With the 2026 Budget Law, the substitute tax on foreign income for new residents rises from €200,000 to €300,000 a year. It is the second increase in eighteen months: the regime was born in 2017 at €100,000 and was doubled in August 2024.
In December, in conversations with families weighing a move, the question was always the same: is it still worth it? The honest answer is that it depends less on the figure than it seems.
What it provides, in brief
The regime remains optional and lasts up to fifteen years. It covers only income produced abroad: what is earned in Italy is taxed as for everyone else. It is open to people who have not been tax resident in Italy for at least nine of the last ten years.
- €300,000
- the annual tax for those moving from 2026
- €50,000
- for each family member included
- 15 years
- the maximum length of the regime
Those who had already opted in keep the terms of their year of entry. The increase applies to those arriving now.
Why the figure weighs less than people think
For the wealth the regime is aimed at, a fixed tax is a predictable line in the budget, and predictability is precisely what is being sought. People who choose Milan rarely do so over a difference of one hundred thousand euros: they do it for the international schools, for an airport half an hour away, for a city where real work gets done, for the quality of everyday life.
The regime also brings exemption from wealth taxes on foreign investments and property, and from inheritance and gift tax on assets located outside Italy. Over the long term, these aspects often matter more than the annual fee.
The flat tax opens the door. What makes people stay is the city.
What it means for the housing market
In recent years new residents have supported demand in the central districts: Brera, the Quadrilatero, Magenta, Palestro, CityLife. They look for generous floor areas, high floors, light, a concierge, often a terrace. It is a segment where quality supply is structurally scarce, and where a handful of deals set the price.
A higher entry cost may make this demand more selective, not necessarily weaker. It is reasonable to expect fewer impulse purchases and more families with a precise life plan, who expect flawless documentation and firm timelines.
Three pieces of advice for those considering the move
- Residence first, then the home: renting for a few months in a district you are considering avoids hasty choices.
- Involve a tax adviser early: the option is exercised through the tax return and must be built to measure.
- Search with discretion: in Milan, the best homes often never appear on the portals.
Milan did not become less attractive on 1 January. If anything, it became a little more demanding. And demanding cities, over time, tend to reward those who choose them.
Real estate advisor · Milan