This newsletter provides an update on Italian tax incentives for individuals relocating to Italy, following Law Decree No. 38 of 27 March 2026.
First, the Italian Budget Law for 2026 increased the annual flat tax under the Flat Tax Regime from EUR 200,000 to EUR 300,000 for the main taxpayer and from EUR 25,000 to EUR 50,000 for each qualifying family member, applicable to individuals transferring their Civil law residence (i.e., the habitual abode) from 1 January 2026 onward.
Second, while the Italian Tax Authorities had previously acknowledged (in a non-published ruling) the possibility of simultaneously applying the Flat Tax Regime to foreign-sourced income and the Inbound Workers Regime to Italian-sourced employment income, the mentioned Law Decree No. 38 of 27 March 2026 now expressly prohibits such cumulation for individuals relocating to Italy from 2027 onward. As a result, individuals wishing to benefit from both regimes must establish their Italian tax residence no later than 30 June 2026 to meet the majority-of-the-year requirement and secure simultaneous access to both favorable regimes on Italian- and foreign-sourced income.

Our Tax Practice breaks down these topics in the newsletter linked here.