ITALY: An introduction

Tax reform strategy

Italy continues to rank among the most attractive countries in Europe for private clients wishing to reside, invest, or transfer their wealth. The Italian Government has further advanced its comprehensive Tax Reform strategy, provided by Law n. 111/2023, through a series of Legislative Decrees and Tax Authority’s Circulars. The aim is modernise the tax framework, reduce administrative burdens, and enhance the appeal of Italy as a jurisdiction of residence and investment for high-net-worth individuals and families.

Legislative Decree n. 139/2024

Among the most relevant updates, Legislative Decree n. 139/2024 marks a turning point in the Italian estate and gift tax regime. The decree contains provisions aimed at rationalising indirect taxes. In particular, introduces a self-assessment mechanism for inheritance tax, moving away from the previous notification by the Tax Authority model and thereby streamlining the compliance process. The reform also finally addresses the taxation of trusts by providing a clearer framework: the taxable event is linked to the effective transfer of assets to the trust beneficiary. So, as a consequence, inheritance and gift tax will be due only in that moment, except for special cases. Moreover, the Legislative Decree reinforces and extends the special provision of law to facilitate the transfer of family businesses to the spouse or to the descendants without paying any inheritance and gift tax. Specifically, the tax benefit applies, depending on the type of assets transferred (eg stakes in the capital of a limited liability company), on the condition that the successors continue the activity of the business or hold control of the company or maintain the right of ownership on stakes in the capital of the company for a period of not less than five years from the date of the transfer.

It is worth recalling that following Circular n. 29/E/2023 and the Legislative Decree n. 139/2024, it has been confirmed that there is a tax-free threshold for inheritance tax and a tax-free threshold for gift tax, for each beneficiary. So, it is possible to transfer assets, by gift or by estate, using each tax-free threshold for each beneficiary (eg 1 million tax-free threshold for a gift to a son and 1 million tax-free threshold for transfer of assets at time of death to the same son).

Further implementing measures of Law n. 111/2023 have reaffirmed the Government’s objectives of reducing the complexity of tax compliance. The revision of international taxation was mainly entrusted to Legislative Decree n. 209/2023, which, among the various innovations introduced, made significant changes to the criteria for determining the tax residence of individuals and companies. These provisions, which came into force in January 2024, have been clarified by Circular n. 20/E/2024, which provides also operational instructions. According to Article 2 of the Italian Tax Code, an individual is considered an Italian resident for tax purposes if, for the greater part of the fiscal year (ie for more than 183 days or 184 in case of leap years), taking into account even fractions of days: the individual is physically present on Italian territory; the individual has a residence in Italy or the individual has a domicile in Italy.

Tax residency

If one of the above conditions is met, the individual qualifies as tax resident for Italian tax purposes. The notion of domicile is now interpreted as the centre of the individual’s personal and family interests (it defines a precise hierarchy between the connection criteria privileging the personal and family relationships over economic and work-related interests), while residence continues to reflect the habitual place of living. Notably, registration in the population register no longer constitutes an absolute presumption of tax residence which means that it can be proved otherwise. For companies, tax residence is established if, for most of the tax period, the company has, alternatively, its registered office, the place of effective management, or the place where day-to-day management is carried out in Italy. These new definitions aim to avoid situations of unintended dual residence.

Inbound workers' regime

The new inbound workers’ regime, applicable to individuals who have been tax residents in Italy since 2024, has also been subject to administrative clarification. The regime provides a 50% (or, in specific cases, 60%) reduction of taxable (employment and self-employment) income for qualifying individuals transferring their tax residence to Italy, with a cap of EUR600,000. The tax benefit is available to those who were not tax resident in Italy in the previous three years and who commit to remain tax resident for at least four years. Further clarifications confirmed that the inbound workers’ regime can also be applied to individuals who have never previously been tax residents in Italy; in addition, for individuals who continue to work for the same entity for which they were employed abroad before moving to Italy, the minimum period of prior residence abroad is to be extended to six or seven tax periods.

New residents flat tax

Another key update affecting international private clients is the amendment of the so-called “new residents’ flat tax” regime. Under the Decree n. 113/2024, the optional substitute tax on income earned abroad, irrespective of the nature and the amount of the income and of its remittance in Italy, for individuals who transfer their residence after 10 August 2024 to Italy has been doubled. According to the new provisions, in fact, individuals who transfer their tax residence to Italy can opt, with reference exclusively to income produced abroad (ie, financial, real estate and working activity income), for the application of a substitute tax, which rose from EUR100,000 to EUR200,000.

Special visas

On the immigration side, Italy offers two special visas: Investor Visa and Elective Residence Visa. The Investor Visa for Italy is a 2-year visa for non-EU citizens who want to invest a minimum amount in Italian strategic assets: government bonds, limited companies, innovative startups, or philanthropic activities. The Investor Visa can be renewed for another 3 years and the holder must maintain the investment for the entire duration of the residence permit. In addition, the Elective Residence Visa continues to be a key channel for non-EU individuals with only “passive” income. This visa has a duration of 1 year and allows entry in Italy (and in the Schengen area) for a long-term stay for the foreigner who intends to settle in Italy without carrying out any work activity.

Art, antiques and collectibles

In a move that further supports Italy’s positioning in the global art market, the Government recently adopted a reduced 5% VAT rate for most sales of works of art, antiques, and collectibles. This measure is expected to stimulate art transactions and increase the international competitiveness of Italy-based artists and galleries. For example, the reduced 5% VAT rate applies to imports and sales by artists and their heirs.

Taxation on crypto-assets

Taxation on crypto-assets has also undergone law changes thanks to the Budget Law 2025, which completed the tax framework already provided by the interpretative guidelines issued by the Italian Revenue Agency with the Circular No. 30/E/2023. Capital gains and other income from transactions related to crypto-assets are subject to the taxation at the rate applicable to financial assets (26%), as miscellaneous income.

Overall, the latest developments confirm Italy’s ambition to be a competitive and reliable destination for seeking residence, succession planning solutions, and cross-border tax efficiency.