Italy's Flat Tax for New Residents and Owning an SRL (2026)

Moving to Italy can replace Italian tax on foreign income with a fixed annual payment of €300,000 for new qualifying transfers in 2026. It does not relieve Italian income, which matters for owners of an Italian società a responsabilità limitata (SRL).

This guide states the position on 27 October 2026: eligibility, election, source of income, the five-year qualifying-gains exception, duration, cost arithmetic and ownership or management of an Italian SRL.

The short answer

Under article 24-bis TUIR (text in force on 27 October 2026), the substitute tax covers foreign-source income. For residence transferred from 1 January 2026 it costs €300,000 annually, plus €50,000 for each eligible family member, for up to fifteen years; failure to pay in full on time ends it.

Italian-source income remains taxed separately: Italian-SRL dividends and quota gains, director's fees, Italian-work salary and Italian rent. The regime helps an SRL owner only where substantial foreign income also exists.

The amount, and how it changed

The figure in the statute has moved twice. The original text, introduced by the 2017 Budget Law, set €100,000 for the main taxpayer and €25,000 for each family member. Article 2 of Decree-Law 113/2024, in force from 10 August 2024, raised the main amount to €200,000 for people who transferred their civil-code residence after its entry into force. Then article 1(25) and (26) of Law 199/2025, the 2026 Budget Law, replaced €200,000 with €300,000 and €25,000 with €50,000 for transfers from its entry into force on 1 January 2026.

Residence transferred	Main taxpayer, per year	Each family member, per year
Through 10 August 2024	€100,000	€25,000
After 10 August 2024 to 31 December 2025	€200,000	€25,000
From 1 January 2026	€300,000	€50,000

The bracket follows the date of transfer of residence under article 43 of the Civil Code, to which both amending laws refer, not the date a return is filed. A transfer in late December 2025 normally makes 2026 the first year of tax residence, because that test looks at most of the period, yet could fall in the €200,000 bracket. This border case is an inference from the wording, not an Agenzia delle Entrate ruling: have an Italian adviser establish both dates and seek a ruling before relying on the amount.

The tax is fixed even when foreign income falls to nil. It is payable in one instalment by the IRPEF balance deadline; the Agenzia's regime summary says ravvedimento operoso (late-payment relief) is unavailable. €200,000 remains applicable to qualifying earlier transfers, but is not the amount for new 2026 transfers.

Who can elect it

Two conditions have to be met, and both are about residence rather than nationality.

The person must transfer tax residence to Italy within the meaning of article 2(2) of the TUIR, as rewritten by Legislative Decree 209/2023: civil residence, domicile (the place where personal and family relations are mainly developed) or physical presence for most of the tax period, fractions of days included, with registration in the resident register raising a rebuttable presumption.

The person must not have been Italian tax resident for at least nine of the ten tax periods preceding the first period in which the option applies (article 24-bis(1)). Circular 17/E of 2017 confirms that nationality is irrelevant: an Italian citizen who has been abroad long enough qualifies, and a foreign citizen who has spent too long in Italy does not. The test counts tax periods, not days, and one period of Italian residence inside the ten-year window is tolerated. That tolerance has a cost: if the election is deferred to the second year of residence, the first Italian year consumes it.

For the nine-of-ten lookback, apply the residence law in force in each year, not today's definition retrospectively. The Agenzia delle Entrate's Circular 20/E/2024, paragraphs 2.3–2.4 says the revised article 2(2) applies only from 2024; through 2023 the former criteria—including the effect of registration in the Italian resident register—apply, subject to any relevant treaty rules. A person cannot clear an earlier year simply by applying the newer physical-presence or rebuttable-registration tests to it.

The option is personal: it does not exempt an entity's own corporate taxes. But that does not mean its effect on income otherwise attributable to an individual is confined to disregarded or interposed entities: Circular 17/E, paragraph 2.3, addresses controlled-foreign-company income under specified conditions, while an Italian intermediary company remains subject to its own CFC rules. Entity residence, source and interposition need separate examination.

