Moving to Italy from the UK: the 2026 flat-tax regime guide

Once you become non-UK resident under the Statutory Residence Test (SRT), the UK generally stops taxing your worldwide income and gains. You remain within the UK net only on UK-source income and on certain UK assets. So a British executive or entrepreneur who leaves for Italy and correctly ceases UK residence will not pay UK income tax on foreign dividends, foreign business profits or foreign investment gains going forward.

The important exceptions are these:

• UK-source income, such as UK rental profits, UK employment carried out here, or UK pensions, generally stays taxable in the UK, subject to relief under the UK-Italy double tax treaty.
• UK land and property. Non-residents remain within UK capital gains tax on disposals of UK residential and commercial property, and must report and pay any tax within 60 days.
• The temporary non-residence rule. If you return to the UK within roughly 5 years, certain gains and some income realised while you were away can be taxed in the year you come back.
• UK inheritance tax. From 6 April 2025 IHT is residence-based: broadly, if you have been UK resident for at least 10 of the previous 20 tax years, your worldwide estate stays in scope, with a tail of 3 to 10 years after you leave before non-UK assets fall out.

The headline, though, is that a clean departure ends UK taxation of your foreign income and gains, and Italy's regime then caps the Italian tax on that same foreign income at a fixed sum. That is the mechanism that makes the move attractive.

Italy's regime for new residents (the neo-residenti regime under Article 24-bis TUIR, an imposta sostitutiva or substitute tax) lets a qualifying individual pay a fixed annual amount in place of ordinary Italian tax on all of their non-Italian income and gains. It does not matter whether your foreign income for the year is 500,000 EUR or 50 million EUR: the substitute tax is the same fixed figure.

The lump sum has risen three times in under two years. It began at 100,000 EUR, was raised to 200,000 EUR for individuals transferring residence from 11 August 2024 (Decreto-legge 9 agosto 2024 n. 113, Art. 2), and under the 2026 Budget Law (Legge 30 dicembre 2025, n. 199, Art. 1 commi 25-26, amending Art. 24-bis, comma 2, TUIR) it rose again to 300,000 EUR for anyone transferring their tax residence to Italy from 1 January 2026. The increase is not retroactive: people who validly elected earlier continue to pay the rate in force when they moved (100,000 EUR or 200,000 EUR) for the rest of their 15-year window.

Practical features to understand:

• You add family members. A spouse, partner or other qualifying family member can be brought under the regime for a further 50,000 EUR each per year (raised from 25,000 EUR for those transferring from 1 January 2026). A married couple with two children therefore pays 300,000 EUR + 3 x 50,000 EUR = 450,000 EUR per year, against 275,000 EUR before the increase.
• It runs for up to 15 years from the first year of Italian tax residence, and cannot be renewed. You can revoke it earlier.
• You elect it in your Italian tax return, and many advisers recommend first obtaining an advance ruling (interpello) from the Agenzia delle Entrate for certainty. The substitute tax is paid una tantum via form F24 (tax code NRPP) by the income-tax balance deadline, and ravvedimento operoso is not available for a late payment.
• It removes the need to disclose foreign assets on the Italian RW monitoring form, exempts electors from the Italian wealth taxes on foreign assets (IVIE and IVAFE), and exempts foreign assets from Italian inheritance and gift tax while the regime applies, a significant estate-planning advantage.

For a UK leaver with several hundred thousand pounds or more of annual foreign income, paying a flat 300,000 EUR can be dramatically cheaper than ordinary Italian rates of up to 43 per cent, and it delivers something the abolished UK non-dom regime no longer can: certainty of cost.

The gateway to the regime is a non-residence condition. To qualify, you must not have been tax resident in Italy for at least 9 of the 10 tax years immediately before you transfer your residence to Italy. In practice, a UK-based individual who has genuinely lived and been taxed in the UK for the past decade will meet this comfortably.

Beyond that first test, you must:

• Actually become Italian tax resident. Italy generally treats you as resident if, for most of the year, you are registered in the Italian population records, have your habitual abode or the centre of your vital interests in Italy, or (from 2024) are physically present in Italy for more than 183 days including fractions of days.
• Make a valid election in your Italian tax return for the year you become resident (or the following year).
• Pay the substitute tax annually and on time. Missing a payment can cause you to lose the regime for that year and beyond, and ravvedimento operoso is not available to cure it.

The regime is open regardless of nationality, so a British citizen qualifies on the same terms as anyone else, provided the non-residence history is met. It is aimed squarely at internationally mobile, high-income individuals, which is why it fits so well with the profile of a departing UK non-dom or high earner.

The single most important point: the substitute tax covers foreign income and gains only. Anything with an Italian source falls outside it and is taxed under Italy's ordinary rules.

Covered by the flat lump sum:

• Foreign employment and self-employment income
• Foreign dividends, interest and other investment income
• Foreign rental income
• Most foreign capital gains
• Foreign estate exposure, as foreign assets are outside Italian inheritance and gift tax while the regime runs

Not covered (taxed under ordinary Italian rules, IRPEF at 23 to 43 per cent plus regional and municipal surcharges):

• Italian-source income of any kind, including Italian employment, Italian business profits and Italian real-estate income
• Gains on the disposal of substantial foreign shareholdings (qualified participations) sold within the first 5 years of the regime, which are excluded from the flat tax and taxed normally. This is a deliberate anti-abuse rule aimed at people selling a business shortly after arriving.

Two further planning points. First, because the flat tax replaces ordinary taxation on foreign income, you generally cannot also claim a foreign tax credit (GOV.UK) in Italy for tax paid abroad on that same income, so you must model the interaction with source-country taxes and treaties. Second, you can choose to cherry-pick which countries the regime applies to, for example excluding a country where you want to preserve a foreign tax credit.

