Italy's Flat Tax vs the UK Non-Dom Regime: A Comparison
July 2024: with the UK announcing the end of the non-dom regime, how Italy's flat tax for new residents compares on foreign income, cost, inheritance tax and families.
For more than two centuries, the United Kingdom has offered wealthy foreigners a way to live in London without paying UK tax on income kept abroad. In March 2024 the government announced that the non-dom regime will end in April 2025, and the new government elected on 4 July 2024 has confirmed the intention to abolish it. Many of the families concerned are now comparing the alternatives, and Italy’s flat tax for new residents is high on the list.
The two regimes solve the same problem in opposite ways: the UK taxes foreign income only if you bring it in; Italy taxes it at a fixed price wherever it stays. This article compares them as they stand today, and explains what the announced UK reform means.
The UK Non-Dom Regime Today
An individual who is UK resident but not UK domiciled can choose the remittance basis: UK tax is due on foreign income and gains only to the extent they are brought into the UK. After seven of the previous nine tax years of residence, using the remittance basis costs an annual charge of £30,000; after twelve of fourteen, £60,000. After fifteen of the previous twenty years, the individual becomes deemed domiciled and loses the remittance basis, and worldwide assets fall within UK inheritance tax, at 40%.
What the UK Has Announced
Under the plans announced in March 2024, from 6 April 2025 the concept of domicile will no longer matter for UK tax. New arrivals who have not been UK resident for the previous ten years will be exempt from UK tax on foreign income and gains for their first four years of residence, whether or not the income is brought into the UK. After four years, they will be taxed on worldwide income like any other resident. Inheritance tax is also expected to move to a residence-based test. The new government has confirmed the direction but has indicated that some details, including transitional rules, will be reviewed, so the final shape is not yet known.
Italy’s Flat Tax for New Residents
Italy’s regime is available to people who transfer their tax residence to Italy and were not Italian resident for at least nine of the previous ten years. It replaces Italian income tax on all foreign income and gains with a fixed annual payment of €100,000, plus €25,000 for each family member included, for up to fifteen years. Gains on qualifying shareholdings sold in the first five years are the main exception. Italian income is taxed normally. Foreign assets need not be reported, are outside Italian wealth taxes, and are outside Italian gift and inheritance tax during the regime.
Side by Side
Where the Differences Matter
Using the money. The remittance basis rewards keeping income offshore. A non-dom who wants to buy a home, pay school fees or simply live on foreign income in the UK pays tax on what is brought in, and the rules on mixed funds make that complex. Under the Italian flat tax, foreign income can be brought to Italy and spent freely once the fixed amount is paid.
Predictability. The UK cost depends on how much is remitted and grows with the years of residence. The Italian cost is known in advance for each year of the regime, regardless of income.
Long-term estate planning. UK non-doms eventually face UK inheritance tax on worldwide assets. During the Italian regime, gifts and inheritances of foreign assets are outside Italian tax, which makes the regime years a natural window for succession planning.
Families. In Italy, a spouse and children can be included in the option for €25,000 each, with the same exemptions.
Who Should Look at Italy
Italy suits families with large foreign incomes who want to live on them, not just hold them, and who value a fixed, predictable cost over a long period. It also suits those for whom inheritance tax is a central concern. It suits less well people whose income is mostly Italian-source, those with modest foreign incomes, for whom €100,000 may exceed the tax saved, and entrepreneurs planning to sell a significant shareholding in the first five years. For former UK residents, the UK’s own exit rules, and the treaty between the two countries, should be part of the analysis.
Our View
The end of the non-dom regime will push many internationally mobile families to choose a new base. Italy offers what the UK is withdrawing, a long-term regime for foreign income, with a fixed price, broad exemptions and the possibility of spending the money where you live. The comparison with other wealth destinations is worth making, but for families who want to live in Europe, Italy is now one of the strongest options.
Frequently Asked Questions
Is the UK abolishing the non-dom regime?
The UK government announced in March 2024 that the non-dom regime will end from April 2025, replaced by a four-year exemption for new arrivals. The new government elected in July 2024 has confirmed the intention, with some details under review.
How does Italy's flat tax compare with the UK remittance basis?
The UK taxes foreign income only when it is brought into the UK; Italy charges a fixed annual amount on all foreign income, whether or not it is brought to Italy.
How much is Italy's flat tax?
€100,000 a year for the main applicant and €25,000 for each family member, for up to 15 years, as of July 2024.
Do flat tax residents pay inheritance tax on foreign assets in Italy?
No. During the regime, Italian gift and inheritance tax applies only to assets located in Italy.
Can a former UK resident use Italy's flat tax?
Yes, if they were not Italian resident for at least nine of the previous ten years and transfer their residence to Italy.
Avv. Marco Mesina
Founder, Move to Dolce Vita · Avvocato, Milan Bar (Ordine degli Avvocati di Milano)
Marco is an Italian tax lawyer who advises individuals and families relocating to Italy on tax regimes, residency, citizenship, real estate and succession planning. Before founding Move to Dolce Vita he worked at Watson Farley & Williams, Withers and Deloitte in Milan.
- Milan Bar
- Citywealth Top 50 Italian Advisors 2025 & 2026
- Profiled by Forbes (2024)
- English · Italian · Spanish
