Wishing to live the "Dolce Vita" but scared of the Italian tax system?
Italy is one of the world top destination for living, due to its history, culture, landscape, food and wine. However, many people decide not to make the move for a simple reason: Italian taxes!
Since 2017 the Italian government has introduced a new tax regime for foreign residents moving to Italy which does not tax any foreign income; this regime is called: flat tax. Let's discover how it works.
Since 2017 the Italian government has introduced a new tax regime for foreign residents moving to Italy which does not tax any foreign income; this regime is called: flat tax. Let's discover how it works.
What is the flat tax regime?
Under the flat-tax regime, individuals who previously have not been tax residents of Italy and who transfer their tax residence to Italy will pay, instead of ordinary tax, a flat-rate substitute tax of € 100,000 per year on all their non-Italian sourced income for the next 15 years; each family member opting for the flat tax regime, will be subject to € 25,000 annual tax instead of € 100,000.
Under the flat-tax regime, foreign income subject to the flat tax includes:
By opting for the new tax regime individuals might be exempt from:
The flat tax does not apply to any Italian sourced income and on capital gains realised upon the transfer of non-Italian "qualified" shareholdings in the first 5 years after the election.
Under the flat-tax regime, foreign income subject to the flat tax includes:
- Employment income
- Rental income
- Capital income
- Self-employment income
- Corporate income (with or without permanent establishment)
- Other income
By opting for the new tax regime individuals might be exempt from:
- Donations and inheritance taxes relating to assets and real estate owned abroad,
- Tax on real estate owned abroad and from wealth tax on foreign financial investments;
- Remittances tax;
- Fulfilling the requirements provided by the foreign investments monitoring legislation, that is filing the RW reporting form (disclosure form to be attached to the Italian tax return with respect to any asset held abroad).
The flat tax does not apply to any Italian sourced income and on capital gains realised upon the transfer of non-Italian "qualified" shareholdings in the first 5 years after the election.
How to apply?
The Tax Authorities have confirmed that the election of such regime must be made by the deadline for submitting the income tax return for the fiscal year during which the individual has become Italian tax resident or during the following fiscal year.
The taxpayer may submit to the Italian Tax Authorities a formal ruling reporting the following:
Furthermore, the ruling could be requested before the taxpayer moves to Italy; Italian Tax Authorities have up to 120 (180) days to approve or deny such request and such time could be spent to plan the move to Italy.
The taxpayer may submit to the Italian Tax Authorities a formal ruling reporting the following:
- Taxpayer’s personal data, including Italian tax code;
- Jurisdiction (or jurisdictions) under which the taxpayer has been tax resident during the previous fiscal years;
- Jurisdiction (or jurisdictions) that the taxpayer wishes to exclude from the flat tax.
Furthermore, the ruling could be requested before the taxpayer moves to Italy; Italian Tax Authorities have up to 120 (180) days to approve or deny such request and such time could be spent to plan the move to Italy.
How can we help you?
Accounting Bolla is a Certified Chartered Accountant firm under the Italian and the UK laws.
We have a wide expertise in helping our international clients with the Flat-tax regime application and its subsequent Italian tax consequences.
We can help you with:
We have a wide expertise in helping our international clients with the Flat-tax regime application and its subsequent Italian tax consequences.
We can help you with:
- Advisory on Flat tax regime application;
- Advisory on the Italian tax implications;
- Tax planning;
- Ruling submitting;
- Tax return filing.
