Flat Tax Increase: Who Is Affected?
Effective January 1, 2026, Italy's substitute tax on foreign-source income for new residents increases to €300,000 per year, up from €100,000 previously, then €200,000. Family members included in this regime must pay €50,000 per person per year.
This is an annual cost, not a one-time fee. If you are a single investor with €300,000 in foreign-source income, you will pay €300,000 in taxes instead of calculating progressive standard taxes. If your spouse is also included, add €50,000. If you have children, add €50,000 per child.
Why the Increase?
This change was announced in the 2026 Budget Law (announced December 30, 2025). The Italian government has not publicly explained the rationale, but the broader trend is that EU countries are tightening preferential tax regimes for foreign nationals. While Portugal is removing real estate from its Golden Visa and now requires €500,000 in a fund, Spain closed its real estate Golden Visa track in April 2025, and Greece restructured its program into three zones with real estate thresholds ranging from €400,000 to €800,000.
Drawback: Higher Annual Costs
If you have high foreign-source income, the €100,000 increase per year is significant. A family of three (spouse plus one child) will pay €400,000 annually (€300,000 + €50,000 + €50,000). This is not a one-time investment but a fixed annual cost as long as you maintain this regime.
However, the Investor Visa program does not require a minimum number of days in Italy for renewal, but to qualify for permanent residency (after 5 years) or Italian citizenship (after 10 years), you typically need to spend more than 183 days per year in Italy. So if your goal is only residency, you may be able to avoid this requirement.
Italy Remains the Cheapest Option in the EU
The Italy Investor Visa continues to operate without processing backlogs, with a minimum investment of €250,000, making it the most accessible traditional EU Golden Visa in 2026. The program stands out for requiring no minimum physical presence for renewals, with investments executed only after approval (eliminating upfront financial risk), and it offers one of the lowest entry points in the EU at €250,000 for innovative startups.
The Investor Visa Committee typically issues a Nulla Osta (preliminary approval) within 45 to 60 days from application submission, and currently has no backlog. Compared to Portugal (with prolonged AIMA processing delays), this is a clear advantage.
Who Should Consider This?
If you have low or no foreign-source income, this tax increase does not affect you. The flat tax regime is optional, not mandatory. You can choose standard Italian taxation if you prefer.
If you have high foreign-source income and are considering Italy, compare: €300,000 per year in Italian taxes versus standard taxes in your current country of residence. If you are currently living in a high-tax country, the flat regime may still be beneficial.