The election and the payment

The statute is drafted as a condition. Article 24-bis(3) requires the option to be exercised after a favourable answer to a specific interpello, filed under article 11(1)(f) of Law 212/2000, within the deadline for the return relating to the year in which residence is transferred.

The 8 March 2017 measure permits the return for the move year or the following year. Point 1.3 allows a ruling request; point 1.12 specifies the return disclosures without one. A request may precede the move. If the Agency has not replied by the return deadline, election can proceed with timely payment. Requests go to the Divisione Contribuenti with the checklist and relevant documents; missing mandatory material makes a request inadmissible.

Circular 17/E calls the request optional; the Agency's current page says it "may also" be filed. Yet the February 2026 Agency explanation repeats the statutory requirement for a favourable answer. A ruling offers advance certainty, but the implementing procedure permits election without one; the taxpayer must then substantiate eligibility in any audit.

Payment is made with F24 ELIDE (F24 Versamenti con elementi identificativi), tax code NRPP, in one solution, by the date for the IRPEF balance. The tax is not deductible from any other tax or contribution (article 24-bis(2)). A revocation after payment allows the amount paid for the same tax period to be refunded or offset with code NRRE.

Under article 24-bis(5) the taxpayer may declare that the substitute tax does not apply to income produced in one or more named states. The exclusion must cover all income from that state and, once made, cannot be revoked; further states can be added later (Circular 17/E, paragraph 4.1). It is a choice to consider where a country taxes the same income heavily: ordinary Italian taxation then applies, and a foreign tax credit may be available under the ordinary rules if its conditions are met.

The option is renewed tacitly each year; nothing is filed to keep it alive, but the tax must be paid every year.

What the €300,000 covers, and what it does not

Article 24-bis(1) covers foreign income identified using article 165(2), the mirror image of article 23's Italian-source criteria for non-residents. A missing Italian-source connecting factor generally makes income foreign-source.

Circular 17/E, paragraph 2, states that Italian-source income remains outside the substitute tax and follows ordinary rules. The ordinary base also includes foreign income excluded from the option and qualifying-share gains in the first five years.

"Outside the substitute tax" does not mean "always taxed progressively". Italian-source income follows whichever regime applies to it: dividends and share gains held outside a business normally bear the 26% substitute taxes described below, rent may fall under the cedolare secca where its conditions are met, and only the rest goes into the progressive IRPEF scale.

Income	Source	Treatment for a flat-tax payer
Dividend from an Italian SRL	Italy	Normally 26% final withholding; outside the flat tax
Director's fee from an Italian company	Italy	Ordinary IRPEF, 23% to 43%, plus contributions where due
Salary for work performed in Italy	Italy	Ordinary IRPEF
Salary for work performed abroad	Abroad	Covered by the substitute tax, apportioned by days
Rent from Italian property	Italy	Ordinary IRPEF or cedolare secca
Rent from foreign property	Abroad	Covered
Interest and dividends from foreign banks and companies	Abroad	Covered
Gain on selling quotas in an Italian SRL	Italy	Ordinary rules; outside the flat tax
Gain on selling shares in a foreign company	Abroad, unless article 23(1-bis) applies	Covered, except qualifying holdings in the first five years; an unlisted company deriving more than half its value from qualifying Italian real estate in the preceding 365 days may instead be Italian-source—property held as business inventory or used directly in the business is excluded from this test
Pension from a non-resident payer	Check the applicable source rule and treaty	If foreign-source, covered; other optional regimes are outside this guide

Two refinements matter. Employment income is split: the part attributable to days worked abroad is foreign-source and covered; the circular illustrates restricted stock units by comparing foreign-work days with the entire earning or vesting period using consistent day-count conventions. And article 23(1-bis) treats a gain on shares in a non-resident company as Italian-source if more than half its value derives directly or indirectly from Italian immovable property at any time in the preceding 365 days; it excludes shares traded on regulated markets. Law 197/2022, article 1(98), as reproduced in Agency ruling 175/2025, also excludes property whose production or sale is the company's actual business and property used directly in its business from the value test. Italian operating premises or a developer's inventory must not automatically turn the share gain into Italian-source income.

