‘Non-dom’ tax gets pricier

Italy’s special tax regime for new Italian tax residents — the one often compared to the UK “non-dom” concept — has long been one of the country’s most effective magnets for internationally mobile families, executives, investors and retirees. (For previous coverage, click here.)

It sits in Article 24-bis of the Italian Income Tax Code (TUIR) and, in plain English, allows eligible individuals to pay a fixed annual substitute tax on most foreign-source income, instead of being taxed under Italy’s ordinary progressive rules.

The regime survives intact in 2026. But the price of entry has jumped again. And this time, the increase is big enough to change the conversation: The flat tax is no longer a “nice-to-have” planning tool for broadly affluent newcomers; it is becoming a product designed for the very top end of globally diversified wealth.

The key change comes from Law 30 December 2025, no. 199, specifically Article 1, comma 25. Starting 1 January 2026, the annual substitute tax for the main applicant increases to €300,000, and the amount for each qualifying family member increases to €50,000. The law also makes the timing point explicit: the new amounts apply to individuals who transfer residence to Italy from the law’s entry into force—meaning that the increase targets new movers from 2026 onward, rather than retroactively hiking the charge for those who moved earlier.

To understand the practical impact, it helps to look at the regime’s recent “price history.” For years, the regime was known for a simple headline: €100,000 per year for the main taxpayer, plus €25,000 per family member. That was the classic version that made Italy look unusually competitive in Europe for people with significant foreign income. In 2024, the first tightening arrived: a legislative change doubled the main amount to €200,000 for those transferring residence after a specific August 2024 cut-off date, while earlier adopters generally remained under the prior amount for their option period. Now, with Budget Law 2026, the legislature has pushed the needle again—from €200,000 to €300,000 for the principal applicant—and has also doubled the family member add-on—from €25,000 to €50,000 each.

What has not changed is how the regime works. Eligibility still hinges on becoming Italian tax resident and having been non-resident in Italy for at least nine of the previous ten tax years. The flat tax is still primarily about foreign-source income: it substitutes for ordinary Italian taxation on income generated outside Italy, while Italian-source income remains taxed under the ordinary rules. The option remains available for up to 15 years, and it is still possible—strategically important, in many cases—to “carve out” certain countries so that income arising there is excluded from the substitute regime and instead falls back into ordinary taxation. That ability can matter a lot when treaty positions, foreign tax credits, or highly taxed jurisdictions are involved.

The continuing appeal of Article 24-bis has never been only the annual number on the check. For many internationally oriented families, the real value lies in administrative simplification and in the way the regime interacts with Italy’s broader framework—particularly foreign-asset reporting and wealth taxation, as well as the estate-planning angle. In practice, taxpayers under the regime generally benefit from lighter obligations around reporting foreign assets and may obtain favorable outcomes on certain Italian wealth taxes applied to assets held abroad. On the succession side, during the option period Italy’s inheritance and gift tax approach is typically limited in a territorial sense to Italian-situs assets—an element that has made the regime especially interesting for people thinking in generational terms and not merely in annual income terms.

Still, the 2026 price tag forces a more blunt question: who is this still for? At €300,000 per year—and potentially much more for a family—the regime continues to be extremely attractive if the taxpayer has substantial recurring foreign income, significant foreign capital gains expected to be realized while resident in Italy (subject to careful technical analysis), and/or a cross-border family structure where the territorial and reporting implications are a central goal. In those scenarios, the substitute tax can function as a predictable “all-in” cost for living in Italy while keeping global income and assets within a stable, pre-agreed framework. In the right fact pattern, certainty itself is valuable—and Italy is effectively pricing that certainty.

On the other hand, the regime becomes harder to justify where foreign income is modest, irregular, or already heavily taxed abroad in a way that would normally be managed through foreign tax credits—because a substitute-tax model can create friction depending on how different jurisdictions treat credits and character of income. It is also less compelling where the taxpayer’s economic life is mostly Italy-based: if the bulk of income is Italian-source, the flat tax doesn’t do much of the heavy lifting, while the annual substitute cost remains fixed.

The family component is where the 2026 amendment is likely to bite most visibly. Under the old structure, including a spouse and two children was an extra €75,000 per year. Now it is €150,000. That doubling changes planning conversations around whether to include all relatives under the option, include only those who truly need the regime’s coverage, or—where possible and consistent with real-world residence and immigration constraints—keep certain family members outside the flat tax framework.

For Italo-Americans, one additional reality deserves a clear sentence: Italian tax residence is one thing; U.S. tax status is another. The Italian flat tax does not switch off U.S. tax and reporting obligations for U.S. citizens and many green card holders. And the interaction between an Italian substitute tax and U.S. foreign tax credit mechanics can be technical. The practical message is simple: if you are U.S.-connected, this is not a regime you “add on” at the end of the move; it is something to model jointly with Italian and U.S. advisors before you pick a timeline, structure holdings, or realize major gains.

In the end, Law no. 199/2025 does not dismantle Italy’s new-residents flat tax. It reshapes its audience. Italy is signaling that the regime remains available, but it is increasingly aimed at those for whom a high fixed cost is still a bargain compared to ordinary Italian taxation, and for whom the stability, reporting simplification, and territorial planning effects are worth paying for. If you are considering a move in 2026 or later, the right question is no longer whether the regime is “good.” The right question is whether—at €300,000 plus €50,000 per family member—it is the best instrument for your income mix, your family structure, and your cross-border legacy plan.

Send your questions regarding Italian law to cbortolani@aliantlaw.com and I’ll be glad to answer them.

The content provided in this Q&A column is intended solely for general informational purposes and does not constitute legal advice. The information presented here is not tailored to any specific situation or transaction and should not be relied upon as a substitute for professional legal counsel. Legal issues can vary widely based on individual circumstances and jurisdictional nuances. Therefore, it is crucial to consult with a qualified legal professional regarding your specific case or concerns. Please be aware that no attorney-client relationship is established by accessing or interacting with the information provided in this column. The column’s author and publisher disclaim any liability for actions taken based on the information contained herein.