Law verified as at 5 October 2026
The French law cited is the law in force at that date. It may change, in particular with the 2027 Finance Law. Italian law is presented on the basis of the references published by the Agenzia delle Entrate: how they apply to a given situation should be confirmed with a local adviser.
In 2017 Italy introduced an optional regime that allows a person transferring their tax residence to the country to pay a lump-sum tax on all their foreign-source income, whatever the amount. The mechanism is simple, its scope is narrow, and its entry cost has been raised twice since it was created.
The general framework for a departure is set out on our page on transferring your tax residence.
How does Italy’s flat tax for new residents work?
The scheme is set out in Article 24-bis of the Testo unico delle imposte sui redditi (TUIR, Decree of the President of the Republic No. 917 of 22 December 1986). This article was introduced by Law No. 232 of 11 December 2016 (Article 1, paragraph 152) and has applied since 1 January 2017. It offers an option for a substitute tax, known as the imposta sostitutiva, on income produced outside Italy.
- Entry condition: not having been tax resident in Italy for at least nine of the ten years preceding the transfer.
- Duration: the option is tacitly renewed each year, but its effects end no later than fifteen years after the first tax period covered.
- Tax base: foreign-source income only. Italian-source income remains taxed under the ordinary rules.
- Extension to family members: the option can be extended to family members, for a separate and lower lump sum.
The amount of the substitute tax has been raised twice. Originally set at €100,000 a year, it was increased to €200,000 for transfers of residence after 10 August 2024 by Article 2 of Decree-Law No. 113 of 9 August 2024. The Italian Budget Law for 2026, legge n. 199/2025 (Article 1, paragraphs 25 and 26), then raised it to €300,000 for transfers of residence from 1 January 2026. For these transfers, the amount due for each family member covered by the extension rises from €25,000 to €50,000, according to the Agenzia delle Entrate.
Who the numbers work for
The regime is a lump sum: it only becomes worthwhile once foreign income is high enough for tax under the ordinary rules to exceed the lump-sum amount. Below that level, the option costs more than it saves.
One point is often overlooked: the lump sum does not cover Italian-source income, nor French-source income that the treaty leaves taxable in France. A French national whose income comes from property located in France gains nothing from the regime on that portion.
How does the France–Italy tax treaty allocate taxing rights?
The treaty between France and Italy for the avoidance of double taxation with respect to taxes on income and on capital was signed in Venice on 5 October 1989. It entered into force on 1 May 1992 and replaces the treaty of 29 October 1958. It comes with a protocol that forms an integral part of it.
Its structure follows the logic of the OECD Model Tax Convention. A residence conflict is settled in stages: permanent home, then centre of vital interests, then habitual abode, then nationality. Income from immovable property remains taxable in the State where the property is situated. The French administrative guidelines detail the rule applicable to each category of income, including the elimination of double taxation.
What France continues to tax
- French rental income, at the minimum rate of 20% and 30% under Article 197 A of the French Tax Code (code général des impôts, CGI), unless the average worldwide rate is elected.
- The French real estate wealth tax (IFI), on French real estate only, above €1,300,000 of net taxable value on 1 January (Article 964 of the CGI).
- French real estate capital gains, at the 19% rate under Article 244 bis A, plus social levies.
- Gifts and inheritances in the cases set out in Article 750 ter of the CGI.
- Exit tax on departure, with automatic deferral, as Italy is a member of the European Union.
A worked example
An entrepreneur who has sold his company receives €900,000 of foreign-source income a year, mainly dividends and interest from a portfolio held outside France and outside Italy. He keeps a flat in Nice, let for €24,000 a year and worth €1,500,000.
- Foreign income: if the flat-tax regime is elected, it bears the substitute tax, i.e. €300,000 a year for a transfer of residence in 2026, whatever the amount of income. The difference compared with tax under the ordinary Italian progressive scale is the real benefit of the regime.
