Flat Tax

Those who transfer their tax residence to Italy can choose to apply a substitute tax on IRPEF for income earned abroad. This special tax regime in Italy is primarily advantageous for taxpayers with significant foreign income, generally above €750,000 per year.

Opting for this regime entails the payment of a flat tax of € 300.000 for each tax period for which the option applies.

The flat tax regime can also be extended to eligible family members, i.e., those who transfer their tax residence to Italy without having been residents for at least nine of the ten tax periods preceding the validity of the option. The extension must be indicated in the tax return for the period in which the family member transfers residence to Italy or in the following period. For each family member covered, the substitute tax is € 50.000 per year.

Adherence to the regime must be indicated in the income tax return for the tax period in which the tax residence was transferred to Italy, or in the immediately following period.

The option is tacitly renewed each year, unless terminated, revoked, or otherwise invalidated (for example, for failure to pay the substitute tax on time or for transferring tax residence to another country). In any case, the effects end 15 years after the first tax period of the option’s validity.

For each tax period, the substitute tax must be paid in a single installment, by the due date for payment of the income tax balance, without applying any voluntary correction procedures.

Eligible taxpayers, both primary and family members, are responsible for paying the tax using the “F24 Payments with Identification Elements” form (tax code “NRPP”).

The option for the substitute tax can be revoked by both the primary taxpayer and the family member. The revocation must be expressed in the income tax return for one of the subsequent tax periods or, if no return is required, through a specific communication to the Taxpayer Division of the Italian Revenue Agency, submitted by the same deadlines and methods as the ruling request. If the primary taxpayer revokes, the effect also applies to family members, regardless of whether they exercise revocation independently.

If revocation occurs after the substitute tax has already been paid for the same period, the amount may be refunded or used as a credit in compensation via the F24 form (tax code “NRRE”).