Italian exit tax for individuals: the 2027 Budget Bill proposal for those moving their tax residence abroad

The current position: no exit tax for individuals until 2026

Until 31 December 2026, exit taxation applies only to those carrying on a business: Article 166 of Presidential Decree 917/1986 (TUIR), which implements Article 5 of Directive (EU) 2016/1164, taxes unrealised gains on business assets when the residence or the assets leave Italy. From 1 January 2027 the same rules move to Article 193 of the new Income Tax Code (Legislative Decree No. 117 of 19 June 2026), which replaces the TUIR (Articles 376 and 377).

For an individual who does not carry on a business, moving residence abroad is not currently a taxable event. The Italian Revenue Agency confirmed this in ruling No. 208 of 14 August 2025: a person moving abroad may keep their securities account in Italy under the administered savings regime and, if they revoke that option, doing so "does not constitute a taxable realisation of capital gains". Gains are taxed when the assets are sold, under the rules for non-residents and the tax treaty with the new State of residence. The general rules for leaving Italy are described in the guide on moving tax residence abroad.

The proposal: Article 17 of the 2027 Budget Bill and new Article 307-bis of the Income Tax Code

Article 17 of the Budget Bill for 2027-2029, approved by the Council of Ministers on 28 October 2026 (Bill A.C. 3174, submitted to the Chamber of Deputies on 30 October 2026), is headed "Exit taxation of persons not carrying on commercial businesses". It would add to Legislative Decree 117/2026 a new Chapter VI-bis containing Article 307-bis, placed right after the rules on the substitute tax on capital gains and other financial income (Articles 304-307, which from 2027 restate Articles 5-7 of Legislative Decree 461/1997).

According to the explanatory report to the Bill, the aim is to "preserve the Italian State's taxing rights over financial income accrued during tax residence in Italy and not yet realised when tax residence is moved abroad". The text refers to a decree of the Minister of Economy and Finance for the implementing rules (paragraph 8 of Article 307-bis): guarantees, refunds and reporting obligations will largely depend on that decree, which does not yet exist.

Who would pay the exit tax: individuals, simple partnerships and non-commercial entities

Under the text as presented, the tax applies to individuals who move their tax residence out of Italy and have been resident there for at least six of the last ten tax years before the move (Article 307-bis, paragraph 1). Paragraph 7 extends it to simple partnerships (società semplici) and equivalent entities not carrying on commercial businesses (Article 5 of the Code) and to the non-commercial entities of Article 82(1)(c) of the Code (formerly Article 73(1)(c) TUIR). That provision expressly covers trusts whose sole or main object is not a commercial activity, and the same letter also includes collective investment undertakings (UCIs), which are however deemed resident if set up in Italy: moving a trust's residence abroad, for example by changing the trustee, would therefore fall within the proposal. However, under Article 82(3) a trust set up in a State that does not allow an adequate exchange of information is deemed resident in Italy, unless proven otherwise, where at least one settlor and one beneficiary are resident in Italy: in those cases a change of trustee may not be enough to lose Italian residence. The treatment of trusts with identified beneficiaries, whose income is attributed to the beneficiaries, will need to be clarified by the implementing decree.

The tax would apply only if three further conditions are all met (Article 17(2) of the Bill and Article 307-bis(2) and (3)):

• the loss of tax residence takes effect on or after 1 January 2027;
• the move results in Italy losing its taxing rights over the income concerned: according to the explanatory report, income that Italy can still tax, including under the applicable treaty, is outside the charge;
• the total fair market value of the assets and rights concerned is at least EUR 800,000 on the last day of the tax year before the one in which the loss of residence takes effect.

Residence is determined for the whole tax year (Article 2 of the Code, restating Article 2 TUIR). As a rule, therefore, values would be measured on 31 December of the year before the first year in which the person is no longer resident. Valuation at 31 December 2026 therefore concerns only those who were resident for most of 2026 and physically left in the second part of the year, since they lose residence from 2027; those who are no longer resident for 2026 fall outside the proposal. The text does not say how this rule interacts with the split-year treatment provided by some treaties.

Which assets are covered and how the EUR 800,000 threshold works

The tax would apply to the financial "miscellaneous income" listed in Article 76(1)(d) to (i) of the Code (currently Article 67 TUIR):

• qualifying and non-qualifying shareholdings in Italian and foreign companies (shares, quotas, rights or securities to acquire them);
• securities other than those representing goods, mass certificates, units in investment funds and other collective investment undertakings, foreign currencies and precious metals;
• derivatives and forward contracts;
• disposals of receivables and of contracts producing investment income;
• crypto-assets.

