Pop Stars, Footballers, and High-Net-Worth Individuals: Why Italy Appeals to People with Foreign Income
From Magazine Covers to Tax Residency
Milan is no longer just the capital of fashion and design. According to Corriere della Sera, several internationally renowned celebrities have reportedly chosen, or are considering, transferring their tax residency to Italy. Among them is pop star Dua Lipa, with Milan emerging as the preferred destination.
Beyond the city’s appeal, quality of life, and central location in Europe, there is a less glamorous but very concrete reason: a tax regime specifically designed to attract individuals with substantial wealth and income generated abroad.
This is the so-called “Flat Tax for New Residents,” established under Article 24-bis of the Italian Consolidated Income Tax Act (TUIR). Here is how it works.
What Is the Flat Tax for New Residents?
The regime was introduced by the 2017 Budget Law (Law No. 232/2016).
The concept is straightforward. Individuals who transfer their tax residency to Italy may elect to pay a fixed annual substitute tax on foreign-source income, regardless of how much income they earn outside Italy.
The term substitute tax means that this payment replaces ordinary Italian personal income tax (IRPEF), including the applicable regional and municipal surtaxes, that would otherwise be levied on such income.
The term flat-rate means that the amount payable does not depend on the taxpayer’s actual income. Someone earning €2 million abroad pays the same fixed amount as someone earning €50 million.
Initially, the annual tax was €100,000. The Italian legislature subsequently increased it twice:
- €200,000 annually for individuals who transferred their tax residency after August 10, 2024 (2025 Budget Law).
- €300,000 annually under the 2026 Budget Law, which increased the substitute tax applicable to foreign-source income for individuals transferring their tax residency to Italy. The same law also increased the amount payable for each qualifying family member covered by the election to €50,000 annually. These changes apply to individuals who establish tax residency in Italy beginning January 1, 2026, the effective date of the provision.
Individuals who had already elected the regime under previous rules generally retain the annual amount applicable when they made their election.
Who Is Eligible?
The regime applies to individuals who transfer their tax residency to Italy and who have not been Italian tax residents for at least nine of the ten tax years preceding the transfer.
Citizenship is irrelevant. Even an Italian citizen who has lived abroad for many years may qualify.
How Long Does It Last?
The election remains valid for a maximum of 15 tax years.
Taxpayers may revoke their election at any time. However, failure to pay the substitute tax, even partially, within the prescribed deadlines results in termination of the regime.
Extension to Family Members
The benefits may also be extended to qualifying family members, including spouses, children, and other relatives identified under the Italian Civil Code, provided they also transfer their tax residency to Italy and satisfy the applicable eligibility requirements.
An additional fixed annual tax applies to each qualifying family member.
Originally, this amount was €25,000 per year, but the 2026 Budget Law increased it to €50,000 annually for new entrants.
Reduced Compliance Obligations: No Form RW, IVIE, or IVAFE
In addition to potential tax savings, the regime significantly simplifies taxpayers’ reporting obligations.
Individuals who elect the regime are exempt from foreign asset reporting requirements. Specifically, they are not required to complete Form RW of the Italian income tax return, which ordinarily discloses investments and assets held abroad.
They are also exempt from:
- IVIE: Italian tax on real estate located abroad.
- IVAFE: Italian tax on financial assets held abroad.
The regime also provides favorable inheritance and gift tax treatment for assets located outside Italy.
However, certain limitations apply.
Italian-source income remains subject to ordinary Italian taxation.
Additionally, capital gains arising from the disposal of qualified shareholdings are excluded from the preferential regime during the first five years.
The Advance Tax Ruling: Seeking Confirmation from the Italian Tax Authorities
Before relocating, taxpayers may submit an advance tax ruling request (interpello) to the Italian Revenue Agency (Agenzia delle Entrate).
This procedure allows individuals to request advance confirmation that they satisfy the eligibility requirements.
Although optional, the procedure is widely used because it provides greater certainty before making a significant relocation decision.
The actual election is subsequently made through the Italian income tax return for the year in which tax residency is transferred, or through the following year’s return.
Why Milan and Italy?
For High-Net-Worth Individuals (HNWIs), Italy offers an attractive combination of predictable taxation, quality of life, culture, strong international connections, and, particularly in Milan, a dynamic financial and creative environment.
Tax policy developments in other European countries also play an important role.
– United Kingdom: The well-known non-domiciled (non-dom) tax regime, historically used by wealthy individuals, was abolished in April 2025 and replaced with a more restrictive system. Consequently, many wealthy London residents began exploring alternative destinations.
– Switzerland: Switzerland has long offered expenditure-based taxation, commonly known as lump-sum taxation, calculated according to an individual’s standard of living. However, the conditions vary by canton, and the regime is not available to Swiss citizens.
– Portugal: The Non-Habitual Resident (NHR) regime was closed to new applicants in 2024 and replaced by a more targeted tax incentive.
– Greece: Greece introduced a system similar to Italy’s, with an annual flat tax of €100,000, subject to a minimum investment requirement in the country.
Compared with these alternatives, Italy offers a relatively stable regulatory framework, a long duration of 15 years, and the possibility of extending the benefits to qualifying family members.
Opportunity or Privilege? The Debate
Arguments in Favor
Supporters argue that attracting wealthy individuals does not necessarily reduce tax revenue because, without the preferential regime, many of these individuals would probably never have relocated to Italy.
Each new resident contributes a fixed annual tax payment and often generates substantial spending on real estate, professional services, restaurants, education, and cultural activities.
Many also bring investments, entrepreneurial activities, and philanthropic initiatives.
In Milan, the resulting economic impact is particularly visible in the luxury real estate market.
Criticism of the Regime
From the perspective of tax fairness, critics raise significant concerns.
An ordinary employee pays Italian personal income tax (IRPEF) at progressive rates of up to 43%.
By contrast, a billionaire who becomes an Italian tax resident under the preferential regime may pay a very low effective tax rate on foreign-source income, sometimes approaching zero.
Other criticisms include:
- Tax competition among European countries, potentially encouraging governments to continuously reduce taxation to attract wealthy residents.
- Rising housing prices in the most desirable neighborhoods.
- Concerns that the regime favors the international mobility of capital more than the mobility of labor.
The successive increases in the annual flat tax—from €100,000 to €200,000 and subsequently to €300,000—suggest that Italian lawmakers have also sought to rebalance the relationship between international competitiveness and tax fairness.