The flat tax in Italy has risen to €300,000 per year starting January 1, 2026. But the headline number isn't the one that determines how much you'll actually pay. When buying a luxury property, the order in which you do things matters.
The new residents' regime has been in place since 2017. It's nothing new. It's a well-known tool that has already attracted thousands of high net worth individuals. Only the price has changed: €100,000 in 2017, €200,000 from 2024, and €300,000 today. For each family member included, an additional €50,000 is added; previously, it was €25,000.
Anyone who exercised the option before 2026 will retain the original amount. Grandfathering is complete.
What the flat tax covers in Italy, and what is left out
The regime stems fromArticle 24-bis of the TUIR (Consolidated Income. Anyone who moves their tax residence to Italy pays a fixed amount on all foreign income. The condition: they must not have lived here for 9 of the last 10 years.
What's included:
- No obligation to declare foreign assets in the RW framework
- Exemption from IVIE and IVAFE
- Exemption from inheritance and gift tax on assets located abroad
- Duration up to 15 years
One thing remains unresolved, and it concerns those who buy: Italian incomes.
A home in Italy generates Italian income. Purchase taxes are paid here, as is IMU (Property Tax) on second homes. And if you resell within five years, the capital gain is taxed in Italy.
Be careful at this point. The regime is closing foreign assets in a lump sum. The Italian home remains outside, according to the usual rules.
Why those who choose the flat tax in Italy end up buying
The regime doesn't force you to buy. Simply change your registered residence. In reality, however, almost everyone buys. There are three reasons.
You need a stable base. To register with the registry office, you must prove you live there. At the high end of the market, buying is the easiest option.
The market has moved. Since 2017, prices in Milan have risen by approximately 49%. In other major cities, they have risen by 11%. The regime has created stable demand in the prime segment. We discuss this in detail in our analysis of the luxury real estate market in Italy.
The coherence of the picture. A valuable home in Italy reinforces the argument that your center of interest has shifted here. This is an element the tax authorities consider when verifying residency.
Four costly sequencing errors
Here comes the operational part.
1. Signing the deed without declaring your residency.
The first-time homeowners' tax breaks reduce the registration tax from 9% to 2%. To qualify, you must declare in the deed that you will transfer your residency to the municipality where the property is located. Then, you must actually move within 18 months. The declaration must be made at the time of signing the deed. Afterwards, it cannot be recovered. Those who sign without it pay 9%. There's no way around it.
2. Taking the tax relief on a luxury property for granted.
Three cadastral categories are excluded from the outset: A/1 (luxury homes), A/8 (villas), and A/9 (castles and prestigious palaces). No residence qualifies for them. For much of the luxury market, the reduced rate doesn't exist. It should be factored into the budget. We've explored this topic in more detail in our guide on what a notary guarantees in luxury property sales.
3. Underestimating the 18 months.
Relocating your residence is handled by the municipality. The local police will come to verify your residence. If you're not yet settled in Italy, the waiting period will be longer. And if you miss the deadline, the agency will charge you the difference, along with penalties and interest.
4. Confusing registered residence and tax residence.
They are two different things. Tax residence depends on three criteria: registration in the registry office, domicile, or presence in Italy for more than 183 days. The flat tax requires tax residence. First-time homeowners' benefits require registered residence, in the same municipality as the home. They often coincide. Not always.
The Notary in the Planning of the Flat Tax in Italy
The notary isn't your tax advisor. But he or she is the person who writes the deed. And in the deed, your tax decisions become final.
In a transfer with a flat tax, the notary takes care of:
- Write in the deed the declarations that decide the taxes
- Check the cadastral category and the resulting tax rate
- Check reciprocity for those arriving from outside the EU
- Keeping your schedule aligned with your tax advisor
- Manage foreign powers of attorney, apostilles, and sworn translations
The tax code should be requested first, at theRevenue Agency or the consulate. If you can't be present at the deed, arrange for a notarized power of attorney from abroad.
One final note: Anyone moving should also decide in whose name to register the house. Direct ownership, simple partnerships, and trusts have very different consequences, both tax-wise and inheritance-wise. We discuss this in the guide on property ownership structures.
Let's talk about it
The Spinaci Notary Office is located in Rome, at Via Antonio Bertoloni 27. We assist those arriving from abroad and relocating their residence to Italy. Notary Federica Spinaci works in Italian and English. We collaborate with international tax firms.
For a confidential consultation, you can call +39 06.807.0943, or fill out the form below!
