Why the comparison is often misunderstood
Both regimes are commonly described as a “flat tax for wealthy foreigners”. That description obscures the legal mechanics and leads to decisions taken on the wrong criteria.
Swiss expenditure-based taxation does not fix the tax. It fixes an alternative method of determining the taxable base, to which ordinary federal, cantonal and communal tariffs are then applied, alongside cantonal wealth taxation. The amount payable therefore depends on the canton and commune of residence and on the expenditure figure agreed with the tax authority.
The Italian regime works in the opposite direction. The taxable base is not reconstructed at all: foreign-source income falling within the option is removed from ordinary progressive taxation and replaced by a fixed annual substitute amount, whatever the quantum of that income.
The consequence is practical. Two clients with identical wealth but different income composition, different business involvement and different family situations can reach opposite conclusions on the same set of rules. The comparison must begin with the client's facts, not with the headline of either regime.
Swiss expenditure-based taxation: eligibility architecture
The regime is governed at federal level by Article 14 of the Federal Act on Direct Federal Taxation (DBG/LIFD) and, for cantonal and communal taxes, by Article 6 of the Federal Act on the Harmonisation of Direct Taxes (StHG/LAID), supplemented by the Federal Council ordinance on expenditure-based taxation and by the practice of the Federal Tax Administration, in particular Circular No. 44.
Three cumulative conditions apply. The individual must not hold Swiss citizenship. The individual must become subject to unlimited Swiss tax liability for the first time, or after an absence of at least ten years. And the individual must not exercise any gainful activity in Switzerland.
Where spouses live together in a non-separated marriage, both must satisfy the conditions under the law currently in force. If one spouse is a Swiss citizen, or takes up employment or self-employment in Switzerland, the regime is not available to the couple. Reforms concerning individual taxation should be monitored, but no conclusion should be drawn from measures that have not entered into force.
Eligibility for the regime is a tax question only. It says nothing about the right to reside in Switzerland, which is decided under immigration law and, for third-country nationals, frequently under cantonal quota and fiscal-interest procedures.
How the Swiss taxable base is actually determined
The base is the annual worldwide living expenditure of the taxpayer and of the dependants supported by the taxpayer, in Switzerland and abroad. It is an expenditure measure, not a measure of income received.
Statutory floors apply. Under federal law, the base may not be lower than a minimum amount fixed by law and periodically adjusted for cold progression, nor lower than seven times the annual rent or rental value for a taxpayer maintaining their own household, nor lower than three times the annual price of full-board accommodation for other taxpayers. The federal minimum amount applicable to the current tax period should be taken from the FTA figures and the current official form and instructions, since it is adjusted over time.
Cantons apply the same architecture for cantonal and communal taxes but set their own minimum base, and must also levy a tax taking account of wealth. Cantonal minimums, effective tariffs and wealth-tax treatment vary materially, and availability itself is not uniform: some cantons have abolished expenditure-based taxation for their own taxes, while federal taxation of expenditure remains governed by Article 14 DBG/LIFD.
The figure is agreed in advance with the competent cantonal authority and reviewed periodically. It is not a negotiation of a tax bill; it is the determination of a legally defined base under the supervision of the authority.
The control calculation is a separate exercise
In addition to the expenditure base, an annual control calculation is required. The tax due may not be lower than the tax computed on defined categories of gross Swiss income and, where relevant, on income for which treaty relief is claimed abroad.
These categories typically include Swiss real estate income, income from movable assets located in Switzerland, Swiss capital income, income from Swiss copyright, patents and similar rights, and Swiss pensions and annuities.
The effect is that a client with significant Swiss-situs assets or Swiss-source income may find the control calculation, rather than the expenditure figure, driving the tax outcome. Structuring decisions taken before the move — where investment assets are held, whether Swiss property is acquired personally, how pensions are drawn — directly influence that calculation.
For the same reason, expenditure-based taxation should never be presented to a client as a single predictable annual number. It is a base determination plus an annual minimum test.
Italy: Article 24-bis TUIR and the 2026 amounts
Article 24-bis TUIR allows an individual who transfers tax residence to Italy, and who was not resident for tax purposes in Italy for at least nine of the ten preceding tax periods, to opt for a substitute tax on income produced abroad.
The Budget Law for 2026, Law of 30 December 2025 no. 199, amended the amounts. The annual substitute tax under Article 24-bis(2) was increased from EUR 200,000 to EUR 300,000, and the amount for each family member extending the option was increased from EUR 25,000 to EUR 50,000. The increase applies to individuals transferring their tax residence to Italy from the entry into force of the law on 1 January 2026; the transitional scope must be verified for each individual case, since options already exercised on the basis of earlier amounts follow their own regime.
