In brief
Someone who for more than 183 days in the tax year is physically present in Italy, habitually lives there, has the centre of their personal and family relationships there, or is registered in the population register of an Italian municipality, is as a rule an Italian tax resident and taxed on worldwide income. New residents have three main special regimes: a flat tax of EUR 300,000 a year on foreign income for those moving from 2026, a 50% (or 60%) exemption on employment income under the impatriati regime, and a 7% tax on pensions and foreign income for retirees moving to small towns in the south. Israel and Italy have a treaty for the avoidance of double taxation, which decides cases of dual residency by permanent home, centre of vital interests, habitual abode and nationality. The move does not in itself end Israeli residency, so both sides need to be planned together.
Key takeaways
- 1Italian tax residency: more than 183 days in the year (including parts of days) of physical presence, habitual residence, a centre of personal and family relationships, or registration in the population register. Registration creates a rebuttable presumption.
- 2IRPEF in 2026: 23% up to EUR 28,000, 33% up to EUR 50,000 and 43% above that, plus a regional tax of 1.23% to 3.33% and a municipal tax of up to 0.9%.
- 3Flat tax for new residents (Article 24-bis): EUR 300,000 a year and EUR 50,000 for each family member, for those moving from 1 January 2026, for up to 15 years, on condition of not having been an Italian resident in 9 of the previous 10 years.
- 4Impatriati (Article 5 of D.Lgs. 209/2023): only 50% of employment income in Italy is taxable (40% with a minor child), up to EUR 600,000 a year, for 5 tax years, with an undertaking of 4 years of residence.
- 5Retirees: 7% on pensions and foreign income for 10 years, on moving to a municipality with fewer than 20,000 inhabitants in eight southern regions.
- 6From 2027 the flat tax may not be combined with impatriati (Decree 38/2026), and from 1 January 2027 a new income tax code (D.Lgs. 117/2026) enters into force that changes the article numbers.
This guide explains what happens to the taxes of an Israeli who moves to live in Italy: when they become an Italian tax resident, which special regimes are open to them in 2026, what the Israel-Italy treaty provides, and what remains on the Israeli side. On the residence visas themselves, see our guide on residence routes in Italy. The figures are correct as of November 2026.
When does an Israeli moving to Italy become an Italian tax resident?
Under Article 2 of the Italian Income Tax Code (TUIR), as amended by D.Lgs. 209/2023 from 2024, a person is an Italian tax resident if for more than 183 days in the tax year, including parts of days, one of four tests is met: physical presence in Italy, habitual residence (residenza), the centre of personal and family relationships (domicilio) or registration in the population register.
- Physical presence: a new test from 2024. Even part of a day counts as a day of presence.
- Habitual residence: the place where a person usually lives and intends to live on a stable basis, even if not continuously.
- Domicilio: redefined as the main centre of personal and family relationships, and no longer the centre of business and interests.
- Registration in the population register (anagrafe): someone registered for most of the tax year is presumed resident, unless they prove otherwise.
The test is applied by full calendar tax year, and status is determined for the whole year. A practical conclusion follows: someone who arrives in Italy in mid-year and registers with the municipality, or is there for most of the year, may be treated as resident already for the year of arrival. The timing of municipal registration and of the actual move is part of the planning, especially when you want to enter a special tax regime.
An Italian citizen living in Israel is usually registered in the register of Italians resident abroad (AIRE). When they return to live in Italy and cancel the AIRE registration in favour of municipal registration, the registration presumption applies to them. The reverse is also true: an Italian citizen who left Italy and did not register in AIRE may continue to be treated as registered as a resident.
What does an Italian resident pay tax on, and at what rates?
An Italian resident is taxed on worldwide income. Italy has no “remittance” basis, meaning tax applies even to income that stays in an account abroad. The exception is the flat tax regime for new residents, which replaces tax on foreign income with a fixed annual amount.
| Tax | Rate in 2026 | Note |
|---|---|---|
| IRPEF up to EUR 28,000 | 23% | National income tax |
| IRPEF from EUR 28,001 to 50,000 | 33% | |
| IRPEF above EUR 50,000 | 43% | |
| Regional tax | 1.23% to 3.33% | Depending on the region |
| Municipal tax | 0% to 0.9% | Depending on the municipality |
| IVIE on real estate abroad | 1.06% | For example on an apartment in Israel; foreign property tax paid is credited |
| IVAFE on financial assets abroad | 0.2% | Bank account: EUR 34.20 per account, not applicable to an average balance below EUR 5,000 |
An Italian resident also reports in the annual return financial assets and real estate held abroad. An apartment in Israel, a bank account in Israel and a keren hishtalmut (Israeli study fund) are examples of assets that need to be considered. On the taxation of rental income from a property in Italy, see the guide to letting property in Italy.
