Italy's exit tax: when it applies, how to calculate it, and how to transfer your income abroad

TheItalian exit tax applies, where legally permitted, to capital gains on business assets that cease to be subject to Italian taxation. It is not a general tax on the assets of every person who moves abroad. To determine whether it applies, it is necessary to distinguish the personal transfer of a shareholder from the transfer of the company, business, or its assets.

This guide explains the provisions of Article 166 of the TUIR applicable in 2026, the different role of Article 166-bis, and the checks to be performed before a transfer to Panama or another country. The new consolidated law approved with Legislative Decree 117/2026 reorganizes the numbering of Article 166-bis effective January 1, 2027: outgoing taxation under Article 193 and incoming tax values ​​under Article 192.

What is the exit tax and what rules apply?

Exit taxation protects the taxation of increases in value accrued when a business or certain assets were fiscally connected to Italy. Taxable income can arise even without a sale to a third party: the prerequisite is the cross-border transaction described by the law, with the resulting exit of the assets from the Italian tax perimeter.

The reference for 2026 is Article166, rewritten from Article 2 of Legislative Decree 142/2018. Article 166-bis regulates the entry of assets into the Italian system. Assigning a general tax on the emigration of individuals to the latter leads to erroneous conclusions.

Exit tax for individuals: investors, partners, and entrepreneurs

A person who privately holds shares, company stocks, funds, or savings must first identify the nature of the assets. Transferring one's residence does not equate to transferring the residence of the company in which one holds a stake. The share remains the partner's investment; the business assets belong to the company.

The situation changes if the individual runs a commercial enterprise and transfers the activity or assets falling under the provisions of Article 166. The crucial distinction is therefore not simply "natural person or company," but rather personal assets or assets and business activity. For professionals and digital businesses, it is also necessary to correctly characterize the activity and transactions performed.

Are there capital thresholds or participation percentages?

Article 166 does not introduce a general threshold of four million euros for those leaving Italy. The percentages that may be relevant for other rules on shareholdings should not be transformed into automatic exit tax thresholds. Even high net worth requires an analysis of the underlying assets; a company with lower values ​​is not excluded.

Personal transfer does not replace income analysis

The absence of a general exit tax on private portfolios does not mean there are no obligations. Sales, dividends, remuneration, real estate income, and other transactions follow their own rules. It is necessary to verify tax residency in the relevant year, the source of income, and any applicable treaty. Simply opening a foreign bank account is not enough to change these elements.

Exit tax for companies and businesses: when it comes into effect

Article 166 covers the transfer of a company's tax residence abroad; certain tax-exempt transfers of assets to a foreign permanent establishment; the relocation of an Italian permanent establishment or its assets abroad; and certain cross-border mergers, demergers, and contributions. For each case, the law specifies which assets become taxable.

When, after transferring residence, certain assets are transferred to a permanent establishment actually located in Italy, those assets may remain within the Italian taxable scope according to the applicable regulations. It is not enough to assign a name or address to a structure: functions, risks, personnel, and assets must be consistent with the operational reality.

Changing the registered office alone does not automatically resolve the issue of corporate tax residency. Before calculating the tax, it is necessary to determine where the company is tax resident, where its management and administration take place, and whether it has any permanent establishments. A purely formal transfer may leave Italian taxation unchanged and add to the controversy.

How the taxable base is calculated

The regulation compares the market value of significant assets and relationships with their corresponding tax-recognized values. Depending on the transaction, the comparison concerns the overall assets and liabilities or the specific assets transferred. For a company or branch, goodwill and the transferred functions and risks must also be considered.

The book value does not necessarily coincide with the tax value; the price assumed by the owner does not necessarily coincide with the market value. The valuation must be explainable through verifiable data, methods, and assumptions. Tax losses and tax-deferred reserves follow specific rules: they cannot be freely offset without complying with the legal requirements.

There is no single exit tax rate applicable to every taxpayer. The income tax system applicable to the individual and the transaction applies. Automatically adding an IRAP rate or applying 26% to every unrealized capital gain produces an unreliable simulation.

Payment and installment plan: the five installments and their conditions

Article 166, paragraph 9, allows, upon option and with any guarantees, payment in five equal annual installments in the circumstances provided for. The benefit applies to transfers to European Union member states or certain European Economic Area member states, with appropriate exchange of information and collection assistance. The conditions also depend on the type of transaction.

Subsequent installments incur interest. The law provides for grounds for forfeiture, including certain subsequent transfers, asset disposals, and defaults. It is therefore necessary to plan and monitor the process in subsequent years, not just file the initial return.

Legitimate planning before the move

Compare the operations actually available

Selling assets before transferring, maintaining an Italian structure, or transferring only part of the business are different transactions, with their own consequences. The comparison must include immediate and subsequent taxation, professional fees, financial sustainability, and economic reasons. An early sale may realize an ordinary capital gain rather than avoid a tax.

Check the perimeter, without presumed deductibles

The first objective is to identify which assets and functions are actually exempt from Italian taxation. Artificially reducing shareholdings or splitting values ​​to fall below non-existent thresholds does not solve the problem. The choices must comply with anti-avoidance provisions and correspond to actual transactions.

