Flat Tax Regime Italy New Residents
LA DOLCE VITA at 100.000 Eur
Tax Italy NewResident DOLCEVITA
TABLE of CONTENTS
Tax Regime New Italian Residents:
WHY TO LOOK AT ITALY IN CERTAIN CASES
TO WHOM THE FLAT TAX REGIME APPLIES
DEROGATION FROM THE STANDARD WORLDWIDE TAXATION REGIME IN ITALY
HOW TO ACCESS THE FLAT TAX REGIME
FLAT-RATE SCHEME FOR FAMILY MEMBERS
TO WHICH INCOME APPLIES THE FLAT TAX
THE LEGISLATION: Article 24-Bis of the TUIR as amended
MALTAWAY CONTACTS for FLAT TAX REGIME FOR NEW RESIDENTS IN ITALY AND for ITALIAN CITIZENSHIP
WHY TO LOOK AT ITALY IN CERTAIN CASES
ITALY, the country of the SWEET LIFE or LA DOLCE VITA, has lost significant attractiveness internationally, both for its Debt, Macro-Economic and Banking situation, and for the presence of an asphyxiating state and public bureaucracy for businesses and citizens, with an ever more extensive, invasive and hungry tax model based on the GLOBAL TAXATION and compulsory DECLARATION regime.
This flat tax regime for Neo residents in Italy on income produced abroad, for those who transfer their tax residence to Italy, is very attractive for income above half a million Euros, with 1 million the effective taxation is 10%, either for the lumpsum of 100k and for the total exclusion from the compulsory declaratory regime.
Substantially, an efficient solution that allows one to savouring a lifestyle, from the Alps to Sicily, made of Italian Style and Dolce Vita
In fact, the 2017 Budget Law (Law 232/2016) introduced a flat tax regime as Neo resident in Italy on income produced abroad for those who transfer their tax residence to Italy.
Tax Italy NewResident DOLCEVITA
TO WHOM THE FLAT TAX REGIME APPLIES
It is applicable to expatriates from Italy who have resided abroad for at least 9 years in the last 10 tax years and who now return to Italy and to European and NON-EU citizens from nearly 180 states who decide to transfer their residence to Italy.
It is intended for high net worth individuals (HNWI) as the option provides for the payment of a flat tax of €100,000 for each tax year in which it is exercised but only on income produced abroad, i.e. not generated in Italy.
A person who receives foreign income of e.g. EUR 2 million, when he transfers his residence to Italy and requests the application of this regime will in fact only have to pay a flat-rate tax of EUR 100,000 on foreign-source income.
In this case equal to 5% rate.
A very low taxation percentage for those with high incomes!
If these persons also have other income produced in Italy, these, on the other hand, are taxed according to the ordinary rules.
With this regulation, the Italian state wants to attract rich people who have activities abroad to live. This may be, for example, entrepreneurs who carry on business in a foreign country and receive substantial income who decide to apply the facilitated regime by transferring their residence to Italy.
In Malta, for example, some Maltese citizens with a high-income capacity to whom the worldwide taxation regime should be applied, have decided to transfer their residence to Italy and take advantage of this facilitated flat-rate regime.
Obviously, attention must be paid in assessing the choice to the tax regime in force in the foreign countries where the income is generated and to the applicable double taxation conventions (DTAs) in order to avoid possible double taxation.
DEROGATION FROM THE STANDARD WORLDWIDE TAXATION REGIME IN ITALY
The facilitation allows to derogate from the application of the worldwide taxation regime or taxation on a worldwide basis, i.e. the taxation of all income wherever produced in the world in force in Italy, by applying a sort of tax regime for NON-DOM already known in some jurisdictions and also applied in Malta or in the UK.
HOW TO ACCESS THE FLAT TAX REGIME
The application and Adherence to the regime is made by submitting the tax return in the same tax period in which the individual transfers his tax residence to Italy or with the tax return of the following year, indicating it via a dedicated form to for newly domiciled persons.
PRIOR INTERPELLO PETITION
It is also permissible to submit a specific prior interpello petition to the Taxpayers Division of the Revenue Agency to obtain a prior and binding opinion on the applicability of the regime for newly resident taxpayers, thus avoiding possible future disputes and assessments.
I recommend evaluating the decision to file the interpello and how to submit the petition with a professional expert in the field to avoid possible rejection due to not knowing exactly what to represent to the Agency.
