The “New Resident” Regime – Upcoming Changes?
The new resident regime under Article 24-bis of the Italian Income Tax Code (TUIR) has, in recent years, encouraged the relocation to Italy of numerous affluent individuals with substantial wealth and foreign-source income.
This preferential tax regime allows qualifying individuals to pay a flat substitute tax of €100,000 (or €200,000 for those who relocate after 10 August 2024), in lieu of ordinary income tax, regional and municipal surcharges, and other substitute taxes. The regime applies to all foreign-sourced income, regardless of its amount.
The option may be exercised for up to 15 years. The substantial benefit deriving from the election may be extended—upon request—to family members of the “main taxpayer,” who would then be subject to an annual substitute tax of €25,000.
Eligibility Requirements
Despite the 2024 amendments introduced by the Italian Government—which increased the annual substitute tax from €100,000 to €200,000—the eligibility conditions remain unchanged. Specifically, applicants must:
a) Transfer their tax residence to Italy under Article 2 of the TUIR (i.e., be resident, domiciled, or physically present in Italy for most of the tax year); and
b) Not have been tax resident in Italy for at least nine of the ten tax periods preceding the first year in which the option takes effect.
The option must be exercised after receiving a positive ruling from the Italian Revenue Agency (Agenzia delle Entrate) in response to a specific advance ruling request (interpello probatorio). Such request must be submitted by the deadline for filing the tax return relating to the tax year in which residence in Italy is established.
Income Covered by the Regime
As noted, all foreign-sourced income—irrespective of amount—is subject to the substitute tax, including dividends and capital gains deriving from shareholdings in entities resident in “tax heavens” jurisdictions.
Income Excluded from the Regime
Capital gains realized on the disposal of qualifying shareholdings during the first five tax periods of the option are excluded from the substitute tax and remain subject to ordinary taxation.
Moreover, taxpayers opting into the regime are exempt from completing the RW form (foreign assets declaration), and assets held abroad are not subject to IVIE or IVAFE (wealth taxes on foreign real estate and financial assets).
Possible Future Developments
The regime—among the most favourable currently available—has so far attracted thousands of individuals formerly resident abroad, who have benefited from the application of the substitute tax.
However, recent findings by the Court of Auditors and public debate have raised questions about the actual benefits the regime brings to the Italian economy and tax system. As a result, members of Parliament have indicated an intention to introduce stricter qualifying criteria, such as requiring a minimum investment threshold in Italy.
It remains to be seen whether such changes will materialize, but indications suggest that the 2026 Budget Law (Legge di Bilancio 2026) may include amendments to Article 24-bis TUIR, refining or restricting the new resident regime.