The option is available for a maximum of fifteen tax periods, may be revoked, and lapses on failure to pay the substitute tax. It may be extended to family members within the categories set out in the provision, each at the per-member amount, provided that they too meet the prior non-residence requirement.
Two features are frequently misdescribed. The option may exclude income arising in one or more specified jurisdictions — the so-called cherry-picking mechanism — in which case that income returns to ordinary taxation with the ordinary foreign tax credit. And capital gains on qualifying shareholdings realised in the first five tax periods of the option are excluded from the substitute tax and taxed under the ordinary rules.
Administrative practice remains relevant to the application of the regime, in particular Circular 17/E of 23 May 2017 of the Agenzia delle Entrate and the associated ruling and checklist practice, read subject to the subsequent legislative amendments.
Domestic-source income is where the regimes diverge
Under Article 24-bis, only income produced abroad falls within the substitute tax. Italian-source income remains subject to ordinary IRPEF at progressive rates, with regional and municipal surcharges. A client who intends to invest in Italian companies, draw Italian directors' fees or hold Italian real estate must model that income separately.
In Switzerland, the equivalent pressure point is the control calculation, which brings Swiss-source income back into the assessment as a floor. The mechanism differs but the planning question is similar: how much of the client's economic activity will be located in the country of residence.
The practical rule that follows is that neither regime rewards a client whose income is substantially generated in the country of new residence. Both are designed for individuals whose economic base remains outside it.
Gainful activity: the decisive constraint in Switzerland
The Swiss regime is incompatible with any gainful activity exercised in Switzerland, whether employed or self-employed. Managing one's own private wealth from Switzerland is generally not treated as gainful activity, but the boundary is factual and is assessed by reference to the intensity, organisation and remuneration of the activity.
For an entrepreneur who still runs an operating group, this is often the point at which Switzerland is excluded, or at which the structure has to change: board functions, management activity and remuneration must be located consistently with the regime, and doing so may conflict with the substance requirements of the operating companies themselves.
Italy imposes no equivalent prohibition. A new resident may work in Italy, but the resulting Italian-source income is ordinarily taxed; and where the individual performs management functions in Italy for foreign companies, questions of place of effective management and permanent establishment arise for those companies.
This is the single criterion that most frequently determines the answer, and it should be examined before any comparison of amounts.
Family, wealth taxes, foreign assets and reporting
Under the Italian regime, the option can be extended to family members at the per-member amount, which for large families can materially change the arithmetic after the 2026 increase. In Switzerland, the expenditure base is computed by reference to the taxpayer and dependants together, so family size affects the base rather than adding a separate charge.
Switzerland levies wealth tax at cantonal and communal level, and the expenditure regime must take wealth into account under the applicable cantonal rules. Italy does not levy a general wealth tax, but applies IVIE and IVAFE to foreign real estate and foreign financial assets under ordinary rules; under Article 1(153) of Law 232/2016, read together with Article 24-bis TUIR, taxpayers who exercise the option are not subject to those levies, nor to the RW foreign-asset monitoring obligation, in respect of the foreign assets and investments covered by the option. Where the option excludes certain jurisdictions, that relief does not extend to the excluded income and assets.
Both jurisdictions receive information under the automatic exchange of financial account information, so the analysis should assume full transparency towards former residence states and source states.
Treaty position and friction with source countries
Treaty access must be analysed treaty by treaty, and it is here that expenditure-based taxation carries a specific risk. Swiss administrative practice recognises that a number of treaties require a modified form of expenditure-based taxation before treaty benefits are granted. The treaties concerned, and the conditions attached, must be verified case by case against the applicable treaty text and the FTA practice in force; no general list should be relied upon.
Modified expenditure taxation broadly requires income from the treaty state, and income for which relief is claimed there, to be included in the Swiss base and taxed at ordinary rates. The client obtains treaty protection, but at a cost that must be quantified before the move.
For Italy, the corresponding question is whether the new resident is treated as a resident entitled to treaty benefits notwithstanding the substitute tax. Source states may examine whether the individual is liable to tax on a worldwide basis in the ordinary sense, and the availability and wording of an Italian certificate of tax residence for a new resident should be verified with the Agenzia delle Entrate before treaty relief is claimed. Where the client's income arises predominantly in one source state, that state's position should be tested in advance rather than assumed.
In both cases, the former state of residence is the more immediate risk: a departure that is not clean in fact — retained dwelling, family centre, continued management — invites a competing residence claim and a tie-breaker analysis in which the new regime offers no protection.
Canton selection against a single national regime
Switzerland is not one jurisdiction for this purpose. Cantons differ in whether the regime is available, in the minimum base they impose, in effective tariffs, in wealth taxation and in administrative approach to the initial agreement and its periodic review.
