Technical article

Italy: Does the EUR 300,000 Flat Tax Cover Money from a Trust?

The flat tax is a fixed price, so it fits larger foreign incomes better than small ones.

By Neil Solomon · 3 min read

Picture a couple in the United States with a trust for their son. The son has lived abroad most of his adult life and is thinking of moving to Italy. He has read that Italy lets new residents pay a flat sum a year on all foreign income. He asks whether a payment from his parents' trust sits inside that sum.

Start with the flat tax itself. PwC, tier B, gives these figures.

The PwC pages themselves differ by date: they show EUR 200,000 for earlier opt-ins and EUR 300,000 from 2026. A family looking at a 2024 article and a 2026 article may see both figures. Both are right for their year.

The flat tax is a sum for foreign income. The trust has its own rules, and the sources describe them from the other side. For a foreign trust that is opaque and sits in a low-tax place, a 2019 article from the law firm Withers says that payouts to an Italian resident are presumed to be income from capital unless the person proves they are capital. Capital payouts are not taxed as income. The low-tax test is a rate below 12%, and countries in the European Union or the wider European Economic Area with information exchange are left out. That is tier B. The article gives no rate for the income case.

A beneficiary may also have to disclose the trust. A 2021 ruling of the Italian revenue agency, reported on a legal blog (tier U), says a discretionary beneficiary of a foreign irrevocable opaque trust declares the interest in section RW of the return. PwC says the flat tax replaces the yearly levies in the table.

Then the inheritance side. Italy taxes the heir at 4% on amounts above EUR 1 million per heir for a spouse and direct line (child, parent). Siblings pay 6% above EUR 100,000, other relatives to the fourth degree pay 6%, and everyone else pays 8%. The tax also applies to transfers from trusts. It is paid on self-assessment within 90 days of filing the inheritance return, from 1 January 2025.

Italy counts a person as resident with more than 183 days in the year, or when the person is registered in the population register for most of the year. The top income rate is 43% over EUR 50,000, plus a regional 1.23% to 3.33% and a municipal 0% to 0.9%, which PwC's figures put at around 47% altogether.

You might say: "EUR 300,000 is a lot to pay if my son's trust income is small." That is a fair point. The flat tax is a fixed price, so it fits larger foreign incomes better than small ones. For a small payout the ordinary rates and the trust rules above may cost less. Only the heir's own numbers can show which side of that line he sits on.

You could set three figures side by side for him: the flat sum, the ordinary rate on his trust payouts, and the 4% inheritance line for later. You could also ask the trustee whether the trust is opaque and where it sits, since that decides which Italian rule is read.

The family reach is wide. The flat tax adds EUR 50,000 for each relative who joins, so a wife and a grown child change the price. An inheritance reaches each heir by relationship.

Has a relative of yours moved to Italy and looked at this flat tax? Share what they found. Someone weighing the same sum may find it useful.

Figures are estimates for planning, based on public data. Date read: October 2026.