The five-year exception for qualifying shareholdings

Article 24-bis(1) excludes gains under article 67(1)(c)—qualifying shareholdings—from the substitute tax for the first five tax periods. For unlisted companies, qualifying means more than 20% of voting rights or 25% of capital. Circular 17/E explains the anti-abuse rationale and counts the first year of Italian tax residence, even where election begins the next year.

The carve-out keeps those gains outside the substitute tax; it does not create a separate rate. Article 24-bis(1) still points to article 68(3), repealed by article 1(999) of Law 205/2017. For gains realised since 1 January 2019, qualifying and non-qualifying private shareholdings outside a business normally bear 26% substitute tax, subject to special rules such as those for privileged-tax jurisdictions. The 2017 circular's 49.72% inclusion figure describes the pre-2019 law; it must not be used for a 2026 sale. A qualifying foreign stake sold during the five years is taxed outside the €300,000. After the five years its gain is covered if it is genuinely foreign-source.

An Italian SRL quota gain is Italian-source under article 23(1)(f), so it remains outside the regime both before and after five years.

Fifteen years, revocation and loss

Article 24-bis(4) makes the option revocable and gives it a maximum life of fifteen years from the first tax period in which it applies. It also lists the events that end it: omitted or partial payment of the substitute tax, and, under the 2017 measure, transfer of tax residence to another state. Years already closed are not reopened, but the protection covers years that were validly in the regime: it does not cure a year in which the conditions never existed. Neither a revocation nor a loss allows a new option later.

For families, the architecture is separate but linked. The eligible persons are those listed in article 433 of the Civil Code—spouse or civil-union partner (the latter expressly included by Circular 17/E, paragraph 1, applying Law 76/2016), children and in their absence the nearest descendants, parents and in their absence the nearest ascendants, adoptive parents, sons- and daughters-in-law, parents-in-law, and siblings—each of whom must independently satisfy the nine-of-ten test. A revocation or loss by the principal extends to them; their own failure to pay does not end the principal's regime (article 24-bis(6)). Where the principal's regime ends, a family member may elect autonomously for the remaining years, up to fifteen years in total; that route is not a rescue from that family member's own default.

Because the tax is due in one instalment and no late-payment remedy is available, the €300,000 must be funded before the balance deadline; a cash-flow mistake can cost the regime itself.

Holding an Italian SRL: where the flat tax stops

An Italian SRL is an Italian taxpayer. It pays IRES at 24% on its taxable income, as the Agenzia delle Entrate's IRES page confirms, and IRAP on a separate base; the SRL corporate tax guide works through that reconciliation. Nothing in article 24-bis touches either tax: the flat tax is a tax on the individual's foreign income, not a group regime.

When the profit leaves the company, the second layer is Italian too. A dividend paid by an Italian resident company to an individual holding the shares outside a business activity is Italian-source income, so it is taxed outside the substitute tax. Since 2018 the final withholding has been 26% for individuals, having been aligned for qualifying and non-qualifying holdings; the Agenzia delle Entrate's instructions to the 2026 personal income tax return explain that relevant dividends from 1 January 2018 are subject to a 26% final withholding, with transitional rules for profits formed up to 2017. A shareholder in the flat-tax regime does not get that withholding back and does not count it against the €300,000. Where the shareholder is a company rather than an individual, a different route applies, which the dividend withholding guide sets out.

A simple income-tax-only illustration shows the scale. Assume an SRL has €1,000,000 before tax and that this is also its IRES taxable base. IRES at 24% leaves €760,000. If all of it is distributed, the 26% withholding takes €197,600, and the shareholder receives €562,400, before IRAP is considered. The company's profit has been taxed twice in Italy, and the owner's €300,000 on foreign income, if any, is a third, separate charge.

