has become a tax resident of Italy or in the following year.
Additionally, taxpayers can submit a binding ruling request (Interpello) to the Italian tax authorities to confirm their eligibility to the special tax regime.
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Main Benefits of the Regime Article 24-bis TUIR (Italian Tax Code)
The primary benefit of the regime is the possibility to pay a fixed annual tax of €200,000 on all foreign-sourced income, regardless of the amount earned.
This tax is paid in lieu of the standard progressive rates applicable under Italian tax law.
For each dependent family member who also relocates to Italy, an additional Flat-Tax of €25,000 per person may apply.
Special Conditions and Exclusions
- Duration: The Flat-Tax regime is available for up to 15 years. Taxpayers can opt out at any time, but the regime automatically ceases if the Flat-Tax is not paid in full by the annual deadline for the payment of Italian Income Taxes or the taxpayer transfers its tax residence to another state or territory.
- Partial Exclusion: Taxpayers can choose to exclude income from certain countries from the Flat-Tax regime, in which case the regular tax rules will apply to that income. This option, known as “cherry picking,” is irrevocable once made but can be expanded to cover more jurisdictions (see article 24-bis par. 5 Italian Tax Code).
- Anti-Avoidance Provisions: Capital gains derived from the sale of substantial shareholdings (as defined by article 67, par. 1 let. c Italian Tax Code ) in foreign entities are excluded from the Flat-Tax for the first 5 years to prevent tax avoidance (see article 24-bis par. 1 Italian Tax Code).
- Inheritance and Gifts: Foreign assets are exempt from the Italian Inheritance and Gift Tax (see Law Budget 2017 and Risoluzione AGE 12/E Feb. 18, 2021).
- Exemption from Tax Monitoring requirements (RW) for financial assets held abroad.
- Exemption from IVIE and IVAFE Wealth Taxes on foreign financial and property assets.
Conclusion
The €200,000 Flat-Tax regime under Article 24-bis TUIR provides a significant incentive for high-net-worth individuals to establish residency in Italy. By offering a fixed, predictable tax liability on foreign income, Italy aims to attract wealthy individuals, thereby boosting the local economy and increasing competitiveness on a global scale.
For more detailed tax information and official guidelines, you can refer to resources in English such as the Agenzia delle Entrate.
If you are a non-EU citizen wishing to relocate to Italy and carry out investments in the country’s economy, you may find useful information about the 2-year Investor Visa at this link: Investor Visa Italy and further explanations about the Flat-Tax Regime for New Residents at this link.
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International Tax Counsel Legal And Tax Advice For International Business
VAT Strategy And Corporate Restructuring
Do not hesitate to contact us in order to clarify your situation on these issues; we will be happy to help you.
The opinion expressed in this article is for informational purposes only.
This article does not constitute legal advice.
In addition, it is important to remind that each client’s tax issue is different because each client’s personal situation is different.
Should you have a similar tax issue, please contact us for an initial discussion of your case.