What is the flat tax regime for new residents, and how much does it cost in 2026?
Under Article 24-bis of the TUIR, a new resident can elect to pay a fixed annual tax on all foreign income, instead of ordinary tax. The 2026 Budget Law (Law 199/2025) raised the amount to EUR 300,000 a year, and EUR 50,000 for each family member who joins, for those who move their residence to Italy from 1 January 2026.
- Threshold condition: not an Italian tax resident in at least 9 of the 10 years before the move.
- Duration: up to 15 years.
- What is covered: foreign-source income. Italian-source income is taxed as usual.
- Related exemptions: according to PwC, the regime also replaces the wealth tax on real estate and financial assets abroad and the obligation to report foreign assets. Professional sources also mention an exemption from Italian inheritance and gift tax on assets located abroad.
- Those who moved earlier: someone who moved before 2026 continues to pay EUR 200,000, or EUR 100,000 depending on the date of the move, and EUR 25,000 per family member.
- Procedure: the election is made in the annual tax return, and it is customary to request an advance tax ruling (interpello) first.
The regime mainly suits those with very high foreign income, for example from dividends, interest or the sale of holdings. For most families moving to Italy, the amount is higher than the tax they would pay under the ordinary system, so it is worth calculating before electing.
What is the impatriati regime for workers moving to Italy?
The regime for returning and incoming workers (impatriati), under Article 5 of D.Lgs. 209/2023, exempts from tax part of employment or self-employment income produced in Italy: only 50% of it is included in taxable income, up to EUR 600,000 a year. Someone who moves with a minor child, or who has or adopts a child during the period, is taxed on only 40% of the income.
- Years abroad: not an Italian tax resident in the 3 tax years before the move. If they work for the same employer or group they worked for abroad, 6 years are required, and 7 years if they worked for them in Italy before leaving.
- Work in Italy: the work is performed in Italy for most of the tax year.
- High qualifications: meeting the requirements of high qualification or specialisation under the legislation the article refers to.
- Undertaking: to remain an Italian resident for at least 4 years. Someone who leaves early loses the benefit and repays it with interest.
- Duration: the year of the move and the following four tax years.
In ruling 2/E of 12 January 2026, the Italian tax authority held that remote work from Italy for a foreign employer does not in itself exclude the regime, as long as the work is performed in Italy for most of the period and the other conditions are met. This is relevant to Israelis who continue to work remotely for an Israeli company, subject to checking all the conditions, including the high-qualification condition.
Tax Decree 38/2026 provided that someone who moves their tax residency to Italy from tax year 2027 onwards will not be able to combine the flat tax on foreign income with the impatriati regime on employment income in Italy. According to publications by Italian firms, someone who became resident by 2026 can still combine the two if they meet the conditions of both.
How does the 7% regime for retirees in southern Italy work?
A retiree who receives a foreign pension and moves their residence to a municipality with fewer than 20,000 inhabitants in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia can elect a 7% tax on the pension and other foreign income, for 10 years: the year of the move and the following nine years.
- Was not an Italian tax resident in at least the 5 tax years before the regime starts.
- Receives income from a foreign pension.
- Moves from a country that has an administrative cooperation agreement in force with Italy.
- The election is made in the tax return for the year of the move, and one or more countries can be excluded from it.
Under Article 18 of the Israel-Italy treaty, a pension in respect of past employment paid to a resident of one of the countries may be taxed only in the country of residence. So a pension from an Israeli pension fund received by someone who has become an Italian resident can be expected to be taxed in Italy, not in Israel. The exception is a government pension for service to the state (Article 19), which as a rule remains taxable in Israel, unless the recipient is an Italian resident and national. Before relying on this, arrange an exemption from withholding with the pension fund and the Israel Tax Authority, and check how lump-sum withdrawals and benefits from the National Insurance Institute (Bituach Leumi) will be classified.
How do the regimes compare?
| Ordinary taxation | Flat tax (24-bis) | Impatriati | 7% for retirees | |
|---|---|---|---|---|
| For whom | Every resident | People with high foreign income | Highly qualified employees and self-employed people | Retirees with a foreign pension |
| What is taxed | Worldwide income, 23% to 43% plus local taxes | Foreign income: EUR 300,000 a year (50,000 per family member) | 50% (or 40%) of employment income in Italy, up to EUR 600,000 | 7% on pensions and foreign income |
| Years outside Italy | Not relevant | 9 of 10 | 3, or 6 to 7 with the same employer | 5 |
| Duration | Unlimited | Up to 15 years | 5 tax years | 10 years |
| Location condition | None | None | Work in Italy for most of the year | A municipality with fewer than 20,000 inhabitants in eight southern regions |
| Italian income | Taxed as usual | Taxed as usual | This is the core of the benefit | Taxed as usual |
What happens if both Israel and Italy consider you resident?
