'CR7 rule': What is Italy's flat tax for wealthy foreign residents?

"A controversial flat tax on foreign income for high earners relocating to Italy could increase by 50 percent next year as part of measures to fund the country's 2026 budget plan. If approved by parliament, the move would mark the second hike in two years, after Rome doubled the levy in August 2024. As concerns over the measure's fairness and its impact on property prices and living costs in major Italian cities continue, here's an in-depth look at Italy's imposta forfettaria"

"Often dubbed the CR7 rule' after former Juventus footballer Cristiano Ronaldo, Italy's flat tax on foreign income is a special fiscal regime allowing high-net-worth individuals moving to the country to pay a lump-sum tax on any income generated abroad. This means that all foreign-sourced earnings, including both passive (e.g., dividends, interest, and rental income) and active sources (employment or self-employment), are excluded from Italy's standard income tax IRPEF, which applies a rate of 43 percent to earnings over 50,000."

Italy's flat tax on foreign income allows high-net-worth individuals who move to Italy to pay a lump-sum annual levy on income generated abroad instead of the standard IRPEF. The regime, dubbed the CR7 rule, covers passive and active foreign-sourced earnings, excluding them from IRPEF, which charges 43 percent on earnings over €50,000. The annual levy is €200,000 and could rise to €300,000 on January 1 under the 2026 budget plan. The regime applies for up to 15 consecutive years and can be opted out of at any time without extra costs. It can be extended to relocating family members for an additional €25,000 per member; eligible relatives include spouse or civil partner, children, parents and siblings under Article 433 of the Civil Code.

Read at www.thelocal.it