- French rental income: €24,000 taxable in France, as the property is located there. The 20% minimum rate applies to this base, i.e. €4,800, excluding social levies. The Italian lump sum has no effect on this tax.
- IFI: the net taxable value of the French real estate assets, €1,500,000, exceeds the €1,300,000 threshold. IFI remains due in France.
- Exit tax: if the thresholds of Article 167 bis were reached on departure, the tax is automatically deferred and discharged after two or five years depending on the value of the shares.
The decisive calculation therefore concerns the foreign portion of income alone. It must be large enough to absorb the lump sum.
Who this move suits, and who it does not
It may suit a person whose foreign-source income is high and recurring, who has not been resident in Italy in the last nine years, and whose French assets are limited.
It is a poor fit for a person whose income comes mainly from France or Italy, for someone whose foreign income remains below the lump-sum amount, and for someone who wants a solution beyond fifteen years, as the effects of the option end at that point.
Key points
- The regime under Article 24-bis of the TUIR taxes foreign-source income only, on a lump-sum basis, for a maximum of fifteen years.
- Its entry cost was raised by the Decree-Law of 9 August 2024 and then by the Italian Budget Law for 2026: €300,000 a year for a transfer of residence from 1 January 2026.
- French income and assets remain taxable in France; the Italian lump sum changes nothing in that respect.
FAQ
Who can opt for the Italian new residents regime?
Any individual who transfers their tax residence to Italy without having been resident there for at least nine of the previous ten years. Its effects end no later than fifteen years after the first tax period covered.
How much does the substitute tax cost?
An annual lump sum, independent of the level of foreign income, originally set at €100,000, at €200,000 for transfers of residence after 10 August 2024, then at €300,000 for transfers from 1 January 2026, according to the Agenzia delle Entrate. Each family member covered by the extension then owes €50,000 a year.
Does the regime cover French income?
No. It applies to income produced outside Italy, subject to the treaty. Income that the France–Italy treaty leaves taxable in France, in particular French-source income from immovable property, remains taxed there.
What happens to my flat in France?
It remains taxable in France on its income, for the real estate wealth tax above the threshold, and on the capital gain if it is sold, at the 19% rate plus social levies.
What about inheritance tax?
The Italian inheritance regime is separate from the flat-tax regime of Article 24-bis and follows its own rules. France and Italy are also bound by a treaty on inheritance, published on impots.gouv.fr. How it interacts with Article 750 ter of the CGI, which maintains French taxation in several cases, must be examined separately and confirmed with a local adviser.
Assessing your move to Italy
We analyse the applicable treaty, the assets kept in France and the timing of the departure, working with an Italian adviser on domestic law. See our notes on the Portuguese IFICI regime and on Swiss lump-sum taxation, our article on the line between tax planning and abuse of law and leaving France in compliance with the rules. Every situation is different and deserves a dedicated analysis.
Official sources
- Tax treaty between France and Italy signed in Venice on 5 October 1989, full text – impots.gouv.fr (in French)
- BOFiP, tax treaties between France and Italy – bofip.impots.gouv.fr (in French)
- BOFiP, rules for taxing the various types of income, France–Italy treaty – bofip.impots.gouv.fr (in French)
- Agenzia delle Entrate, optional regime for new residents, legislation and practice – agenziaentrate.gov.it
- Article 964 of the French Tax Code (code général des impôts), real estate wealth tax – Légifrance (in French)
- Article 244 bis A of the French Tax Code (code général des impôts), real estate capital gains of non-residents – Légifrance (in French)
- Article 197 A of the French Tax Code (code général des impôts), minimum rate applicable to non-residents – Légifrance (in French)
- Article 167 bis of the French Tax Code (code général des impôts), exit tax – Légifrance (in French)
This article sets out the law for general information purposes, as verified at the date of publication. Foreign law is presented subject to confirmation by a local adviser. It does not constitute legal advice. Every situation is different and deserves a dedicated analysis. Content compliant with the professional conduct rules of the legal profession.
