Italy Flat Tax Regime for High-Net-Worth New Residents vs Puerto Rico Act 60 (Individual Resident Investor & Export Services)
A factual side-by-side comparison of two residency programmes. All figures are drawn from the canonical program pages — follow either link in the table header for sources and the full profile.
Key Differences at a Glance
- ›Italy Flat Tax Regime for High-Net-Worth New Residents leads to citizenship (~10 yrs); Puerto Rico Act 60 (Individual Resident Investor & Export Services) does not.
- ›Puerto Rico Act 60 (Individual Resident Investor & Export Services) uses territorial taxation; Italy Flat Tax Regime for High-Net-Worth New Residents taxes worldwide income.
Italy Flat Tax Regime for High-Net-Worth New Residents Italy · passive income | Puerto Rico Act 60 (Individual Resident Investor & Export Services) United States · other | |
|---|---|---|
| Country | Italy | United States |
| Category | Passive Income | Other |
| Application Fee | $300 | $750 |
| Minimum Income | — | — |
| Minimum Investment | — | — |
| Processing Time | 3 months | 3 months |
| Family Included | €25,000/year (approximately $27,000) per additional qualifying family member (spouse, children, or other dependent relatives) included in the same substitute-tax election. | Spouse and dependents are covered as part of the household relocation and face no separate immigration hurdle (they are already US citizens or otherwise share the applicant's existing US status); each adult who independently wants Individual Resident Investor tax benefits generally needs to separately qualify as a bona fide Puerto Rico resident. |
| Path to PR | Yes — 5 years | No |
| Path to Citizenship | Yes — 10 years | No |
| Physical Presence | Applicant must become an Italian tax resident, generally meaning registration in the civil registry (Anagrafe) and/or presence in Italy for more than 183 days in the tax year, or establishing habitual abode/domicile in Italy. Must not have been an Italian tax resident for at least 9 of the preceding 10 tax years to qualify initially. | Not a visa or immigration status — US citizens and other US nationals may relocate to Puerto Rico as freely as moving between US states. To claim Act 60 tax benefits, however, an individual must qualify as a 'bona fide resident' of Puerto Rico under IRC Section 937, generally requiring: (1) a presence test — at least 183 days in Puerto Rico during the tax year (limited alternative tests exist), (2) a tax home test — the applicant's tax home must be in Puerto Rico, and (3) a closer connection test — a closer connection to Puerto Rico than to the US mainland or any foreign country, evidenced by a primary home, family location, and registrations (driver's license, voter registration, vehicles) based in Puerto Rico. |
| Dual Citizenship | Allowed | Allowed |
| Tax Impact | The single flat substitute tax replaces ordinary Italian progressive income tax (up to 43%) on all foreign-source income and gains. It also exempts the beneficiary from Italy's foreign-asset wealth taxes (IVIE/IVAFE), from disclosing foreign assets on the RW tax-return schedule, and from Italian inheritance/gift tax on foreign assets. Italian-source income remains taxed under ordinary rules; the regime applies for a maximum of 15 tax years. | Bona fide Puerto Rico residents are, under IRC Section 933, excluded from US federal income tax on Puerto Rico-source income. Layered with an Act 60 Individual Resident Investor decree, this delivers 0% Puerto Rico tax on PR-source capital gains, interest, and dividends realised after the decree date and the establishment of bona fide residency — only gains accrued after relocating are covered; pre-move built-in gains generally remain subject to federal capital gains tax, subject to a bifurcation/phase-in rule tied to how long the asset is held post-move. Separately, Act 60's Export Services chapter (successor to Act 20) offers a flat 4% Puerto Rico corporate tax rate on eligible income from services exported to clients outside Puerto Rico, plus a substantial exemption on distributions of those earnings to Puerto Rico resident shareholders. This is the only route by which a US citizen can materially reduce federal tax exposure on qualifying investment and export-services income without renouncing US citizenship. |
| Tax Residency Trigger | 183 days/yr | 183 days/yr |
| Worldwide Taxation | Yes | Territorial |
| Renewal Cost | $216,000 | $5,000 |
About Italy Flat Tax Regime for High-Net-Worth New Residents
Italy's flat tax regime for new residents (Art. 24-bis of the tax code) lets individuals who move tax residency to Italy pay one flat substitute tax on all foreign-source income and gains, instead of ordinary progressive taxation and Italy's foreign-asset wealth taxes. Aimed squarely at high-net-worth individuals, it requires the applicant not to have been an Italian tax resident for 9 of the prior 10 years. An August 2024 budget decree doubled the annual charge from €100,000 to €200,000, and Budget Law 2026 raised it again to €300,000 for elections from 1 January 2026, with earlier participants grandfathered at their entry rate. The regime runs up to 15 years, can extend to family members for €50,000 each (€25,000 for pre-2026 elections), and is typically paired with an underlying immigration route — Elective Residency, an Investor Visa, or EU free movement — since the election itself confers no right to reside.
