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Eligible taxpayers
Recent geopolitical tensions in the Gulf region are drawing the attention of high-net-worth individuals (HNWIs) and ultra-HNWIs towards jurisdictions that combine tax efficiency with political stability. In this context, Italy continues to position itself as one of the most competitive destinations in Europe.
For over a decade, the Italian legal system has provided a comprehensive framework of preferential tax regimes aimed at attracting new tax residents, including:
- the flat tax regime;
- the inbound workers regime;
- the retirees regime;
- the regime for researchers and professors.
Among these, the flat tax regime for new residents represents one of the most relevant instruments for individuals with substantial wealth. It allows taxpayers to subject all foreign-source income to a fixed substitute tax of EUR 300,000 per year (increased from the previous EUR 200,000), irrespective of the actual amount of income generated.
The regime may be extended to qualifying family members, who are subject to a substitute tax of EUR 50,000 per year each.
In addition to the “tax cap” benefit, the regime provides further significant advantages:
- exemption from foreign asset reporting obligations (RW form);
- exclusion from the application of Italian wealth taxes on foreign assets (IVIE and IVAFE);
- application of inheritance and gift tax exclusively to assets located in Italy.
Alongside the flat tax regime, additional measures contribute to enhancing the attractiveness of the Italian tax system for different categories of taxpayers.
The inbound workers regime applies to individuals who transfer their tax residence to Italy and carry out employment or self-employment activities within the Italian territory, including in favour of the same foreign entity or group to which they previously belonged. The regime grants a 50% exemption from Italian personal income tax (IRPEF) on qualifying employment or self-employment income for a period of five years, not renewable, thereby effectively subjecting only half of such income to taxation. This results in a significant reduction of the overall tax burden for the duration of the incentive.
The pensioners regime, on the other hand, is available to individuals who, among their sources of income, derive at least one stream of pension income from a foreign source and who transfer their tax residence to specific municipalities located in Southern Italy. Under this regime, an optional substitute tax equal to 7% applies to all foreign-source income, regardless of its amount, for a maximum period of ten years, making it a particularly efficient solution for individuals with international income flows.
Finally, the regime for researchers and professors applies specifically to individuals qualifying as professors or researchers who transfer their tax residence to Italy in order to carry out academic or research activities therein. Subject to the fulfilment of specific statutory requirements, it provides for a tax exemption of up to 90% of employment income derived in Italy, with an ordinary duration of six years, which may be extended in the presence of certain family or property-related conditions. The regime stands out for its high level of competitiveness within the European landscape, encouraging both the return and the relocation of highly qualified academic and scientific professionals.
A common requirement across all the above regimes is the transfer of tax residence to Italy. For this purpose, the taxpayer must, for the greater part of the tax year (i.e. more than 183 days, including fractions of a day), either have their habitual abode in Italy, or their centre of personal and family interests located therein, or be physically present within the Italian territory.
The transfer of tax residence therefore represents the key prerequisite for accessing all four preferential regimes, together with a preliminary verification of the statutory requirements set forth by Italian law. In practice, it may often be advisable to submit an advance tax ruling request to the Italian Revenue Agency in order to obtain confirmation — particularly in cases involving a high degree of complexity — regarding the applicability of the relevant preferential regime. While not mandatory, this approach is commonly adopted in connection with both the flat tax regime and the pensioners regime.
In this respect, RSM Studio Tax Legal & Advisory has developed significant expertise over the years, with a strong track record at national level, as also reflected in coverage by leading Italian financial media (e.g. Il Sole 24 Ore).
In an increasingly uncertain global environment, Italy is therefore positioning itself not only as a tax-efficient jurisdiction, but also as a stable and strategic destination for individuals and families with significant wealth.
HNWI and U-HNWI – Italian favourable regimes