The choice of canton and commune is therefore a substantive planning decision with a measurable financial effect, and it interacts with immigration, since fiscal-interest based residence procedures for third-country nationals are handled at cantonal level.
Italy's regime is national and uniform in its mechanics, which makes the outcome easier to predict but leaves less room for optimisation. Regional and municipal surcharges affect only income taxed in the ordinary way.
Timing and realisation events before the move
The most consequential decisions are usually taken before residence changes. Whether a disposal, a distribution, a share reorganisation or the crystallisation of an accrued gain occurs before or after the transfer determines which system applies to it, and in several departure states an exit charge applies on the transfer itself.
Under the Italian regime, gains on qualifying shareholdings realised in the first five tax periods are outside the substitute tax, so the sequencing of a partial or staged exit is central. Under the Swiss regime, private capital gains on movable private assets are in principle not subject to income tax, but the expenditure base and the control calculation still frame the annual position, and cantonal wealth taxation applies to the proceeds.
Distributions from a family holding, the settlement or restructuring of trusts, and the timing of pension drawdown should all be placed on the same calendar as the residence change, together with the departure state's own rules.
Holding structures, trusts, foundations and succession
A change of personal residence changes the tax position of the structures around the individual. Where the client manages a holding company from the new country of residence, the place of effective management of that company may shift with them, with corporate residence and permanent establishment consequences that neither personal regime addresses.
Trusts and foundations require particular care. Italy applies specific look-through and attribution rules to trusts and to income of foreign entities in low-tax jurisdictions, and the interaction with Article 24-bis needs to be examined for each structure. Switzerland has no domestic trust law but recognises foreign trusts under the Hague Convention, and the tax treatment depends on the classification of the trust and the position of settlor and beneficiaries.
Succession law and succession taxation follow different rules again. Italy applies inheritance and gift tax with a national scope of application; Switzerland taxes inheritance and gifts at cantonal level, with widely differing rules and, in most cantons, exemption for direct descendants. For a family that expects a generational transfer during the period of residence, this often weighs more heavily than the annual tax figure.
Immigration is a separate workstream
Neither regime creates a right of residence. In Switzerland, EU and EFTA nationals rely on the free movement agreement, while third-country nationals generally require a cantonal permit, in practice frequently on grounds of important public — including fiscal — interest, subject to quotas and to cantonal discretion.
In Italy, EU nationals register locally, while third-country nationals require an entry visa and permit under the applicable category. Registration formalities, the timing of the transfer within the tax year and the alignment between civil registration and tax residence all affect when the regime can first be applied.
Tax and immigration timelines rarely coincide, and the tax plan should be built around the slower of the two rather than the other way round.
Exit from the regime and the next move
Both regimes end. The Italian option is limited to fifteen tax periods and can be revoked or lost; on expiry, worldwide income becomes taxable under ordinary rules, which for a client with a large foreign income base is a material change requiring several years of preparation.
In Switzerland, the regime ends if the conditions cease to be met — acquisition of citizenship, taking up gainful activity, or a voluntary switch to ordinary taxation — and the transition to ordinary assessment must be modelled, including the wealth-tax position and the treatment of accumulated assets.
A regime with a defined horizon should be entered with the subsequent step already outlined. Planning that assumes indefinite continuation is the most common structural weakness we see in files presented for review.
Which profiles tend to fit which regime
Switzerland tends to suit an individual who has genuinely withdrawn from active business, whose income is passive and largely foreign, who values stability, a predictable administrative relationship and a strong wealth-holding environment, and who is prepared to accept the prohibition on gainful activity and the cantonal wealth-tax layer.
Italy tends to suit an individual with a very large and diversified foreign income base, who wishes to remain economically active, who may work or hold offices in Italy accepting ordinary taxation on that income, and whose planning horizon fits within fifteen years — bearing in mind that the fixed amount is now EUR 300,000 per year, plus EUR 50,000 per family member, which changes the threshold at which the regime becomes efficient.
Neither should be chosen on tax alone. Where the operating business, the family and the decision-making centre remain elsewhere, the correct advice is frequently that no change of residence should be undertaken, or that it should be deferred until the underlying structure has been reorganised.
The TCC perspective
In our experience the decisive variables are rarely the headline amounts. They are the location of gainful activity, the composition of income by source, the treaty relationship with the states in which that income arises, the position of the departure state, and the structures that travel with the client.
A comparison prepared on the basis of the annual charge alone will usually produce the wrong answer for entrepreneurs and family offices, because it ignores the corporate, treaty and succession consequences that follow the individual.
TCC Tax & Corporate Consultants SA assists internationally mobile private clients, families and family offices in analysing these regimes, coordinating the tax, corporate, immigration and succession workstreams, and working with the professionals responsible in each jurisdiction concerned.