Real estate and cash in accounts without a currency component are outside the text. For insurance policies and certain types of foreign funds, the scope will need to be clarified by the implementing decree.

The EUR 800,000 threshold refers to the total value of the assets concerned, not to the amount of the unrealised gains (explanatory report). It is an entry threshold, not an allowance: once it is exceeded, the tax is calculated on all gains, with no exempt portion. The text does not say how fair market value is determined; the general rule in Article 9 of the Code (currently Article 9 TUIR) refers, for listed securities, to the average price over the last month and, for other shareholdings, to the company's net equity pro rata. This point, too, awaits the decree.

How the tax would be calculated: taxable base, 26% rate and government bonds

The taxable base is the sum of the positive differences between the fair market value of each asset or right on the last day of the previous tax year and its recognised tax cost, determined under Article 77(7) of the Code (currently Article 68(6) TUIR). Under the text as presented, unrealised losses on individual holdings do not reduce the taxable base.

The rate is not stated in Article 307-bis, which refers to "the provisions ordinarily applicable to the respective types of income". For this income it is the 26% substitute tax of Article 304(1) of the Code, as the technical report confirms. For Italian government bonds and equivalent securities, and for bonds issued by States that allow an adequate exchange of information and by their local authorities, gains are counted at 48.08%: the effect is equivalent to the 12.5% rate that applies to those bonds.

For assets acquired by inheritance, the cost is the value assessed or declared for inheritance tax purposes; for assets received as a gift, the donor's cost (Article 77 of the Code). Historical cost applies even to assets acquired before becoming resident in Italy: for individuals there is no entry-value rule like the one for businesses (Article 192 of the Code, currently Article 166-bis TUIR).

Payment within 180 days or deferral with a 50% advance payment and a guarantee

The tax would be due within 180 days of the date on which the loss of residence takes effect (Article 307-bis, paragraph 4).

A person moving to a European Union Member State, or to a non-EU State with which agreements are in force allowing an adequate exchange of information and mutual assistance in the recovery of tax claims comparable to Directive 2010/24/EU, could opt for deferral on three conditions:

• paying an advance of 50% of the tax within the 180 days;
• providing an adequate guarantee, whose type and amount are left to the decree;
• the deferral lasts five tax years for moves within the European Union and ten in the other eligible cases.

The text provides for no interest on the deferred tax, unlike the rules for businesses (Article 193(11) of the Code). It does not list the non-EU States that have collection-assistance agreements comparable to the Directive: this must be checked State by State and will also depend on the decree.

Selling, gifting or returning to Italy during the deferral period

During the deferral period the proposal distinguishes three situations (Article 307-bis, paragraphs 5 and 6):

• sale for consideration: the tax applies to the lower of the unrealised gain at the reference date and the gain actually realised. If the price is below the tax cost, according to the explanatory report no tax is due; any increase in value after departure is in any event outside the Italian charge;
• gift, or transfer to controlled companies or entities, to family members or to companies they control: the entire unrealised gain at the reference date is taxed;
• no disposal within the period, death, or return to Italy during the period: no tax is due on the assets not disposed of, and any excess paid is refunded, under procedures left to the decree.

The advance already paid is credited against the tax due on each transaction. Under the text, the refund applies to those who chose deferral: a person who pays the full tax within 180 days gets no refund if they later return to Italy or if the assets fall in value.

Tax treaties, low-tax jurisdictions and new residents

Tax treaties. The charge applies only if Italy loses its taxing rights. Where the treaty with the new State of residence leaves Italy the right to tax the gain (for example, in many treaties, for shares deriving their value mainly from real estate in Italy, along the lines of Article 13(4) of the OECD Model), the exit tax would not apply to those assets. The text does not, however, provide for coordination with the new State of residence: if that State taxes the full gain on sale, without recognising an entry value or a credit for the Italian tax, double taxation may arise.

Low-tax jurisdictions. Italian citizens removed from the population register who move to States other than those identified by ministerial decree are deemed resident unless they prove otherwise (Article 2(3) of the Code; currently Article 2(2-bis) TUIR). If the presumption is not rebutted, residence is not lost and the exit tax does not apply; if it is rebutted, the proposal would apply and, absent collection-assistance agreements, without the option of deferral. The text contains no express coordination between the two rules.

New residents under the substitute tax. The proposal contains no rules for those who opted for the substitute tax on foreign income for new residents (Article 246 of the Code, currently Article 24-bis TUIR, described in the dedicated guide).