Full Italy Flat Tax Regime for High-Net-Worth New Residents profile →About Puerto Rico Act 60 (Individual Resident Investor & Export Services)
Puerto Rico's Act 60 of 2019 (the Puerto Rico Incentives Code) consolidated dozens of prior tax-incentive laws — most notably Act 22-2012 (Individual Investors) and Act 20-2012 (Export Services) — into a single unified code effective January 1, 2020. It is not a visa: as a US territory, Puerto Rico requires no immigration process for US citizens, who can relocate as freely as moving between states. What Act 60 offers instead is a Puerto Rico tax decree layered on top of that existing right to relocate. Individual Resident Investor decree holders who become genuine bona fide Puerto Rico residents (183+ days per year, primary home, and closer connection to Puerto Rico than to the mainland or any other jurisdiction) pay 0% Puerto Rico tax on qualifying PR-source capital gains, interest, and dividends accrued after the move — a benefit rooted in IRC Section 933's exclusion of PR-source income of bona fide residents from federal tax. Separately, businesses that export services from Puerto Rico can access a flat 4% corporate tax rate under the Export Services chapter. The programme has drawn sustained local political scrutiny over housing costs and perceptions that wealthy newcomers extract disproportionate benefit; this pressure led to a 2022 increase in the mandatory annual charitable-giving requirement and continues to generate periodic legislative proposals to further tighten eligibility or compliance.
Full Puerto Rico Act 60 (Individual Resident Investor & Export Services) profile →Gotchas to Watch For
Italy Flat Tax Regime for High-Net-Worth New Residents
- ⚠The flat tax is due in full for the year regardless of how much foreign income was actually earned — it is not a cap on tax owed, but a fixed annual charge
- ⚠The regime confers no residence rights on its own; losing or failing to maintain the underlying visa (Elective Residency, Investor Visa, etc.) ends the ability to remain in Italy irrespective of the tax election
- ⚠The rate is fixed at whatever applies on your election date and grandfathered for the 15-year life: €100,000 before 10 Aug 2024, €200,000 from 10 Aug 2024, and €300,000 from 1 January 2026 (Budget Law 2026) — moving to Italy later means the higher current rate, so the timing of your residence transfer matters
- ⚠Italian-source income and capital gains are explicitly excluded from the flat tax and remain subject to ordinary progressive Italian taxation, which can catch newcomers off guard
- ⚠The 9-out-of-10-year prior non-residence test is strictly enforced; recent Italian tax residency, even briefly, can disqualify an applicant
Puerto Rico Act 60 (Individual Resident Investor & Export Services)
- ⚠Not actually a 'visa' — no immigration application is required for US citizens; the entire benefit is a Puerto Rico tax-decree programme layered on top of ordinary US citizenship rights
- ⚠Only income/gains accrued AFTER establishing bona fide PR residency and receiving the decree qualify for the 0% rate — built-in gains on assets held before the move generally remain subject to full federal capital gains tax
- ⚠Both the IRS and Puerto Rico's treasury have increased audit scrutiny of 'paper resident' claims — maintaining a mainland home, mainland driver's license, or spending significant time outside PR can disqualify bona fide residency and trigger back taxes and penalties
- ⚠Applies only to PR-SOURCE income; income from a mainland-based business generally remains fully taxable at ordinary federal rates even if the owner personally lives in Puerto Rico
- ⚠Growing local political backlash over housing costs and perceptions of inequitable benefit has led to periodic legislative proposals to tighten or sunset Act 60 incentives — current decree holders have historically been grandfathered under their original terms even when rates for new applicants were revised
Neutral reference — we don't recommend one programme over another. Programmes change: always verify each detail against the official source linked on the individual program pages.