The alternative route is a director's fee. A fee is a cost of the company, deductible in the year of actual payment, so it reduces the income that bears IRES; but it is Italian-source and taxed at ordinary rates. On income tax alone, and before contributions, surtaxes and IRAP, the two routes are close at the top: €100 of profit paid as a dividend leaves 24 for IRES, then 26% of 76, or 19.76, leaving €56.24; the same €100 paid as a fully deductible fee leaves 57 after 43% IRPEF. A director's fee may also trigger social security contributions, so this narrow income-tax comparison cannot determine which route is better; whether contributions arise and on what base requires case-specific advice. A passive shareholder does not receive a director's fee merely by holding shares.

A foreign holding company does not, by itself, change the source of what it pays: dividends distributed by a non-resident company are foreign-source and therefore covered. What the Agency looks through is the interposed entity. Where a foreign company is interposed between the individual and the income, Circular 17/E attributes the income to the individual and preserves the source it would have had in his hands, so Italian property or Italian business income held through the structure stays Italian. A genuine foreign company is treated as such; an arrangement whose purpose is to move Italian profit abroad meets the anti-abuse and residence rules independently of the flat tax.

Cost against benefit, with the arithmetic

The comparison is between two Italian tax bills on the same foreign income: the €300,000 substitute tax, and the ordinary IRPEF that would be due if the option were not exercised. It is valid for income that would otherwise be taxed progressively. Much foreign investment income is not: interest, dividends and capital gains held outside a business normally bear separate 26% substitute taxes, and for those the comparison is different.

For 2026, article 11 of the TUIR, as amended by the 2025 and 2026 Budget Laws, gives 23% up to €28,000, 33% from €28,000 to €50,000 and 43% above €50,000 of taxable income after applicable deductions. For taxable income above €50,000, the gross national tax is €13,700 + 43% of the excess. Above €200,000 of total income the 2026 Budget Law also restricts up to €440 of certain 19% tax credits or reliefs (detrazioni), which can add that amount to a bill where those reliefs are claimed; this restriction does not change the taxable-income base.

Assume a single person with no Italian income, no foreign tax on the income, no deductible amounts and no tax reliefs, so that no foreign tax credit reduces the IRPEF.

Foreign income taxed progressively	Ordinary IRPEF	Flat tax	Flat tax minus IRPEF
€300,000	€121,200	€300,000	+€178,800
€400,000	€164,200	€300,000	+€135,800
€500,000	€207,200	€300,000	+€92,800
€700,000	€293,200	€300,000	+€6,800
€715,800	≈€300,000	€300,000	≈€0
€800,000	€336,200	€300,000	−€36,200
€1,000,000	€422,200	€300,000	−€122,200
€2,000,000	€852,200	€300,000	−€552,200

The break-even solves €13,700 + 0.43 × (X − €50,000) = €300,000, which gives X ≈ €715,800. Below that, the flat tax is a more expensive way to buy certainty; above it, the saving grows with each euro, because the marginal rate stays at 43% while the substitute tax does not move.

For a portfolio normally taxed at 26%, the break-even is €300,000 ÷ 0.26 ≈ €1,153,800 of taxable gains or distributions, not portfolio value. Special rates, losses and credits change that answer; regional and municipal surtaxes, deductions and contributions are excluded from the progressive-income illustration.

Three corrections must be applied before deciding.

The first is the foreign tax credit. Under article 165(1) TUIR (article 185(1) from 2027), ordinary IRPEF on foreign income may be reduced by tax definitively paid abroad, subject to the applicable limits on the Italian tax attributable to that income. If the €1,000,000 above is already taxed at 30% abroad and the whole €300,000 is definitively paid and creditable, Italian ordinary tax falls from €422,200 to €122,200, and the flat tax costs €177,800 more. If foreign tax exceeds Italian tax and the credit is fully available up to the Italian limit, the Italian top-up is nil; without that assumption it may not be. The regime may be less attractive when income is already heavily taxed abroad, but the result requires a country-by-country calculation.