The UK's remittance basis let non-doms keep unremitted foreign income and gains outside UK tax, sometimes for many years. Its abolition on 6 April 2025 removed that option. The replacement, the 4-year Foreign Income and Gains (FIG) regime, only helps qualifying new arrivals to the UK for their first 4 years and requires at least 10 prior years of non-UK residence. For a long-settled UK resident with large foreign income, the FIG regime does nothing.

That is why Italy's regime has become the go-to successor for this group. The comparison is stark:

• Cost certainty. Italy fixes the tax on all foreign income at a known number (300,000 EUR for 2026 electors), whatever you earn abroad. The old UK remittance basis charge was smaller but taxed remittances; the new UK rules tax worldwide income in full after year 4.
• Duration. Italy runs up to 15 years. The UK FIG regime lasts only 4.
• Estate planning. Italy exempts foreign assets from inheritance and gift tax during the regime. The UK has moved to a residence-based IHT that can keep your worldwide estate in scope for years after you leave.
• Lifestyle. Italy offers residence in a G7 country with an extensive treaty network, rather than a low-tax jurisdiction with limited substance.

For a former UK non-dom or a high-earning entrepreneur with international income, Italy effectively rebuilds the certainty the UK regime used to provide, at a fixed and now higher price. The trade-off is that 300,000 EUR is a meaningful annual cost, so the regime suits individuals with roughly a million euros or more of foreign income, where the flat charge undercuts ordinary tax.

The flat tax is not the only option, and for some UK leavers a different regime fits better.

The impatriate workers regime (lavoratori impatriati, Art. 5 D.Lgs. 209/2023) is aimed at people moving to Italy to work, and is unchanged for 2026. Qualifying workers exclude 50 per cent of their Italian-source employment or self-employment income from tax, rising to 60 per cent if you relocate with a dependent minor child (or have or adopt one during the benefit period). The relief applies to qualifying income up to 600,000 EUR per year (an annual cap; income above that is taxed in full) and runs for 5 years, subject to conditions on prior non-residence (generally not Italian resident in the previous 3 tax years) and staying in Italy. This suits an employee or consultant who will earn substantial Italian income, which the flat tax would not shelter.

The 7 per cent flat rate for foreign pensioners (Art. 24-ter TUIR) is aimed at retirees and remains in force for 2026. If you receive a foreign pension and move to a qualifying small municipality in southern Italy, in regions such as Sicily, Calabria, Sardinia, Basilicata, Campania, Abruzzo, Molise or Puglia (or a central earthquake-zone municipality), you can pay a flat 7 per cent on all of your foreign-source income for up to 10 years. You must not have been Italian resident in the previous 5 years. Law n. 34 of 11 March 2026 raised the eligible-municipality population threshold from 20,000 to 30,000 inhabitants with effect from 7 April 2026, adding roughly 74 further southern towns; whether this wider threshold first applies to FY2026 or FY2027 residence registrations is to confirm, pending official Agenzia delle Entrate guidance, so check it before fixing a move date. For a UK pensioner with a private or workplace pension, this can be far cheaper than the 300,000 EUR lump sum.

Choosing between the three regimes depends on your income mix. Large passive foreign income points to the flat tax; a new Italian salary points to the impatriate regime; a modest pension points to the 7 per cent southern regime. They cannot generally be combined, so the choice matters.

The Italian regime only delivers if you genuinely cease to be UK tax resident, because otherwise the UK will continue to tax your worldwide income and undo the benefit. UK residence is decided by the Statutory Residence Test (RDR3, GOV.UK), which weighs days spent in the UK against connecting factors such as UK home, work, family and prior residence. Leaving requires planning your UK day count and, usually, cutting UK ties, not simply buying a house in Italy.

Key UK mechanics to get right:

• Split-year treatment. The tax year of departure can often be split into a UK part and an overseas part, so you are taxed as non-resident from the date you leave rather than for the whole year. The conditions are specific, so the date and manner of departure matter.
• The temporary non-residence 5-year rule. If you return to the UK within around 5 years, certain income and gains realised while abroad, including some previously untaxed distributions and gains on assets held before you left, can be pulled back into UK tax in the year of return. To make the move permanent in tax terms, plan to stay non-resident for more than 5 complete tax years.
• Retained UK property. If you keep a UK home and let it, you fall within the Non-resident Landlord Scheme and must declare UK rental profits. When you sell UK residential property as a non-resident, you must report the disposal and pay any non-resident CGT within 60 days of completion, at 18 or 24 per cent depending on your UK-rate band, even if no tax is due.
• Inheritance tax tail. Because IHT is now residence-based, leaving the UK does not immediately remove your worldwide estate from UK IHT. Depending on how long you were UK resident, a tail of between 3 and 10 years can apply before non-UK assets fall out of scope.
• The UK-Italy double tax treaty. The treaty allocates taxing rights and prevents the same income being taxed twice, and its tie-breaker decides your residence if both countries claim you in a transitional year.

Sequencing is everything. Establishing Italian residence and electing the flat tax, while simultaneously and cleanly ending UK residence under the SRT with split-year treatment, is a coordinated cross-border exercise. Done well, you exit UK worldwide taxation and cap your Italian tax on foreign income at a fixed sum. Done carelessly, you risk dual residence, the temporary non-residence claw-back, or unexpected UK property and IHT charges. No new individual-level exit tax or UK-Italy treaty or reporting change was identified in the 2026 Budget Law, though rising reporting pressure on foreign and crypto assets (GOV.UK guidance) is arriving through the EU DAC8 directive.