Italian Flat Tax vs. UK Non-Dom Regime: A Smart Comparison for Global HNWIs

Choosing where to live is never just about lifestyle—it’s also about optimizing taxation, legacy, and long-term planning. For high-net-worth individuals with international income, two of the most attractive options in Europe have long been the UK non-dom regime and Italy’s flat tax for new residents.

But which one offers better value? Which one is more flexible? And more importantly, which one aligns with your future plans?

Let’s explore how these two regimes compare—beyond the surface-level tax rates—to help you make an informed decision.

1. The Basics: Two Systems, One Goal

Both the Italian flat tax and the UK non-dom regime are designed to attract wealthy foreigners by allowing them to shield foreign income from domestic taxation. But the structure and application of these regimes differ significantly.

Italy introduced its flat tax in 2017, offering a €100,000 annual payment (raised to €200,000 in 2023 for families) in lieu of ordinary taxation on foreign income. It’s a fixed, predictable solution.

The UK’s non-dom regime, on the other hand, allows eligible individuals to claim the remittance basis—meaning they are taxed only on income or gains brought into the UK. There is no flat amount, but the cost can rise with time, including annual charges of up to £60,000 after several years of residency.

2. Predictability vs. Flexibility

Italy offers certainty. You know exactly what you will pay each year. The €100,000 flat tax covers all foreign income and gains, regardless of the amount. Whether your offshore portfolio yields €300,000 or €3 million, the tax due remains the same.

In contrast, the UK non-dom system is more flexible—but also less predictable. You pay taxes only on what you remit, but you're exposed to scrutiny and complex reporting rules. There’s also a time limit: after 15 years of UK residency, you automatically become UK-domiciled for tax purposes.

For long-term planning, Italy’s flat tax regime offers peace of mind. There’s no limit on the number of years you can benefit, provided you remain a tax resident and apply correctly.

3. Scope of the Regimes

Italy’s flat tax applies to:

• All foreign income, including dividends, capital gains, rents, pensions, etc.

• Foreign assets, which are exempt from IVAFE and IVIE (Italy’s wealth taxes)

• Heirs, who can inherit foreign assets tax-free if the deceased was under the flat tax regime

UK’s non-dom status:

• Applies only if non-domiciled status is maintained

• Does not exempt foreign wealth from UK inheritance tax unless structured carefully

• Can be lost automatically after long-term residency

In essence, Italy offers a more holistic approach to wealth protection, especially in multigenerational planning.

4. Lifestyle and Compliance Considerations

Italy has simplified entry into the flat tax regime. No minimum stay is required, and there are no mandatory investments or donations. The only requirement is becoming a tax resident, meaning living in Italy more than 183 days per year.

The UK system has grown increasingly complex. Recent scrutiny over non-doms in Parliament has led to stricter regulations, increased fees, and growing public pressure for reform. For some, this creates uncertainty.

Italy, in contrast, is actively promoting its flat tax regime as a long-term strategy to attract wealthy residents—offering a stable and favorable legal environment.

And let’s not forget lifestyle: while London offers a world-class urban experience, many expats now find the Mediterranean life in Milan, Florence, or Lake Como a much more appealing trade-off—especially post-Brexit.

5. Estate and Succession Planning

One of the most strategic advantages of Italy’s flat tax is its effect on inheritance and gift taxation. While the UK applies a 40% inheritance tax on estates above £325,000, Italy’s flat tax residents can pass on foreign wealth without triggering Italian inheritance taxes.

This makes Italy extremely attractive for those with international wealth looking to protect their heirs. As long as the assets are outside Italy and the deceased was under the flat tax regime, zero inheritance tax applies on those foreign assets.

The UK offers options for trusts and exemptions, but the rules are more complicated, subject to change, and often require elaborate planning.

Conclusion: A Decision Beyond Taxation

While both Italy and the UK offer appealing tax benefits for wealthy expats, the decision ultimately comes down to your lifestyle priorities, wealth structure, and succession goals.

If you want simplicity, predictability, and long-term wealth protection, Italy’s flat tax is hard to beat. If you prefer flexibility and short-term optimization, the UK still offers advantages—but with growing uncertainty.

Each case is unique, and a careful analysis of your personal situation—residency history, source of wealth, and family goals—is essential.

Need Help Comparing Tax Regimes or Planning a Move?

At Knotted, we advise international families, entrepreneurs, and investors on how to make the most of Italy’s flat tax regime. From eligibility checks to structuring foreign wealth, we help you move smart—and stay compliant.

📧 Contact us at: info@knotted.ch

📱 WhatsApp us anytime: +41 76 771 30 22

Let’s make your next move the most tax-efficient one yet.