The second is Italian income on top. If the individual's Italian taxable income, after applicable deductible amounts, exceeds €50,000, an additional foreign-income slice that is itself subject to progressive taxation falls in the 43% marginal band from the first euro. On that income-tax-only comparison, the break-even on that slice is €300,000 ÷ 0.43 ≈ €697,700. Separately taxed foreign dividends and gains do not move into the 43% bracket because of Italian salary; they normally keep their own 26% treatment.

The third is the family. Each family member brought in adds €50,000 to the fixed cost. On this income-tax-only comparison, it is worth paying for a relative only if that person's foreign income would otherwise bear more than €50,000 of Italian income tax; other consequences require separate advice.

Freelancers: forfettario versus SRL

A new resident who sells services rather than running a company meets a different regime, the forfettario.

The Agenzia delle Entrate's guidance on the forfettario sets the access threshold at €85,000 of revenue or fees in the previous year, with a €20,000 ceiling on employee and collaborator costs. The tax is not levied on turnover: a coefficient fixed by activity is applied to revenue, mandatory contributions are deducted, and the result bears a single 15% substitute rate, reduced to 5% for the first five years where the start-up conditions are met. The exclusion for people who received employment or assimilated income above €35,000 in the previous year applies to 2025 and 2026, having been raised from €30,000, and does not apply where the employment ended in that year without a pension or another employment relationship.

The €85,000 threshold is tested against the prior year for entry or continued eligibility; the same Agency page specifies an immediate exception: if current-year receipts exceed €100,000, the regime ceases in that same year, with VAT due from the transactions causing the threshold to be crossed. Otherwise loss of an access condition or occurrence of an exclusion generally ends it from the following year.

The exclusion that matters here is conjunctive: the regime is closed to anyone who controls, directly or indirectly, an SRL and whose company carries on activities directly or indirectly referable to those carried on individually. Both conditions must hold, and the exclusion operates from the following tax period. Incorporating is not automatically fatal, but putting the same activity into an SRL is the typical case in which the forfettario is lost.

The two regimes address different income: the forfettario taxes Italian business or professional income, the flat tax covers foreign income. Whether both can be used in the same year is a separate question that the forfettario guidance does not decide and that requires its own assessment.

What this guide does not cover

It does not cover treaty tie-breakers and exit taxes in the country of departure, inheritance and gift tax, IVIE and IVAFE, or IMU. It leaves out separate pensioner and impatriate relief, trusts and other interposed structures, and the amount of IRAP. The arithmetic is an income-tax comparison, not a full valuation of the regime.

From 1 January 2027, Legislative Decree 117/2026 re-enacts the income tax code. Old articles 24-bis, 23 (including 23(1-bis)), 67, 68 and 165 correspond respectively to new articles 246, 25 (property-rich shares: paragraph 2), 76, 77 and 185; articles 2 and 11 keep their numbers. The €300,000/€50,000 amounts and fifteen-year life remain in article 246.

Primary sources

The principal texts are article 24-bis TUIR as in force on 27 October 2026, Law 199/2025, article 1, paragraphs 25 to 27, the Agenzia's Circular 17/E and its 8 March 2017 implementing measure. The Agenzia's neo-resident page still shows the former €200,000 and €25,000 amounts in older paragraphs next to a notice with the 2026 figures: read it with that notice. Other official texts are linked at the relevant claims above.

What to confirm with an Italian professional

Eligibility in a concrete case is ultimately decided by the Agenzia delle Entrate; a ruling is the way to test it in advance, although the implementing procedure also contemplates election without one. An adviser should fix the date of first tax residence and the bracket it produces; test the nine-of-ten condition against the actual history; decide whether to file the ruling; map each income stream to its source, including carried interest and stock awards vesting across the move; establish whether the foreign income would otherwise bear progressive IRPEF or a 26% substitute tax, and run the foreign tax credit arithmetic country by country; consider an exclusion under article 24-bis(5), remembering that it cannot be revoked; and confirm the company-side treatment of dividends, fees and intercompany charges.

If you would like the arithmetic run on your own income and company structure, request a quote.