Italy’s Flat Tax – Is It Still Worth It In 2025?

This article looks at Italy’s flat tax system, how it works, who is eligible and what the benefits are. 

Under Italy’s flat tax system, HNWIs who are resident in Italy enjoy exemptions on foreign-sourced income for up to 15 years in favour of an annual flat tax. Family members are also eligible to apply, further adding to its appeal. 

In 2024, however, the Italian government soured the deal by doubling the cost. This article re-examines the Italian flat tax system to see whether or not it’s still worth it for HNWIs while also exploring alternatives. 

What Is Italy’s Flat Tax?

Italy’s famous flat tax is getting a lot of attention again, except now it’s pricier than ever. 

First launched in 2017, Italy’s flat tax was a special programme which allowed wealthy individuals to pay a flat rate of income tax on foreign-sourced income. 

The original cost was set at €100,000, however, the government later decided to raise that to €200,000 in 2024, effectively doubling the tax cost. 

Which begs the question, is it still worth it in 2025?

Italy Flat Tax: Who Qualifies?

To answer the question of whether Italy’s flat tax is still worth it, we first need to examine who it’s designed for and what criteria you need to meet to qualify for it. 

Firstly, you must establish tax residency in Italy, but you must not have been an Italian resident for nine of the previous ten years. 

You can then enjoy the flat tax for up to 15 years with the option to add family members under the flat tax regime for a cost of €25,000 per family member. 

Italian Flat Tax: What Income Is Covered?

It’s worth noting that Italy’s flat tax regime applies to foreign-sourced income only. 

This means that wealthy residents pay a flat rate of €200,000 on all foreign-sourced income for a period of up to 15 years. Family members can also be added for an extra €25,000 per person.  

Any domestically-sourced income, however, will be taxed at standard rates. Italy has a progressive tax system with rates ranging from 23%, up to 43% for income over €50,000. 

Italy Flat Tax: Benefits

The main benefit of Italy’s flat tax is its predictability. 

Which means for 15 years, you pay the same lump sum amount of tax on all your foreign income. 

It’s worth noting that those who applied under the old pricing system still pay the old rate of €100,000 and will continue to do so until their 15-year period has elapsed.

This means, even if the government decides to raise the rate again, if you apply now, the rate you pay will be locked in for the next 15 years, regardless of any policy changes. 

Secondly, you have the option of adding family members for an extra €25,000. 

Third, under Italy’s flat tax regime, you enjoy exemptions on wealth, gift and inheritance taxes on foreign-held assets, another notable incentive for high-net-worth individuals. 

As part of a broader migration strategy, meanwhile, Italy’s flat tax regime can be combined with residency on your path towards obtaining an EU passport. 

For non-EU citizens, the naturalisation period is ten years. Those with Italian ancestry, meanwhile, can speed up the process by applying for citizenship by descent.

In either case, you can enjoy the flat tax in Italy for 15 a maximum of years, but once you have obtained your Italian citizenship, you are, of course, free to live anywhere in Europe. 

Italy Flat Tax: Key Considerations

The main point about Italy’s flat tax is that you must actually relocate to Italy to qualify. 

As an Italian tax resident, you must also continue to reside there for 183 days of the year, if not, you forfeit your tax residency and become liable to pay tax elsewhere. 

Any income you earn in Italy will be taxed at regular rates of up to 43%. This can potentially include crypto earnings if not managed carefully. 

If your crypto is held in a foreign exchange, the exemption still applies, however, you could be in for a nasty surprise if the authorities determine that your crypto is held by an Italian exchange, so make sure to look this up in advance.

By its very nature, Italy’s flat tax system means that tax paid elsewhere is non-deductible. 

For US persons, the issue becomes thornier since, unless they choose to renounce their citizenship, thus leaving the US permanently, they remain bound to the American tax system.

It’s worth reiterating that Italy’s flat tax is only available for 15 years, after which point you become eligible to pay tax under the regular progressive system. 

Uprooting after 15 years may not be an issue for everyone, but for those with families, especially with children of school age, it’s worth considering and planning your entry and exit strategies well in advance. 

Finally, there’s the price of the flat tax itself. Even at its previous rate of €100,000, it’s evident such a tax arrangement is not for everyone. 

And since the price was doubled in 2024, the programme becomes even more selective, raising the obvious question – is it still worth it?

Before you can answer that question, you first need to look at the alternatives.

Italy Flat Tax: Alternatives

While Italy’s flat tax has several pros, there are also some obvious cons, most notably its €200,000 price tag. 

So now, let’s explore some other European alternatives in Greece, Portugal and Malta.

The Greek Flat Tax:

To be blunt about it, the Greeks pretty much copied the Italians, with one major difference – they didn’t double the amount, so the flat tax sum in Greece remains set at €100,000. 

What’s more, adding family members costs €20,000 per person, rather than the Italian rate of €25,000. 

Aside from the price differences, however, it works the same, i.e., it applies to foreign-sourced income only, while Greek-sourced income remains taxable under the standard progressive system. 

You must live in Greece to avail of the flat tax, and it only lasts for 15 years.

Once the 15-year period has elapsed, the standard progressive tax rate applies, with a rate of 44% on income above €40,000. 

Portugal’s IFICI Programme: 

Portugal shut down the older NHR (Non-Habitual Resident) scheme at the end of 2023 and replaced it with the IFICI programme. 

 IFICI stands for the Tax Incentive for Scientific Research and Innovation. And if you’re thinking that it sounds more like a specialist programme, you would be correct. 

While the old NHR was broader in scope, the IFICI is more specialised, created to attract high-value individuals in key sectors deemed vital to Portugal’s economy, with a notable emphasis on science and technology. 

