Italian Lump Sum Tax Regime: From €100,000 to €200,000, but only for new joiners

The Italian Government has issued the Law-Decree No. 113 of 9 August 2024 (Decree), approved by the Parliament through Law No. 143 of 7 October 2024, increasing the annual substitute tax due by the main applicant under the Lump Sum Tax Regime (Regime) from €100,000 to €200,000.

The Decree includes a grandfathering clause under which the above increase will be applicable only to those that move their habitual abode to Italy after the date of effect of the Decree, i.e. on 11 August 2024 or later. 

The Decree does not amend any of the other features of the Regime. Notably, the increase affects only the amount of annual substitute tax due by the main applicant while qualifying family members are still able to benefit against the annual payment of a €25,000 substitute tax.

The absence of any other changes to the Regime and the introduction of a grandfathering clause shows that the Government is supportive of the Regime. It also shows that the Government appreciates that HNWIs relocated to Italy because of the attractiveness of the Regime and that it would not be fair to change the rules applicable to those who had already moved to the country. It is worth noting that a grandfathering provision was adopted by the Government also when, in late 2023, it amended the so-called “Impatriate Regime”, another of the regimes meant to attract individuals to relocate to Italy. 

Nicola Saccardo, Head of the Italian Team, commented: “even after the increase of the annual substitute tax, the Regime remains one of the most appealing worldwide for HNWIs given the significant benefits provided (which have remained unchanged). The decision taken by the Government appears to be aimed simply at containing within a reasonable number those who relocate to Italy. Furthermore, the policy enacted with the grandfathering clause grants to those who will decide to relocate a reassurance of stability as they can reasonably expect to be “grandfathered” in the event of changes in the future. Individuals relocating from the UK (as a result of the expected tax changes) and France (as a result of the uncertain environment following the recent elections) may therefore still rate Italy as one of the most attractive destinations”.