Tax Residency Changes in 2026: EU and US Updates

2026 brings a wave of legislative and regulatory changes affecting tax residency rules for high-net-worth individuals, digital nomads, and cross-border movers between the European Union and the United States. From the end of Portugal’s NHR regime to new US expatriation rules and Italy’s expanded flat tax, the landscape is shifting fast.

This article provides a comprehensive overview of what has changed, what is changing, and what high-net-worth individuals and internationally mobile professionals need to consider now.

EU Tax Residency: Key Changes in 2025–2026

🇵🇹 Portugal: NHR 2.0 (IFICI) — New Rules in Force

Portugal’s original Non-Habitual Resident (NHR) regime ended for new applicants on December 31, 2023. In its place, the IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação) — commonly called NHR 2.0 — was introduced from January 1, 2024 and applies through at least 2026.

• Flat 20% tax on qualifying Portuguese-source income
• Exemption on most foreign-source income (dividends, interest, capital gains, rental income)
• Eligible professions: technology, R&D, startups, academic researchers, highly qualified workers
• Important: Passive wealthy retirees no longer qualify — active professional or investment activity is required

🇮🇹 Italy: Expanded Flat Tax Regime

Italy’s Res Fiscale Agevolata (€100,000 annual flat tax on foreign income) remains in force but with tightened enforcement. From 2025, the Italian Revenue Agency has increased scrutiny on:

• Proof of actual relocation (utility bills, children’s school registrations, physical presence days)
• Substance of the Italian tax residency (the “domicile” concept has been clarified to mean primary life center)
• Inheritance and gift tax implications — assets outside Italy are potentially included

Italy also offers a reduced €100,000 → €200,000 flat tax option for new residents bringing capital or strategic investments. This is aimed at ultra-HNW individuals.

🇬🇷 Greece: 7% Flat Tax for Foreign Pension Income

Greece continues to offer a 7% flat tax on foreign pension income for qualifying non-residents who transfer their tax residency to Greece. With low cost of living and an expanding expat community, Greece is gaining traction as an alternative to Portugal.

🇪🇸 Spain: Beckham Law — Stricter Enforcement in 2026

Spain’s special expatriate regime (Régimen Especial de Trabajadores Desplazados, known as the Beckham Law) continues at a flat 24% rate on Spanish-source income up to €600,000, but authorities have increased review of:

• Whether the individual truly moved for employment purposes
• Tie-breaker situations where the individual maintains family links in Spain
• Remote workers who claim the Beckham Law but have no Spanish employer

EU Tax Residency Comparison: 2026 Summary

US Tax Residency: Key Changes and Considerations in 2026

🇺🇸 Citizenship-Based Taxation: Still the Rule

The United States remains one of only two countries in the world (with Eritrea) to tax its citizens on worldwide income regardless of where they live. If you hold a US passport or a Green Card, you remain subject to US taxation — even if you live in Portugal, Italy, or Singapore.

This creates significant planning challenges for US citizens using EU preferential regimes: the Italian €100K flat tax does not eliminate US reporting obligations, and the foreign earned income exclusion ($126,500 for 2024) only covers employment income.

🇺🇸 Exit Tax (Section 877A) — Expatriation Update

US citizens and long-term Green Card holders (8 out of 15 years) who renounce citizenship or abandon their Green Card are subject to the Section 877A Exit Tax if they are a “covered expatriate”. In 2026, the covered expatriate thresholds are:

• Net worth: ≥ $2 million
• Average annual net tax liability: ≥ $206,000 (indexed for inflation)
• 5-year tax compliance failure

Covered expatriates are deemed to have sold all worldwide assets at fair market value on the day before expatriation — gains above $866,000 (2024 exclusion amount) are taxed at capital gains rates. Deferred compensation, IRAs, and certain trusts have special rules.

FBAR & FATCA: No Change — Compliance Still Critical

FBAR (FinCEN 114) and FATCA (Form 8938) reporting requirements remain unchanged in 2026. US persons with foreign financial accounts exceeding $10,000 at any point in the year must file FBAR. Penalties for non-willful violations remain up to $10,000 per account per year.

Key Planning Considerations for 2026 Movers

1. Pre-move tax modelling: Always model your full global tax picture before relocating — EU preferential regimes and US CBT can interact in unexpected ways.
2. Treaty analysis: Check whether a tax treaty applies between your origin and destination country, and how it affects specific income types (pensions, dividends, capital gains).
3. Timing of exit: The date you cease residency in your home country matters enormously — tax year breaks, deemed disposals, and exit charges all depend on precise timing.
4. Substance and presence: EU tax authorities are increasing scrutiny of residency claims. Ensure physical presence days, family ties, and economic activity genuinely reflect the new domicile.
5. US Green Card holders: Consider whether long-term Green Card retention makes sense — after 8 years you face the same exit tax rules as US citizens.