The Italian Flat Tax for New Fiscal Residents: A Strategic Opportunity to Attract Capital and People to Riviera dei Fiori and Sanremo
Technical Introduction to the Special Tax Regime
Italy, aiming to attract investments and high-net-worth individuals from abroad, has introduced a particularly advantageous fiscal regime known as the “Flat Tax for New Residents.” This regulation, governed by Article 24-bis of the Consolidated Income Tax Act (TUIR), allows new fiscal residents coming from abroad to opt for a substitute taxation on foreign-source income.
Effective from August 10, 2024, the flat tax has been significantly increased from 100,000 to 200,000 euros per year. This regime enables beneficiaries to pay a fixed annual tax of 200,000 euros on their foreign-source income, regardless of the actual amount earned, thus excluding this income from the standard progressive Italian taxation system, which can reach up to 43%.
Requirements and Tax Benefits of the Regime
To take advantage of this special fiscal regime, individuals must:
- Not have been fiscal residents in Italy for at least nine of the past ten tax years;
- Transfer their fiscal residency to Italy;
- Submit a specific application to the Italian Revenue Agency (Agenzia delle Entrate) within the legal deadlines.
The application of this special fiscal regime is valid for a maximum of 15 years from the date of fiscal residency transfer to Italy and can also extend to family members, subject to an additional fixed tax of 25,000 euros per year for each adhering family member.
This tool represents a concrete opportunity for individuals with significant wealth primarily generated abroad, such as entrepreneurs, investors, and professionals, offering them an optimal avenue for fiscal and wealth planning by relocating their fiscal residency to Italy.
Economic Implications and Attractiveness of the Regime
The Flat Tax for new residents was introduced to compete with similar fiscal regimes in other European countries (e.g., Portugal, Switzerland, the United Kingdom, Malta, and Cyprus), aiming to attract capital and affluent individuals, thus fostering economic and social development in Italy.
The increase in the annual tax cap to 200,000 euros significantly enhances the competitiveness of the Italian regime at the European level, making it particularly advantageous for individuals with substantial foreign income or income derived from complex asset structures such as holding companies, trusts, or foundations.
The Attractiveness of Riviera dei Fiori and Sanremo
Within this context, certain Italian regions naturally become more attractive to those benefiting from this privileged tax regime. Among prestigious locations, the Riviera dei Fiori, and particularly Sanremo, stands out as one of the most appealing destinations for new residents.
Choosing an exclusive location like Sanremo goes beyond fiscal advantages, also encompassing quality of life, natural beauty, proximity to significant European cities (such as Monte Carlo and Nice), and the availability of high-quality services, making these areas exceptionally attractive.
The combination of tax benefits, lifestyle quality, and intrinsic territorial value positions Sanremo and Riviera dei Fiori as ideal locations for individuals seeking to relocate to Italy under this favorable regime, maximizing fiscal benefits while investing in local real estate markets.
Impact on the Local Real Estate Market
An increased interest from high-income foreign individuals toward locations such as Sanremo can positively affect the local real estate market. The heightened demand from new residents can lead to an increase in property values, especially residential and prestigious properties in Riviera dei Fiori, thus enhancing local real estate value and stimulating further investments in the tourism, residential, and commercial sectors.
In conclusion, the Italian flat tax for new residents, now increased to 200,000 euros per year, represents an effective strategy to attract capital and economically significant individuals to Italy. Among the most promising destinations in this respect, Sanremo and the Riviera dei Fiori emerge as optimal choices for maximizing the regime’s benefits, simultaneously guaranteeing high living standards and significant real estate investment potential.
Demographic and Real Estate Trends Related to the Flat Tax for New Residents
Growth of Foreign Residents in Italy
As of January 1, 2023, Italy had approximately 5 million foreign residents, accounting for 8.7% of the total population. Compared to the previous year, there was an increase of 111,000 individuals (+2.2%), attributable to positive natural balance and net migration.
Real Estate Purchases by Foreigners
In 2020, Italy recorded 26,000 home purchases by foreigners, with an average expenditure of approximately 85,000 euros per property. However, foreign interest in the Italian real estate market is rising, with increased inquiries coming from over 150 countries. The United States leads, with a 30.5% increase in inquiries, followed by the United Kingdom, Germany, France, the Netherlands, Belgium, Sweden, Switzerland, and Canada.
Most Sought-After Italian Locations by Foreign Buyers
The Italian regions most sought after by foreign buyers include:
- Tuscany: especially Lucca, Chianti, and Versilia (Forte dei Marmi, Marina di Pietrasanta).
- Liguria: the crescent-shaped coast, including Sanremo, is highly favored.
- Lake Como: locations such as Menaggio, Cernobbio, and Bellagio are highly sought after.
- Puglia: cities like Ostuni are experiencing a boom in requests for typical properties.
- Sardinia: Costa Smeralda remains one of the most desired locations.
These locations offer a combination of natural beauty, cultural heritage, and lifestyle quality, making them particularly appealing to foreign investors.
Impact of Flat Tax on Immigration and Real Estate Market
The introduction of the flat tax for new residents has incentivized the relocation of high-income individuals to Italy. According to our Center for Studies’ Annual Regional Report 2024, a 19% increase in ultra-high-net-worth individuals (UHNWIs) in Italy is expected over the next five years, adding approximately 2,977 individuals to this category.
This influx of affluent new residents positively impacts the real estate market, particularly in prestigious locations like Sanremo and Riviera dei Fiori, where demand for luxury properties is growing.
Conclusion
The combination of fiscal incentives, quality of life, and natural beauty positions Italy, particularly regions like Liguria, as a preferred destination for foreign investors. The flat tax for new residents continues to effectively attract capital and people, stimulating the real estate market and local economy.