Amendments to Italy’s Lump-Sum Tax Regime: What Are the Implications?

We have previously discussed on Italy’s Lump-Sum Tax Regime, which allows residents to pay a fixed annual tax of €200,000 (effective from 2024) in exchange for an exemption from income tax on foreign-sourced income.

A draft budget bill proposing an amendment to this tax regime has recently been submitted to Parliament.

The Proposed Change

The Italian government has included a measure in the 2026 Draft Budget to increase the annual lump-sum tax for new residents by €100,000.

This marks the second proposed increase to the lump-sum amount since its introduction in 2017 (the first was an increase from €100,000 to €200,000 a year ago). The current proposal seeks to raise the tax further by €100,000, bringing the total sum to €300,000.

This bill is currently under parliamentary review.

Core Principles of the Italian Lump-Sum Tax Regime

The regime previously granted the right to pay a fixed sum of €200,000 (originally €100,000 from 2017) in exchange for an exemption from:

• Income tax on income derived from non-Italian sources;
• Gift and inheritance tax (for assets located outside Italy), even if the donor/testator resided in Italy;
• Taxes related to cryptocurrency holdings;
• The requirement to declare foreign income.

Furthermore, for an additional contribution of €25,000, the same rights can be extended to immediate family members (spouse, children, parents, in-laws, siblings). The regime remains valid for 15 years, after which the applicant transitions to the general tax system.

Eligibility Criteria for Tax Benefits

The conditions for eligibility include:

• Not having been a tax resident of Italy for 9 out of the last 10 years;
• Payment of the lump-sum tax, currently €200,000 (projected to be €300,000 under the draft bill);
• Submitting a specific request (interpello) to the Tax Authority (Agenzia delle Entrate) before filing the tax return for the year in which the individual becomes a tax resident of Italy (by spending more than 183 days in the country, or by acquiring a permanent domicile or center of vital interests in Italy);
• Filing an application for the Lump-Sum Regime in the year the individual establishes tax residency in Italy.

This regime has enjoyed significant popularity, given that Italy’s progressive personal income tax rate currently reaches up to 43%.

Potential Alternatives

The proposed increase in the lump-sum amount makes the Greek lump-sum tax, which operates under a similar framework, a more attractive alternative. The requirements for the Greek regime are:

• Not having been a tax resident of Greece for the last 7 out of 8 years;
• Payment of a fixed annual tax of €100,000;
• Making an investment in the Greek economy totaling €500,000.

Similar to the Italian case, the Greek lump-sum tax regime is valid for 15 years. It is an excellent fit for those planning to obtain a Greek Residence Permit by Investment, as the investment threshold for the tax regime aligns with the required economic contribution for the residency application.

The proposed Italian Budget Bill is making tax planning more complex and expensive

Are you concerned about how this potential tax increase will impact your personal financial strategy? Do you wish to explore currently effective alternatives (Greece, Cyprus, etc.) that best suit your capital preservation goals?

Schedule a consultation with our tax specialist. We will conduct a detailed comparative analysis, assist you with changing tax residency, and secure predictability for your financial liabilities for the next 15 years.

Author: Molchanov Aleksei

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