Under Article 4(2) of the treaty for the avoidance of double taxation between Israel and Italy, signed in Rome on 8 September 1995, an individual's dual residency is decided in a fixed order: permanent home, and if there is one in both countries, the centre of vital interests, meaning the place where personal and economic relations are closer. If there is still no decision, the place where they habitually stay, then nationality, and finally agreement between the tax authorities.
In practice: someone who moves to Italy but leaves in Israel a vacant apartment, an active business and family members may end up in a situation where both countries consider them resident, and the treaty will decide in Israel's favour. For the decision to go in Italy's favour, the home, family and activity must actually move there, and there must be documentation of this. On Israel's tax treaties in general, see the overview of Israel's tax treaties.
| Type of income | Maximum withholding under the treaty | Note |
|---|---|---|
| Dividends | 10% for a company holding at least 25%; 15% in other cases | 15% applies to individuals |
| Interest | 10% | |
| Royalties | 10%; 0% on copyright in literary, artistic and scientific works | |
| Private pension | Taxed only in the country of residence (Article 18) | Government pension: Article 19 |
| Salary | Taxed in the country where the work is performed (Article 15) | With an exception for a short stay of up to 183 days |
The rates for dividends, interest and royalties are also detailed in the guide to corporate tax in Italy and dividends to Israel.
What happens to Israeli residency when you move to Italy?
Israel examines the centre of life. Under the Israeli Income Tax Ordinance, presence of 183 days in a tax year, or of 30 days in the year and 425 days in total over the year and the two preceding years, creates a presumption that the centre of life is in Israel. The presumptions can be rebutted, but even someone who does not meet them is still examined under the centre-of-life test.
- What remains taxable in Israel even after the break: Israeli-source income, such as rent from an apartment in Israel, which the treaty allows Israel to tax, in which case Italy gives a credit under the treaty rules.
- Israeli company: someone who continues to hold and manage an Israeli company from Italy needs to check where the company is managed and controlled, and how salary and dividends will be taxed after the move.
- Assets and returns: leaving Israel may be a tax event for certain assets, and this should be checked before the move.
- National Insurance: Israel and Italy have a social security agreement, in force from 1 December 2015, covering old age, survivors and disability. It does not cover maternity, work injury, children and unemployment. Your status with the National Insurance Institute and the health fund needs a separate check.
Our general guide on ending Israeli tax residency and relocation, coming soon, sets out the declaration procedure, exit tax and reporting. In the meantime, the reporting obligations on assets and income abroad are gathered in the guide to the Israeli side. The decision on the timing of the break and how to report is best made together with an Israeli accountant.
What changes in 2027 with the new income tax code?
D.Lgs. 117/2026, published on 3 July 2026, is a new consolidated code of Italian income tax law, and its provisions enter into force on 1 January 2027. According to publications, it is mainly a reorganisation of existing provisions. Article 5 of D.Lgs. 209/2023 on impatriati was repealed by the new decree, and the regime's provisions move to the code, according to publications to its Article 225. Anyone checking tax rulings, forms and employment contracts should note that article numbers are changing, and check the wording that applies in the relevant tax year.
What do you do in the first year of the move?
- Before the move: check residency in both countries for the year of the move, and decide whether to enter one of the special regimes. For the flat tax, it is recommended to request an advance tax ruling.
- Timing: set the actual date of the move and of municipal registration, taking into account the more-than-183-days rule and the conditions of the chosen regime.
- Codice fiscale: a tax identification number, needed for almost every transaction in Italy.
- Registration in the anagrafe: the municipal population register, which is also a presumption of tax residency.
- Employer or self-employed: notify the employer of the impatriati election, or open a self-employed file (partita IVA) and register for social security. For the self-employed in the Gestione Separata, a rate of 26.07% applies in 2026 to those not insured under another scheme.
- Israel: coordinate with an Israeli accountant on ending residency, the return for the year of the move, exemption from withholding on pensions or interest under the treaty, and National Insurance status.
- Map assets abroad: a list of accounts, apartments and investments for reporting in Italy, and calculation of IVIE and IVAFE.
- The first annual return: file the Italian tax return for the year of the move, including the election of the special regime if relevant.