For example, only income from the States indicated in the interpello are subject to the facilitation and care must be taken that they are States collaborating with Italy to avoid the request for facilitation being rejected.
The request is optional and the taxpayer may decide to opt for the regime simply by exercising the option in his tax return.
CHECK LIST
It is necessary at the time of application to indicate the existence of the elements necessary for access to the scheme, by filling in the check list and submitting supporting documentation if necessary.
The check list is also a valuable aid in assessing for yourself whether you meet the requirements for accessing and applying for the flat-tax rate regime.
For the most part, the Italian Revenue Agency uses the same criteria already used to consider a person actually resident abroad.
The Italian Revenue Agency’s check list requires:
- for Italian citizens to indicate AIRE registration
- jurisdiction of last tax residence
- the jurisdictions not included in the exercise of the option
and also the
VERIFICATION OF THE PREREQUISITE OF THE ABSENCE OF TAX RESIDENCE IN ITALY IN THE NINE TAX PERIODS OUT OF THE TEN PRECEDING THE START OF THE PERIOD OF VALIDITY OF THE OPTION
through a series of questions, for example:
- proving the absence of previous tax residence in Italy by also proving that neither wife nor children have resided there
- no enrolment of minor children in educational institutions in Italy
- not having had stable personal, social, cultural and political ties with persons residing in Italy
- not holding corporate offices positions in Italian companies
- not having received income from capital, employment, self-employment, business, pensions, remuneration for intellectual works, patents, trademarks in Italy.
FLAT TAX OF EUR 100.000
The payment of the substitute tax, in the amount of EUR 100,000, must be made in a single instalment, for each tax period in which the scheme is in effect, by the due date for the payment of the balance of income tax return.
Failure to pay or partial payment of the substitute flat tax by the due date will result in forfeiture of the scheme.
FLAT-RATE SCHEME FOR FAMILY MEMBERS
The flat-rate regime may also be extended to one or more family members (spouse, children or descendants or close relatives in the ascending line) who will be required to pay the Eur 25,000 substitute flat tax annually.
DURATION OF THE REGIME
The option is tacitly renewed from year to year, unless the taxpayer or a family member decides to revoke it, and has a maximum duration of 15 years
TO WHICH INCOME APPLIES THE FLAT TAX
The legislation does not contain a specific list of categories of income, so it must be understood to apply to all income from foreign sources, whether from employment, business, capital, financial, dividends, royalties, rental income from real estate abroad, capital gains from the sale of virtual currencies at a foreign exchange, etc.
The law, however, in order to avoid the possibility of avoidance, provides that for the first 5 tax years (starting from the year in which the option is valid) the regime cannot be applied to capital gains or capital gains deriving from the disposal of qualified participations in non-resident entities and companies, in order to avoid a person transferring residence to Italy for the sole purpose of obtaining preferential taxation.
The taxpayer under the facilitated regime is not required to fill in the declaratory RW form nor to pay tax on real estate or financial assets held abroad.
THE LEGISLATION: Article 24-Bis of the TUIR as amended
Below is Article 24-bis of Presidential Decree No. 917/86 as amended by the regulations currently in force.
Article 24-bis. Option for substitute tax on income earned abroad by individuals transferring their tax residence to Italy.
ARTICOLO 24-BIS COMMA 1 TUIR
- Le persone fisiche che trasferiscono la propria residenza in Italia ai sensi dell’articolo 2, comma 2, possono optare per l’assoggettamento all’imposta sostitutiva, di cui al comma 2 del presente articolo, dei redditi prodotti all’estero individuati secondo i criteri di cui all’articolo 165, comma 2, a condizione che non siano state fiscalmente residenti in Italia, ai sensi dell’articolo 2, comma 2, per un tempo almeno pari a nove periodi d’imposta nel corso dei dieci precedenti l’inizio del periodo di validità dell’opzione. L’imposta sostitutiva non si applica ai redditi di cui all’articolo 67, comma 1, lettera c), realizzati nei primi cinque periodi d’imposta di validità dell’opzione, che rimangono soggetti al regime ordinario di imposizione di cui all’articolo 68, comma 3.
