Italy’s 2027 Draft Budget Bill introduced an exit tax for individuals. Since then, the question I hear most is not how the tax works, but whether it changes the case for moving to Italy under the flat tax regimes.
Some advisers in other jurisdictions have suggested that it does. A closer reading of the draft points the other way.
Everything here rests on a draft. Article 17 of the bill, which contains the measure, must clear Parliament by the end of December, and lawmakers rarely approve a budget exactly as first published. Any conclusion today is provisional, and it would be a mistake for anyone to restructure his affairs or change his plans in haste.
Lump-sum coverage
The exit tax rests on a fiction: On departure, the individual is treated as if he had sold his financial assets at market value. Under the draft, that deemed gain belongs to the last year of Italian residence and follows the rules that would ordinarily apply to it.
For a resident under the Article 24-bis regime, gains on foreign assets are foreign-source income, and the annual lump sum already covers foreign-source income for that year. If an actual sale in the last year of residence would not have cost any additional Italian tax, it is hard to see why a deemed sale should.
Several practitioners in Italy have reached the same conclusion publicly, and I share it. What remains exposed is narrow.
Italian assets, such as shares in Italian companies, fall outside the regime anyway, as do assets in any country the resident chose to exclude from it. The rule that taxes qualified shareholdings sold in the first five years of the regime should rarely come into play, since the exit tax only applies after six years of residence.
Two caveats apply. Nothing in the draft says any of this in terms, and an express coordination clause would spare both taxpayers and the tax authority a future dispute. And the protection depends on timing: Someone who stays beyond the 15-year life of the regime and leaves in a year taxed under ordinary rules would not benefit from it.
Foreign pensioners
Pensioners under the 7% regime of Article 24-ter benefit from the same reasoning, with one nuance. The 24-bis charge is a fixed amount, so a deemed gain adds nothing to it. Under 24-ter, the charge is a percentage of foreign income.
On the same reading, a deemed gain on foreign assets would at most fall within the 7% base, rather than attract the ordinary 26% rate. Here too, leaving while the regime is in force is what preserves the benefit.
Planning tools
If anything, the debate is a reminder that a move to Italy works best when a family organizes its wealth from the outset. Holding companies and trusts could reduce exposure, because the individual no longer owns the assets directly. They need to be genuine tools for asset protection and succession, used in line with the Revenue Agency’s published guidance, including its 2022 circular on trusts.
Flat tax residents also have a practical window. Reorganizing foreign assets during the regime years falls under the lump sum and can reset the tax base without additional Italian tax.
Procedural tools help as well. Article 24-bis already allows a ruling request before arrival, and once Parliament enacts the exit tax, residents can ask the Revenue Agency how it applies before departure.
If the final text or its guidance frames the charge as an anti-avoidance measure, there may also be room to show that a particular move is not tax-driven. That will depend entirely on the final wording.
No one welcomes an exit tax. Many European countries already apply one, and Italy was something of an exception.
On the current draft, families who have moved under the flat tax, or are considering it, should see very little change, provided they plan their affairs with some care. The text that counts is the one Parliament approves in December, and it will deserve a close reading.
IMI program guide: Italy Investor Visa