EU law compatibility issues

The Court of Justice of the European Union has ruled several times on exit tax mechanisms for individuals, notably in its judgments of 11 March 2004, Case C-9/02, de Lasteyrie du Saillant, and 7 September 2006, Case C-470/04, N, which examined the taxation of unrealised gains on emigration, guarantees required to suspend payment and the treatment of later falls in value. A case on the Polish exit tax for individuals, C-430/25, is pending: the Advocate General delivered her opinion on 15 October 2026 and the Court has not yet given judgment.

Some features of the proposal, such as the advance payment and guarantee required even for moves within the European Union, the absence of any offset for unrealised losses and the use of historical cost for assets acquired before arrival in Italy, may therefore be debated in the light of this case law. Some commentators have already raised the issue. The picture may change with the final text of the law and with the Court's judgment; for moves to Switzerland, the EU-Switzerland Agreement on the Free Movement of Persons is also relevant.

What to do in practice: planning a move of tax residence abroad

1. Follow the Budget Bill: the text may change until it is approved, expected by 31 December 2026, and many aspects will depend on the implementing decree.
2. Check the conditions: years of residence in Italy in the last ten tax years, and the date from which the loss of residence would take effect under Article 2 and the applicable treaty.
3. Map the financial assets: fair market value and tax cost of each shareholding, security, fund, derivative and crypto-asset, identifying those Italy would continue to tax under the treaty.
4. Estimate the tax in both scenarios, payment within 180 days or deferral with a 50% advance and a guarantee, and check whether the new State of residence qualifies for deferral.
5. Assess the new State of residence: how it treats the gain on sale (entry value, credit for the Italian tax) and whether there is a risk of double taxation.
6. Plan transactions during the deferral period: sales, gifts, contributions to controlled companies or transfers to family members have different effects on the tax due.
7. Review structures: simple partnerships, non-commercial trusts and non-commercial entities would fall within the proposal, as would transactions that move their residence.

Key risks of the new exit tax

• The rule is not yet final. The text is a proposal: the threshold, rate, start date and deferral may change in Parliament. Decisions based only on the Bill should be reviewed against the approved text.
• Start date. What matters is the year from which the loss of residence takes effect, not the date of physical departure; a person resident for most of 2026 who leaves in the second part of the year loses residence only from 2027 and would fall within the proposal: they should check carefully from which tax year they cease to be resident.
• Tax without a sale. The tax is due on gains not yet received: cash is needed for payment within 180 days or for the 50% advance and the guarantee.
• No refund without deferral. Under the text, a person who pays the full tax at once recovers nothing if the assets fall in value or if they return to Italy.
• Double taxation. The text provides no coordination with the new State of residence: the same gain could be taxed twice.
• Structures and internal transfers. Gifts and transfers to family members or controlled companies during deferral trigger tax on the entire unrealised gain; trusts and simple partnerships would fall within the proposal.
• Compliance and penalties. Guarantees, refund procedures and tax return sections will be set by the implementing decree; errors in calculation or payment would be subject to the general rules on tax penalties.

Legal sources

• Bill A.C. 3174, submitted to the Chamber of Deputies on 30 October 2026: Budget Bill for the 2027 financial year and multi-year budget 2027-2029 – Chamber of Deputies page
• Bill A.C. 3174, Volume II, text of the Bill, Article 17 (pp. 30-33) – Chamber of Deputies
• Bill A.C. 3174, Volume I, explanatory report (pp. 97-99) and technical report (pp. 235-237) on Article 17 – Chamber of Deputies
• Legislative Decree No. 117 of 19 June 2026 (Income Tax Code) – Official Gazette
• Article 2 of Legislative Decree No. 117/2026 – Normattiva
• Article 76 of Legislative Decree No. 117/2026 – Normattiva
• Article 77 of Legislative Decree No. 117/2026 – Normattiva
• Article 82 of Legislative Decree No. 117/2026 – Normattiva
• Article 193 of Legislative Decree No. 117/2026 – Normattiva
• Article 246 of Legislative Decree No. 117/2026 – Normattiva
• Article 304 of Legislative Decree No. 117/2026 – Normattiva
• Article 166 TUIR – Normattiva
• Directive (EU) 2016/1164, Article 5 – EUR-Lex
• Ruling No. 208 of 14 August 2025 – Italian Revenue Agency
• Court of Justice of the EU, judgment of 11 March 2004, Case C-9/02, de Lasteyrie du Saillant – EUR-Lex
• Court of Justice of the EU, judgment of 7 September 2006, Case C-470/04, N – EUR-Lex
• Court of Justice of the EU, Opinion of the Advocate General of 15 October 2026, Case C-430/25 – EUR-Lex