Italy

The main income tax levied on individuals is the personal income tax, also known as Imposta sui redditi delle persone fisiche (IRPEF).

In Italy, individuals may be subject to the following income taxes:

• national income tax;
• regional income tax;
• municipal income tax.

The tax liability is computed on a progressive basis. The applicable national tax rates are shown below.

National income tax

National income tax for FY 2026 is levied at progressive tax rates as follows:

Regional income tax

Regional income tax depends on the region of residence. The regional income tax rate generally ranges from 1.23% to 3.33%.

Municipal income tax

Municipal income tax depends on the municipality of residence. The municipal income tax rate generally ranges from 0% to 0.9%.

Municipalities may establish progressive tax rates applicable to the national income brackets.

The scope of taxation in Italy

The tax status of an individual is the starting point for applying the correct taxation in Italy. According to Italian tax law, both Italian tax residents and non-resident individuals are subject to taxation in Italy, but on a different basis.

Tax resident individuals

Tax resident individuals are liable to Italian personal income taxes on their income wherever produced, under the so-called worldwide principle. Therefore, tax residents are also subject to taxation on foreign income, such as income deriving from real estate owned outside Italy, foreign dividends and interest, foreign compensation and director’s fees, and other foreign income.

Tax resident individuals are also subject to wealth taxes on real estate and financial investments owned outside Italy.

Tax resident individuals are required to declare all their foreign investments, whether financial or not, for monitoring purposes through the Italian tax return, unless an exemption applies, such as under the lump sum tax regime for new resident individuals.

Non-tax resident individuals

Tax non-resident individuals are subject to PIT only on income produced in Italy, such as employment income related to work activity performed in Italy.

Foreign income is generally not relevant for Italian tax purposes for non-tax residents.

Lump sum tax regime for new resident individuals

Individuals who transfer their tax residency to Italy may elect for the application of a flat tax on foreign-sourced income, provided that the relevant conditions are met.

The flat tax amount has changed over time:

• individuals who opted for the regime from the 2024 tax period may continue to pay the flat tax of EUR 100,000 until the end of the application period of the regime;
• individuals who opted for the regime from the 2025 tax period may continue to pay the flat tax of EUR 200,000;
• as per the changes introduced by the 2026 Italian Budget Law, for individuals who transfer their legal residency to Italy from 1 January 2026, the flat tax is increased to EUR 300,000.

The regime may also be extended to one or more family members. In addition to the taxpayer, each family member may be subject to a separate flat tax on non-Italian-sourced income. For family members of individuals who transfer their legal residency to Italy from 1 January 2026, the flat tax is increased to EUR 50,000.

For previous access periods, the lower amount provided by the prior rules may continue to apply, where the relevant conditions are met.

The lump sum tax regime applies to foreign-sourced income and replaces:

• income tax on foreign investments, including foreign interest, dividends, and capital gains, except for capital gains on qualified participations earned in the first five years;
• wealth tax on real estate and financial investments owned outside Italy;
• financial monitoring obligations through the Italian tax return.

To elect this treatment, the individual must meet several requirements, including previous non-Italian tax residency for at least nine out of the ten fiscal years preceding the transfer.

The option must be exercised through the annual Italian income tax return. It is generally advisable to submit an advance ruling to the Italian tax authorities to obtain their formal opinion on the applicability of the special regime.

The regime is not cumulative with the previous inbound workers regime under Article 16 of Legislative Decree no. 147/2015. However, under the current provisions of Legislative Decree no. 209/2023, there seem to be no restrictions to cumulate the lump sum tax regime with the new inbound workers regime, provided that the relevant conditions for both regimes are met.

Flat tax regime for non-Italian retirees

A special regime provides for a flat tax rate of 7% on non-Italian-sourced pensions and other foreign-source income.

The ordinary length of the regime is ten years, starting from the tax year in which the individual becomes Italian tax resident. More precisely, the option is valid from that tax period and for the following nine tax periods.

The regime applies not only to foreign pension income but also, where the relevant conditions are met, to other categories of foreign-source income, including employment or self-employment income, business income, capital income, rental income, and certain other income.

An individual may apply for the 7% flat tax regime if all the following conditions are met:

• the individual has not been resident in Italy for tax purposes for at least five tax periods before the option becomes effective;
• the individual is the holder of foreign pension income;
• the individual transfers tax residence to Italy, pursuant to Article 2 of the Italian Tax Code, in one of the municipalities belonging to the territory of southern Italy, with a population of less than 20,000 inhabitants, located in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, or Puglia;
• the transfer of residence occurs from countries with which administrative cooperation agreements are in force.

The option is exercised through the annual income tax return relating to the tax year in which tax residence is transferred to Italy.

It is also possible to exclude one or more jurisdictions from the application of the 7% flat tax regime.

Revaluation of lands and shareholdings

Italian tax law has historically allowed individuals to step up the tax value of certain lands and shareholdings through the payment of a substitute tax, where the relevant statutory provisions are in force and the legal conditions are met.

The availability, rate, deadlines, and procedural requirements of this regime should be verified based on the legislation applicable for the relevant tax year.