The main benefit of the IFICI is a 20% flat tax on Portuguese-sourced income, provided that income is eligible under the programme (e.g. educational, medical, technical, scientific research, etc.).

Foreign-sourced income, meanwhile, such as rent, dividends, and royalties, remains exempt.

The only exceptions are pension income, or income derived from countries appearing on the Portuguese government’s blacklist. 

Once approved for inclusion in the IFICI, you can enjoy the benefits for up to ten years. 

Although we consider the older NHR to be superior, the newer IFICI is still worth investigating as another viable method of saving on taxes while establishing residency in Europe. 

The first step is to get in touch to discuss your options. We can then check to see whether or not you qualify, saving you time while also offering alternatives.

One option in particular we like is Malta. 

Maltese Residence Programmes:

The tiny Mediterranean island of Malta offers two separate but similar tax statuses based on the nationality of applicants. 

The first is The Residence Programme (TRP), which is open to applicants from all 27 EU countries, plus Norway, Iceland, Switzerland and Liechtenstein. 

Applicants from outside that list of countries, meanwhile, may apply for the Global Residence Programme (GRP).

Aside from the nationality of applicants, however, the programmes are pretty much the same. Both offer a flat tax of 15% on income earned abroad, though only if it is remitted to Malta. Locally-sourced income, meanwhile, is taxed at 35%. 

Applicants also receive a Maltese residence permit, granting visa-free travel across Europe’s Schengen Area. 

Unlike other programmes, Malta’s GRP and TRP don’t have strict residency, meaning you are freer to move around, provided you don’t trigger tax residency elsewhere, e.g. by spending over 183 days in another country.

Is Italy’s Flat Tax Worth It?

So, is Italy’s flat tax still worth it in 2025?

Well, that all depends on your circumstances. 

For most people, the answer is clearly no, since the rate of tax vastly exceeds their annual income. 

Instead, the flat tax system is specifically aimed at HNWIs for whom a flat rate of income tax at €200,000 is deemed a comparative bargain. 

Furthermore, since it requires one to physically relocate to Italy, the Italian flat tax regime is specifically designed to attract wealthy individuals, though only for a period of 15 years.

The fact that these tax benefits lapse after 15 years establishes a clear time limit, though given that naturalisation is possible after ten years, Italy’s flat tax provides an added incentive to those seeking EU citizenship.

There is also the added benefit of being able to add family members for an additional cost of €25,000 per person. 

It should be noted, also, that the government has already made changes to the system and may make more in the future. 

For example, we have heard chatter about tying the flat tax system to investments, namely funds and company start-ups.

There’s nothing concrete as of yet, though it is in line with current trends in Europe, as rules on tax and migration are being tightened up across the EU. 

So, although Italy’s flat tax is still potentially worth it for HNWIs looking to reduce their tax burden while attaining a foothold in Europe, the question now becomes whether it will still be worth it in the future. 

Italy Flat Tax: Key Takeaways

• Italy’s flat tax rate is €200,000 per year (raised from its original value of €100,000 in 2024).

• Additional family members can be added for €25,000 per person.

• The flat tax applies to foreign income only, Italian-sourced income is still taxed at the standard progressive rate.

• You must relocate to Italy and not have been a resident of Italy for the past nine out of ten years. 

• You must remain a resident in Italy (for a minimum of 183 days) to be eligible. 

• The flat tax lasts for 15 years, after which time you revert to the standard progressive system. 

• The annual cost means Italy’s flat tax is only beneficial to high-net-worth individuals. 

• The possibility remains that the Italian government may want to make additional changes to the system, including tying the flat tax to funds and investments. 

Italy’s Flat Tax: Conclusion

Until recently, Italy’s flat tax was a far more inviting prospect, though even at its doubled cost, applications continue.  

That’s because, even at €200,000, it still makes sense for many high-net-worth individuals (and their family members) looking to simplify their tax structure while also gaining a foothold in the EU.

Those shrewd enough to apply under the previous rules continue to pay €100,00 annually.

All the while we hear rumblings about further changes to the programme, which could make it far less attractive long term. 

This reiterates what we’ve been saying all along and why procrastination often leads to disappointment as programmes get shuttered and access becomes more restrictive. 

We’ve seen it happen in Italy, in Portugal and in Malta. As political pressure mounts, programmes are either tightened up, replaced with less attractive versions or shut down completely. 

Moving to Europe is a life-changing decision, and we appreciate that these things take time.

Perhaps you still have commitments tying you to your home country, be they business ties, children still in school, or, in many cases, both. 

We fully understand that. After all, we hear similar stories all the time.

In every case, however, we always people to get the ball rolling now – that way, everything is set in advance when you’re ready to move later. 

Italy Flat Tax: FAQs

What Is Italy’s Flat Tax for HNWIs?

Italy has a special flat tax system for HNWIs. Under this system, you are exempt from taxation on all foreign income for up to 15 years, and pay an annual flat rate of €200,000 instead. (This amount was raised from its original rate of €100,000 in 2024.) 

This applies to foreign income only, while Italian-sourced income is still eligible under the progressive income tax system at rates of up to 43%. 

Which countries pay the most taxes?

With some notable exceptions, like Japan, the countries which pay the most taxes tend to be in Europe, particularly in northern Europe and Scandinavia, for example, France, Germany, Denmark, Norway and Sweden. 

Are there many low-tax countries in Europe? 

Yes, there are several low-tax countries in Europe, though these tend to be smaller countries. Some, like Malta, are EU members, while others, like Andorra and Monaco, have trade agreements with the EU, allowing them to enjoy many of the same benefits.