In 2025 French minister François Bayrou accused Italy of “tax dumping.” But Italy’s regimes are legal and transparent, not tax-haven schemes. In fact Italy has made them less generous: from 1 January 2026 the flat tax for new residents rose from €200,000 to €300,000 a year (2026 Budget Law), with €50,000 per family member. Alongside it run the impatriate regime (−50% of taxable income) and the 7% flat tax for foreign pensioners in small southern towns.
The spark came from Paris. François Bayrou, French minister and long-standing political figure, accused Italy of practicing tax dumping — attracting residents and capital by lowering taxes in a way deemed unfair to neighboring countries.
Rome responded immediately: Palazzo Chigi dismissed the claims as “unfounded,” stressing that Italy’s regimes are legitimate tools, established by law and fully compliant with EU rules.
Beyond the political clash, however, the Bayrou case highlights a broader issue: Europe’s accelerating tax competition. After decades of losing capital and talent, Italy is now on the opposite side — a country that attracts instead of exporting. And this shift is creating friction.
The French accusation: what is tax dumping?
Bayrou pointed to Italy’s main fiscal incentives:
- the €300,000 flat tax for new residents with foreign income;
- the Impatriate Regime, cutting taxable income for professionals working in Italy;
- the 7% flat tax for foreign retirees moving to small towns in Southern Italy.
According to the French minister, these measures amount to harmful tax competition: they lure wealthy taxpayers, erode the tax base of other countries, and create a fragmented, multi-speed Europe.
The very concept of “tax dumping” is controversial. In economic terms, it describes drastically lowering taxes to gain competitive advantage, often at the expense of others. But where does legitimate competition end — and dumping begin?
Italy’s response: legal and transparent policies
The Italian government swiftly rejected Bayrou’s claims. Rome stressed that these regimes:
Which tax regimes does Italy use to attract residents (and what they cost in 2026)?
Three tools sit at the centre of the dispute, all set out in law and declared to the tax authority. They are not opaque shortcuts: they are optional regimes with precise requirements.
The first is the new-resident flat tax (art. 24-bis of the Italian tax code): a flat substitute tax on foreign-source income. From 1 January 2026 the 2026 Budget Law raised it from €200,000 to €300,000 a year, with €50,000 for each family member included; those who opted in earlier keep the previous amount. The second is the impatriate regime, which since 2024 removes 50% of taxable income from tax, up to €600,000 a year, for five years. The third is the 7% flat tax for foreign pensioners who move to a southern town under 30,000 residents. Many arrivals follow the end of the UK non-dom regime, as we cover in moving to Italy from the UK.
| Regime | Who it is for | Tax | Duration |
|---|---|---|---|
| New residents (art. 24-bis) | Anyone moving tax residence to Italy with foreign income (non-resident 9 of the last 10 years) | €300,000/year flat on foreign income (from 2026), +€50,000 per family member | Up to 15 years |
| Impatriates (from 2024) | Workers moving their tax residence to Italy | −50% of taxable income, up to €600,000/year | 5 years |
| 7% foreign pensioners (art. 24-ter) | Foreign pensioners resident in southern towns under 30,000 residents | 7% on all foreign income | 10 years |
- Are transparent and internationally recognized;
- Are time-limited (5 years for the impatriate regime, 10 for pensioners, 15 for the €200k flat tax);
- Are fully aligned with EU and OECD rules on anti-avoidance.
In other words, Italy is not a tax haven, nor does it provide opaque shortcuts. These tools have specific goals: to attract talent, retain capital, and revitalize towns suffering from demographic decline.
A European race already underway
The real issue is not Italy alone, but the broader European race to attract expats, pensioners, and investment.
- Portugal made headlines with its NHR regime, now under review.
- Greece introduced a 7% flat tax for retirees and incentives for entrepreneurs relocating.
- Spain offers benefits for foreign workers and visas for digital nomads.
- Ireland and the Netherlands have long leveraged targeted regimes for multinationals.
Seen in this light, accusing Italy of tax dumping seems selective: nearly every EU country has developed similar strategies. The difference is that Italy, a recent entrant in this field, is suddenly gaining visibility — especially after the end of the UK’s non-dom regime, which pushed many HNWIs to look toward Italy.
From “Losing Country” to “Attracting Country”
For decades, Italy’s story was defined by outflows: young graduates leaving for better-paid jobs abroad, retirees moving to Portugal or Tunisia, and businesses relocating headquarters to more favorable tax jurisdictions.
Yet today, a new trend is emerging. Milan has been described by the Financial Times as “the new London of continental Europe,” hosting family offices, banks, and investors following the UK’s non-dom abolition. Meanwhile, in southern villages, albeit on a smaller scale, the arrival of foreign pensioners under the 7% regime is breathing new economic and social life into local communities.
