Italy Increases Lump Sum Tax to €300,000: The European Tax Residency Options for HNWIs evolve Again

Introduced in 2017, Italy’s lump sum tax framework was designed to attract internationally mobile individuals who had been non-resident in Italy for a qualifying period. Initially set at €100,000 per annum, the regime substituted Italian taxation on foreign-source income and gains for up to fifteen years.

Subsequent amendments increased the annual charge to €200,000 for new entrants, and Italy’s 2026 Budget Law now raises this to €300,000 for individuals becoming Italian tax resident from 1 January 2026. The annual substitute tax for qualifying family members has simultaneously doubled to €50,000 per person.

Although grandfathering provisions preserve the position of existing participants, the revised framework places Italy among the highest-cost tax residency options in Europe, reshaping its role from a broadly accessible relocation destination to a premium, high-commitment choice.

Italy’s reform is emblematic of a wider European reassessment of tax systems designed to attract internationally mobile capital and talent. Across several jurisdictions, long-standing frameworks are being refined to respond to fiscal pressures, public perception, and evolving policy priorities.

Common themes emerging across Europe include:

• Rising minimum tax contributions or baseline fiscal expectations for new residents.
• Greater differentiation between legacy participants and new entrants.
• Increased emphasis on policy defensibility and long-term sustainability, rather than short-term competitiveness.

For HNWIs, this changing context means that residency decisions are increasingly strategic, multi-factor exercises rather than purely tax-driven relocations.

Switzerland

Switzerland continues to attract interest through its expenditure-based Swiss Lump Sum Tax System, under which tax liability is determined by reference to living costs rather than actual income. While offering stability and discretion, negotiated tax bases frequently result in effective annual tax liabilities at or above high six-figure levels, particularly for globally mobile individuals with substantial lifestyles. As a result, Switzerland increasingly occupies the upper tier of European tax residency costs.

Malta

Malta is frequently considered alongside these jurisdictions due to its long-established Maltese Res Non-Dom Tax System based on stable residence and domicile principles, which operate within the general income tax system rather than as a standalone incentive. The jurisdiction offers a combination of EU membership, English-speaking administration, and flexible residence options, making it relevant for individuals seeking tax residence without automatic worldwide taxation, subject to appropriate structuring.

Portugal

Portugal’s former Non-Habitual Resident (NHR) regime has closed to new entrants and has been replaced by the IFICI regime (Incentive for Scientific Research and Innovation). IFICI is a more targeted framework aimed at attracting individuals engaged in qualifying scientific, research, and innovation-related activities, offering favourable tax treatment for certain employment and professional income streams. While narrower in scope than NHR, the IFICI regime keeps Portugal relevant for individuals whose professional profiles align with its eligibility criteria and reflects the broader European shift towards more selective tax residency frameworks.

Ireland

Ireland’s residence and domicile concepts, rooted in common law, continue to feature in international structuring discussions, particularly for individuals familiar with Anglo-Saxon legal systems. Increasing international scrutiny and domestic reform discussions highlight the importance of careful planning to maintain alignment with evolving compliance expectations.

Malta’s resident non-domiciled (RND) tax system is grounded in domestic income tax law and applies to individuals who are resident but not domiciled in Malta under Maltese legal principles. Unlike fixed-charge models, the RND framework avoids a worldwide basis of taxation and instead operates on a source and remittance basis.

In practice, this means:

• Maltese-source income is taxable in Malta.
• Foreign-source income is taxable only to the extent that it is remitted to Malta.
• Foreign capital gains are not subject to Maltese tax, even if remitted.

This structure allows for robust and sustainable tax planning, particularly for HNWIs and family offices with diversified international income streams and asset holdings.

Importantly, the RND tax system is not tied to a single immigration route. It may be enjoyed by individuals holding Maltese residence under a variety of lawful pathways, including the Malta Permanent Residence Programme (MPRP), the Malta Global Residence Programme (MGRP), the Retirement Programme, and other residence bases. Where Maltese citizenship is later obtained — including potentially under the Citizenship by Merit framework — taxation continues to be determined by residence and domicile rather than citizenship alone.

From a mobility perspective, Maltese residence permits non-EU nationals to reside in Malta while travelling within the Schengen Area, typically for up to 90 days in any 180-day period. For many individuals who view Italy or other Schengen states as a secondary or seasonal place of stay, this level of access meets practical lifestyle requirements without triggering Italian tax residence.

Where Maltese citizenship is subsequently acquired, individuals obtain full EU citizenship rights, including the freedom to live, work, and settle in any of the 27 EU Member States, including Italy, according to EU citizenship law.

Italy’s reform reinforces a broader directional shift across Europe: tax residency options are becoming more selective, more costly, and more structurally grounded. For HNWIs and family offices, effective planning increasingly turns on:

• Avoiding unintended worldwide taxation
• Securing long-term policy and legal certainty
• Aligning residence, mobility, and succession objectives

As European frameworks continue to evolve, jurisdictions offering principle-based taxation systems and flexible mobility outcomes are likely to remain central to sophisticated cross-border residency strategies.

Our Private Client Tax and Immigration teams advise internationally mobile individuals, families, and family offices on European tax residence, cross-border structuring, and mobility planning. We provide integrated advice on residence status, tax exposure, and long-term legal positioning across multiple jurisdictions, including Malta, Italy, and other key European destinations. Our approach focuses on clarity, compliance, and sustainability, helping clients assess residency options in light of evolving policy environments while aligning tax, lifestyle, and succession considerations.