ARTICOLO 24-BIS COMMA 2 TUIR
- Per effetto dell’esercizio dell’opzione di cui al comma 1, relativamente ai redditi prodotti all’estero di cui al comma 1 è dovuta un’imposta sostitutiva dell’imposta sui redditi delle persone fisiche calcolata in via forfetaria, a prescindere dall’importo dei redditi percepiti, nella misura di euro 100.000 per ciascun periodo d’imposta in cui è valida la predetta opzione. Tale importo è ridotto a euro 25.000 per ciascun periodo d’imposta per ciascuno dei familiari di cui al comma 6. L’imposta è versata in un’unica soluzione entro la data prevista per il versamento del saldo delle imposte sui redditi. Per l’accertamento, la riscossione, il contenzioso e le sanzioni si applicano, in quanto compatibili, le disposizioni previste per l’imposta sul reddito delle persone fisiche. L’imposta non è deducibile da nessun’altra imposta o contributo.
ARTICOLO 24-BIS COMMA 3 DEL TUIR
- L’opzione di cui al comma 1 deve essere esercitata dopo aver ottenuto risposta favorevole a specifica istanza di interpello presentata all’Agenzia delle entrate, ai sensi dell’articolo 11, comma 1, lettera b), della legge 27 luglio 2000, n. 212, entro il termine per la presentazione della dichiarazione relativa al periodo d’imposta in cui viene trasferita la residenza in Italia ai sensi del comma 1 del presente articolo ed è efficace a decorrere da tale periodo d’imposta. Le persone fisiche di cui al comma 1 indicano nell’opzione la giurisdizione o le giurisdizioni in cui hanno avuto l’ultima residenza fiscale prima dell’esercizio di validità dell’opzione. L’Agenzia delle entrate trasmette tali informazioni, attraverso gli idonei strumenti di cooperazione amministrativa, alle autorità fiscali delle giurisdizioni indicate come luogo di ultima residenza fiscale prima dell’esercizio di validità dell’opzione.
ARTICOLO 24-BIS COMMA 4 TUIR
- L’opzione di cui al comma 1 è revocabile e comunque cessa di produrre effetti decorsi quindici anni dal primo periodo d’imposta di validità dell’opzione. Gli effetti dell’opzione cessano in ogni caso in ipotesi di omesso o parziale versamento, in tutto o in parte, dell’imposta sostitutiva di cui al comma 2 nella misura e nei termini previsti dalle vigenti disposizioni di legge. Sono fatti salvi gli effetti prodotti nei periodi d’imposta precedenti. La revoca o la decadenza dal regime precludono l’esercizio di una nuova opzione.
ARTICOLO 24-BIS COMMA 5 DEL TUIR
- Le persone fisiche di cui al comma 1, per sé o per uno o più dei familiari di cui al comma 6, possono manifestare la facoltà di non avvalersi dell’applicazione dell’imposta sostitutiva con riferimento ai redditi prodotti in uno o più Stati o territori esteri, dandone specifica indicazione in sede di esercizio dell’opzione ovvero con successiva modifica della stessa. Soltanto in tal caso, per i redditi prodotti nei suddetti Stati o territori esteri si applica il regime ordinario e compete il credito d’imposta per i redditi prodotti all’estero. Ai fini dell’individuazione dello Stato o territorio estero in cui sono prodotti i redditi si applicano i medesimi criteri di cui all’articolo 23.
ARTICOLO 24-BIS COMMA 6 DEL TUIR
- Su richiesta del soggetto che esercita l’opzione di cui al comma 1, l’opzione ivi prevista può essere estesa nel corso di tutto il periodo dell’opzione a uno o più dei familiari di cui all’articolo 433 del codice civile, purché soddisfino le condizioni di cui al comma 1. In tal caso, il soggetto che esercita l’opzione indica la giurisdizione o le giurisdizioni in cui i familiari a cui si estende il regime avevano l’ultima residenza prima dell’esercizio di validità dell’opzione. L’estensione dell’opzione può essere revocata in relazione a uno o più familiari di cui al periodo precedente. La revoca dall’opzione o la decadenza dal regime del soggetto che esercita l’opzione si estendono anche ai familiari. La decadenza dal regime di uno o più dei familiari per omesso o parziale versamento dell’imposta sostitutiva loro riferita non comporta decadenza dal regime per le persone fisiche di cui al comma 1.
MALTAWAY CONTACTS for FLAT TAX REGIME FOR NEW RESIDENTS IN ITALY AND for ITALIAN CITIZENSHIP
For any clarification, advice, legal opinion, support to procedures and applications for both Italian citizenship and special taxation regimes in Italy, please do not hesitate to contact us, Maltaway’s professionals put at your disposal their more than 30 years of International Practices
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