Italy has introduced a significant change affecting internationally mobile individuals and high-net-worth taxpayers considering relocation.
A newly approved law, already in force following its publication in the Official Gazette, provides that the Italian flat tax regime for new residents will no longer be compatible with the inbound workers regime (impatriati).
However, the restriction will only apply to individuals who transfer their tax residence to Italy starting from the 2027 tax year.
This delayed entry into force is where the real story lies.
Both Regimes Remain Combinable Through 2026
The new rule creates a transitional window that remains open until the end of the 2026 tax year.
Individuals who become Italian tax residents by 2026 will still be able to combine the two regimes, provided all conditions are met.
This includes access to:
- The flat tax regime (currently €300,000, from 1 January 2026), and
- The inbound workers regime in the revised framework introduced from 2024.
In practical terms, this means that, for a limited period, taxpayers may still structure their relocation to benefit from both regimes simultaneously, achieving a favourable tax position.
From 2027 onwards, this combination will no longer be available.
Each Regime Runs on Its Own Clock
While the transitional window presents a clear opening, the interaction between the two regimes is far from automatic.
Each regime follows its own timing rules and access conditions, which must be carefully aligned.
For example:
- The flat tax regime must generally be exercised within the first tax return following the transfer of residence (or, at most, within a limited timeframe thereafter). It cannot be deferred indefinitely.
- The inbound workers regime may apply either through payroll (via the employer) or through the tax return, but recent guidance from the Italian tax authorities has introduced interpretative constraints and practical limitations.
This creates a number of borderline scenarios, particularly in cases involving:
- Partial years of residence,
- Changes in employment status,
- Individuals transitioning from one regime to another, or
- Complex international income structures.
The Interpello as a Safeguard
Given the technical complexity and the increasing scrutiny surrounding special tax regimes, advance certainty becomes important.
In this context, the Italian tax ruling procedure (“interpello”) can play a key role.
A ruling allows taxpayers to formally present their specific situation to the Italian tax authorities and obtain an official position on the applicability of the regime(s), particularly in grey or borderline cases.
This is especially relevant where:
- The timing of the relocation is close to the 2027 cut-off,
- The interaction between regimes is not clearly addressed by existing guidance, or
- There is a risk that the tax authorities may challenge the structure.
Current Residents Face a Regime Choice Too
The new rule is not only relevant for future arrivals.
It also creates a strategic decision point for individuals who have already relocated to Italy and are currently applying, or considering applying, to one of the two regimes.
In these cases, the choice between the flat tax and the inbound workers regime may have long-term consequences and requires a careful evaluation of:
- The nature and source of income,
- Expected future income streams,
- Family and asset structure, and
- The duration and sustainability of the chosen regime.
In some cases, a switch between regimes may be considered, but this must be assessed in light of strict timing rules and potential interpretative risks.
At first glance, the new legislation represents a restriction. In practice, however, it introduces a clear planning horizon.
The period between now and the end of 2026 offers a narrowing window to combine both regimes before the restriction takes effect.
From 2027 onwards, the framework will become more rigid. As is often the case in international tax planning, timing will matter.
