Prime Minister Giorgia Meloni's government has proposed increasing the annual flat tax paid by wealthy foreigners residing in Italy from €200 to €300 starting January 1, 2026. The measure is part of the country's budget plan for the following year.
The tax regime, created in 2017 by Matteo Renzi's government, was designed to attract high-income professionals, investors and foreign retirees. Known as the “CR7 rule”, in reference to former player Cristiano Ronaldo, the model allows foreign residents to pay a fixed annual amount on income generated outside Italy.
The proposed adjustment, which still needs to be approved by Parliament, will not be retroactive. In other words, it will not affect those who already benefited from the scheme in previous years. In 2024, the amount had already been doubled, from €100 to €200.
The current system offers significant savings by exempting the progressive IRPEF (Personal Income Tax) rate, which reaches 43% on income above €50 per year.
Despite its popularity among millionaires, especially in cities like Milan, the measure's economic impact has been questioned. Economy Minister Giancarlo Giorgetti stated that it is still "very difficult to assess" how much beneficiaries have actually invested in the country.
In addition to domestic criticism, the policy has been the target of accusations of "fiscal dumping" from France. In September, then-French Prime Minister François Bayrou criticized the Italian model, claiming it harms neighboring countries. The Italian government called the accusation "completely unfounded."
Currently, other European countries also offer tax incentives to high-income foreigners. Greece charges €100 per year to foreign residents with investments of at least €500 in the country. Portugal, on the other hand, adopts a 20% tax rate on local income and exemptions on part of earnings abroad, aimed at qualified professionals.
FOLLOW-US