Coordinate date, values ​​and liquidity

The relevant date for determining income varies depending on the specific case: it may coincide with the end of the last period of residence, the transfer of assets, or the effectiveness of the transaction. A subsequent price decrease does not automatically change the income already determined. The plan must provide resources for the payment even when no cash flows from a sale are forthcoming.

Document the personal and operational transfer

For those moving to Panama, immigration permit, domicile, business, and tax residency are related but distinct aspects. The Panamanian residency procedure alone does not determine the Italian tax outcome. AIRE registration and the foreign certificate are included in the documentation file, but do not replace the examination of Italian and conventional criteria.

Declaration and documents to be prepared

Before the transaction, a reconstruction of the tax values, an inventory of significant assets and liabilities, a description of the transferred functions, valuations, and a timetable are required. The tax return form, statements, communications, payment deadlines, and any installment payment options must be identified, based on the period and the entity.

• Separate partner documents and company documents.
• Reconcile balance sheets, records, and tax values, including losses and reserves.
• Maintain reports, contracts, and evidence of operational changes.
• Check the treatment and values ​​recognized in the destination country.
• Assign responsibilities for reporting and follow-up.

Exit tax, RW table, IVAFE and IVIE are separate obligations

The RW form concerns the tax monitoring of foreign assets and investments for those required to complete it. IVAFE and IVIE have separate requirements. They are not exit tax installments and are not automatically absorbed by the payment of the latter. The possible cessation of obligations depends on the taxpayer's actual position and the year in question.

Transferring to Panama requires particular attention to proof of non-Italian residency and the presumption established for Italian citizens by Article 2, paragraph 2-bis. The Italian and European tax lists, and international anti-money laundering monitoring, have different functions. Removal from one list does not automatically affect all other regulations.

European framework and incoming tax values

Directive 2016/1164regulates exit taxation within the European anti-tax avoidance framework. It does not impose an identical tax on every European citizen and every private asset. Payment mechanisms and the recognition of assets in the receiving state also require the application of the respective national rules.

Article166-bis concerns incoming tax values ​​in Italy. It does not guarantee that a foreign country will automatically recognize the same values ​​adopted by Italy on outgoing transactions. This misalignment may impact the taxation of a future transfer and must be analyzed prior to the transaction.

Cryptocurrencies: Private Wealth and Corporate Assets

Privately held cryptoassets are not all taxable at market value solely for personal transfer abroad pursuant to Article 166. However, if they belong to the assets of a company covered by the regulation, they must be examined within the relevant scope. Realizations, exchanges, compensation, and returns require separate classification.

Rates and redeterminations are not a personal exit tax

In 2026, the general Italian tax regime for cryptocurrency income will be 33%, with a specific exception of 26% for certain euro-denominated e-money tokens. The previous threshold of €2,000 has been eliminated. These rules, contained in Laws 207/2024 and 199/2025, should not be confused with the company's exit tax. Any recalculation options must be verified by year, deadlines, and requirements.

Exit tax, CFC and foreign investment

The exit tax concerns the withdrawal of certain assets from the Italian tax system. The CFC regime applies, under certain conditions, to the income of controlled foreign companies. Corporate residency, on the other hand, determines the company's tax status. Incorporating a company in Panama while maintaining its operations and management in Italy does not make these issues irrelevant. The shareholder must also verify the taxation of dividends and transfers.

Three practical cases to distinguish

Professional or remote worker

Anyone who moves their life and continues to work must verify their residence, nature of their business, and place of income generation. The existence of foreign clients does not in itself constitute an exemption; any business transfer must be analyzed separately.

Partner of an Italian company

A partner who emigrates while maintaining an LLC operating in Italy does not automatically transfer the company. However, if the corporate residence, business, or assets are transferred, the issue of Article 166 becomes concrete and requires an evaluation of the transaction.

Private investor in crypto-assets

A change of residence does not regularize past income or obligations. It is necessary to reconstruct transactions and assets, verify actual residence in the year of the income, and verify the regulations of the destination country. A foreign exchange alone does not prove the foreign source of the income.

Mistakes to avoid

• Confusing the partner's assets with those of the company.
• Attribute a personal exit tax to Article 166-bis.
• Using general thresholds or rates that have no regulatory basis.
• Promise six installments or an indefinite deferral until the sale.
• Treat AIRE, immigration permit, or foreign bank account as conclusive tax evidence.
• Omitting to check the assets recognized abroad and the necessary liquidity.

Regulatory sources and 2027 update

Italian legislation

For 2026: Articles 166 and 166-bis of Presidential Decree 917/1986, as rewritten by Legislative Decree 142/2018. For crypto-assets: Law 207/2024, Article 1, paragraphs 24–25, and Law 199/2025, Article 1, paragraph 28.

Effective date of the new consolidated text

Legislative Decree 117/2026 places the provisions in Articles 192 and 193. Article 377 provides for their application from 1 January 2027. For transactions spanning two years, the period, effective date, and requirements must be verified, without confusing the entry into force of the decree with the application of the new consolidated law.

European Union law

ATAD Directive 2016/1164 constitutes the European reference. National conditions and the position of the destination country remain decisive for the specific operation.

Frequently asked questions about the Italian exit tax