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| Barbara Scampuddu |
Gian Luca Nieddu |
Starting from 2017, non-resident individuals who transfer
their place of residence to Italy may opt for a preferential
tax regime with regard to foreign source income.
The new tax regime will apply under the condition that the
individuals have not been resident in Italy for nine years out
of the previous 10 years (in this regard, a specific ruling may
be submitted to the Italian tax administration).
The option can be exercised by the deadline for filing the
income tax return for the fiscal period in which the
individual's residence is transferred to Italy, or in the
following year.
The detailed rules for exercising this option are provided
in the Decree of the director of the Italian tax agency dated
March 8 2017. Although the option can be revoked, it is valid
for a maximum of 15 years.
Under an objective standpoint, the preferential tax regime
regards the individual income tax (IRPEF), the inheritance and
gift tax and other indirect taxes applicable to immovable
properties and financial activities held abroad (IVIE and
IVAFE).
Individual income tax (IRPEF)
According to the preferential tax regime, individuals will
be taxed as follows.
With regard to national source income, individuals will be
taxed according to the income tax return according to the IRPEF
ordinary rates, which range between 23% and 43%.
Income of a financial nature will normally be subject to a
withholding tax of 26% (in some cases, 12.50%) levied by the
intermediary.
Foreign source income
With regard to foreign source income (immovable property
existing abroad, dividends of foreign companies, capital gains
from the sale of non-qualified shares of foreign companies,
etc.), individuals will pay a flat tax equal to €100,000
($106,000) for each fiscal year.
Capital gains from the sale of qualified shares
(shareholding higher than 20%), realised in any of the five
fiscal periods following the option, are excluded and subject
to the ordinary income tax. Starting from the sixth year after
the option, those incomes will also be subject to the
preferential tax regime. Any family member who meets the
conditions requested may apply for the preferential tax regime
and pay a flat tax equal to €25,000 for each fiscal
year.
Inheritance and gift tax
With regard to individuals whose estate is being
administered during the period of validity of the option, the
inheritance tax will apply only to goods and rights existing in
Italy. The same rules will apply with regards to gifts made
over the lifetime of the option. Thus, goods and rights
existing abroad will not be taxable for inheritance and gift
tax purposes.
IVIE and IVAFE
Furthermore, such individuals and their family members are
exempt from the real estate abroad value tax (Imposta sul
valore degli immobili all'estero, or IVIE) and from the
financial activities abroad value tax (IVAFE), respectively
applicable at a rate of 0.76% and 0.2%.
RW
Lastly, such individuals and their family members do not
have to comply with the rules regarding the so called
"monitoraggio fiscale". Thus, they do not have to show
in their tax return the goods and rights held abroad.
Barbara Scampuddu (barbara.scampuddu@hager-partners.it)
and Gian Luca Nieddu (gianluca.nieddu@hager-partners.it)
Hager&Partners
Tel: +39 02 7780711
Website: www.hager-partners.it