Italy, then, is in a paradoxical phase: still losing some of its youth and retirees, but increasingly attractive to foreign residents. A complex picture that makes the “tax dumping” debate more nuanced than it first appears.
Tax Mobility: the strategic context
To fully understand France’s criticism, it must be placed within the wider phenomenon of tax mobility, which has gone from marginal to mainstream in the global economy.
In the past, fiscal residence was a fixed, almost bureaucratic detail. Today, it is a mobile asset — just like a company’s registered office or the location of a financial investment. Executives moving to Milan, German retirees settling in Calabria, American professionals choosing Lisbon: these are no longer exceptions, but pieces of an increasingly fluid economic geography.
Motivations go beyond tax rates: legal certainty, quality of services, political stability, and global mobility all play a role. Tax mobility is not mere opportunism, but evidence of a competitive market for jurisdictions, where states compete for people and capital as they once competed for industries.
Italy is simply replicating well-established models: Ireland with its 12.5% corporate tax, Portugal with NHR, Greece with its pensioner regime. What makes Italy stand out is its novelty — a country long seen as an exporter of human capital now turning into a magnet.
Dumping or legitimate competition?
The real question is whether Italy’s policies truly constitute “dumping.”
Critics argue that cutting taxes to attract the wealthy is equivalent to draining revenues from other states, deepening intra-EU competition. Supporters counter that fiscal sovereignty remains national, and that every state has the right to adopt attractive regimes as long as common rules are respected.
A useful comparison is Ireland: long accused of attracting multinationals with its 12.5% corporate tax, yet now recognized as Europe’s tech hub.
Beyond the rhetoric: the real challenges
The Bayrou case highlights three pressing challenges for Europe:
- Social balance: if incentives are perceived as privileges for the few, they may fuel resentment.
- EU harmonization: how far can states compete without undermining Europe’s fiscal unity?
- Long-term sustainability: tax incentives only work if supported by infrastructure, services, and quality of life.
After all, taxation is only part of the equation: without a welcoming environment, no regime can endure.
In Italy the new-resident flat tax is nicknamed the “CR7 rule.” In 2017 Cristiano Ronaldo was among the first to use it, paying a fixed levy on his foreign income during his years at Juventus. According to estimates cited in the 2025 debate, the rise to €300,000 has not cooled demand: around 3,600 millionaires are expected to move their residence to Italy over the year.
Conclusion: Europe at a crossroads
Bayrou’s words have the merit of exposing a debate Europe can no longer ignore: fiscal competition is a reality. Today, Italy is not a victim but a protagonist.
The challenge ahead is twofold: for Europe, to strike a balance between competition and cohesion; for Italy, to prove that its regimes are not tax dumping, but development tools capable of attracting people and capital without sacrificing fairness.
In short, the real test will be whether Italy can turn this opportunity into shared value, not just a temporary advantage.
- Italian Revenue Agency — Option for new residents (substitute tax, art. 24-bis).
- Italian Revenue Agency — Preferential regime for foreign pensioners (7% flat tax, art. 24-ter).
- Italian Revenue Agency — Impatriate workers, new regime from 2024.
- IPSOA — New residents: flat tax rises to €300,000 from 2026 (2026 Budget Law).
- ItaliaOggi — What tax dumping is and why France accuses Italy.
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FAQ
Tax dumping is when a country aggressively lowers taxes to attract residents and capital from other states, seen by some as unfair competition. In 2025 France, through François Bayrou, used the term against Italy’s tax regimes for new residents. The Italian government replied that these are legal, transparent tools, not dumping.
From 1 January 2026 the new-resident flat tax is a flat substitute tax of €300,000 a year on foreign-source income, up from €200,000 under the 2026 Budget Law. Each family member included in the option pays €50,000 a year. Anyone who opted in before 2026 keeps the amount in force when they joined.
No. A tax haven is marked by opacity, near-zero taxation and no exchange of information. Italy’s regimes are set out in law, declared to the Revenue Agency and compliant with EU rules; they carry a real substitute tax (up to €300,000 for new residents) and precise entry requirements. They are tools of tax competition, not evasion.
In 2025 French minister François Bayrou called Italy’s regimes a case of “tax dumping” and “tax nomadism,” arguing they attract high-income taxpayers and erode France’s tax base. Italy’s government rejected the claims as unfounded, noting that Italy had even raised the new-resident levy from €200,000 to €300,000.
It is open to anyone moving their tax residence to Italy who has not been an Italian tax resident for at least 9 of the previous 10 years. The option lasts up to 15 years and replaces ordinary income tax on foreign income; it also exempts foreign assets from IVIE, IVAFE, RW monitoring and inheritance and gift tax. It suits people with substantial foreign wealth and income.