Italy has inheritance and gift tax: 4% above EUR 1 million per heir for a spouse and relatives in the direct line, and higher rates for other relatives. An Italian resident holding assets in Israel should review intergenerational planning in both countries.
This guide is general information correct as of November 2026 and is not tax advice, and every case requires individual review with accountants in Israel and in Italy.
More on relocating to Italy: Residence routes and status in Italy · Ending Israeli tax residency · Moving abroad with an Israeli company or business · The family legal checklist
Frequently asked questions
How many days do you need to be in Italy to be a tax resident?
More than 183 days in the tax year, including parts of days, but this is only one of four tests. Someone who habitually lives in Italy, has the centre of their personal and family life there, or is registered in the population register for most of the year is also treated as resident, even if not physically present for 183 days.
How much does the flat tax regime in Italy cost in 2026?
EUR 300,000 a year on all foreign income, plus EUR 50,000 for each family member who joins, for those who moved their residence to Italy from 1 January 2026. Those who moved earlier continue to pay EUR 200,000 or 100,000 depending on the date of the move. The regime lasts up to 15 years.
Can an Israeli working remotely for an Israeli company benefit from impatriati?
Possibly. The Italian tax authority held in January 2026 that remote work from Italy for a foreign employer does not in itself exclude the regime. All the conditions must be met: at least 3 years outside Italy, work in Italy for most of the year, high qualifications and an undertaking of 4 years of residence.
Will an Israeli pension be taxed in Italy?
Under Article 18 of the treaty, a private pension in respect of past employment is taxed only in the country of residence, meaning in Italy if you have moved there. A retiree moving to a small town in southern Italy can consider the 7% regime. A government pension is generally taxed in Israel, and an exemption from withholding should be arranged with the pension fund.
Is there a tax treaty between Israel and Italy?
Yes. The treaty was signed in Rome on 8 September 1995 and entered into force in 1998. It sets tie-breaker tests for dual residency, maximum withholding of 10% or 15% on dividends, 10% on interest and 10% on royalties, and a credit to avoid double taxation.
Can the flat tax be combined with impatriati?
For those who become Italian residents from tax year 2027 onwards, no: Decree 38/2026 prohibited the combination. According to professional publications, someone who became resident by 2026 can combine them if they met the conditions of both regimes, and it is worth securing this with a tax ruling.
Does moving to Italy automatically end Israeli residency?
No. Israel examines the centre of life, and the day-count presumptions continue to apply. If both countries consider you resident, the treaty decides by permanent home, centre of vital interests, habitual abode and nationality.
Do you have to pay tax in Italy on an apartment in Israel?
An Italian resident is generally liable to a 1.06% wealth tax on real estate abroad (IVIE), from which foreign property tax paid is credited. Rental income from the apartment is taxed first in Israel under the treaty, and is also reported in Italy with a credit. According to PwC, someone who elected the flat tax is exempt from IVIE.
Read next · 12 min readCorporate Tax in Italy and Dividends to Israel: IRES and IRAP in 2026, Treaty Withholding Tax and What Happens in IsraelItalian corporate tax 2026: 24% IRES and 3.9% IRAP, treaty withholding on dividends to Israel (10% or 15%), interest, royalties and Israeli reporting.Read the guideSources
- Normattiva - Law 371/1997 ratifying the Italy-Israel double taxation convention (Rome, 8.9.1995), arts. 4, 15, 18, 19
- PwC Worldwide Tax Summaries - Italy, Individual: Residence (last reviewed 23 July 2026)
- PwC Worldwide Tax Summaries - Italy, Individual: Taxes on personal income (IRPEF 2026, flat tax, 7% regime)
- PwC Worldwide Tax Summaries - Italy, Individual: Other taxes (IVIE, IVAFE, inheritance, social security)
- PwC Worldwide Tax Summaries - Israel, Individual: Residence
- Normattiva - D.Lgs. 209/2023, art. 5 (impatriati), repealed by D.Lgs. 117/2026
- Normattiva - D.Lgs. 19 giugno 2026, n. 117 (Testo unico delle imposte sui redditi)
- BonelliErede (Belex) - Recent developments on Italian tax incentives for individuals, after Law Decree 38/2026 (5 June 2026)
- Dottrina Lavoro - Agenzia delle Entrate, risposta 2/E del 12 gennaio 2026 (impatriati, lavoro da remoto per datore estero)
- Bituach Leumi - Existing social security conventions (Italy, in force 1.12.2015)
- Taxing.it - Translation of art. 5 D.Lgs. 209/2023 (impatriates relief)
- PwC Worldwide Tax Summaries - Italy, Corporate: Withholding taxes (treaty rates, Israel)
