Operating guidelines

Italian Special Tax Regimes for Individuals

Italy is offering an interesting package of tax incentives that guarantee the exemption of a large part of the income produced by individuals who become new residents: High Net Worth Individuals, employees, professionals, entrepreneurs, professional sportsmen and women and retirees.

The extent of the tax benefits and the considerable tax savings enable Italy to position itself at the top of the list of "fiscally advantageous" countries, gaining the nickname of “New El Dorado”.

 

Italian non-dom system for HNWIs (Res Non-Dom)

Who can apply and what is the favourable regime?

The benefit is addressed to High Net Worth Individuals and consists in the taxation of all income produced abroad (except, within certain limits, for capital gains deriving from the sale of "qualified" shareholdings) through the payment of a fixed annual tax of € 100,000.00 (flat tax) regardless of the amount of foreign taxable income.

Are there any further advantages?

Yes, there are additional tax benefits consisting of total exemption from the tax on the value of real estate abroad (IVIE), from the tax on the value of financial assets abroad (IVAFE) and from obligations relating to tax monitoring (RW Form), on the one hand, and from inheritance and gift taxes in relation to assets located abroad, on the other.

In addition to the tax benefits, there are also facilitations on the processing of entry visas and residence permits for new-residents, or in any case for those who intend to make investments in Innovative Start-Ups, investment initiatives, or research, also in collaboration with universities and public bodies.

Are there advantages for the family members?

Yes, the person eligible for the res non-dom regime may request that it be extended, throughout its period of validity, to one or more family members (wife/husband, children, parents, brothers and sisters). In order to benefit from the res non-dom regime - and all the benefits granted to it - family members must comply with the same requirements as the main taxpayer.

In this case, family members are entitled to a discount on the flat tax: the flat tax will be due at a fixed rate of only 25,000.00 euros (instead of 100,000 euros) for each family member who benefits from the res non-dom scheme.

What are the conditions and requirements?

Two conditions and requirements must be met: (i) the subject must not have been an Italian tax resident in the last nine years and (ii) he must transfer his tax residence to Italy.

How can it be requested?

Those who wish to benefit from the res non-dom regime may submit a specific request to the Italian Tax Administration, which is required to respond within a maximum period of 120 days. In the event of a favourable opinion, or failure to reply, the request is considered accepted and effective.

As an alternative to the request, the option for the facilitated regime can be made directly in the Italian tax return of the tax period in which the person transferred his/her tax residence to Italy or in the one immediately following. In this case - and, therefore, in the absence of a prior request - the Italian State could, in the future, revoke or disallow the application of the facilitated regime.

For these reasons, the submission of the request to the Italian Tax Administration is considered by experts as the "main road" to access the scheme.

How long does the facilitated scheme last and in which cases can it end?

The duration of the res non-dom scheme is 15 years from the first tax period of validity of the option and is not renewable.

It may expire early if the option is revoked or if the flat tax is not paid within the terms.

 

 

 

Inward expatriates regime

Who can apply and what is the favourable regime?

The facility is aimed at people who move to Italy to carry out a work activity - professional or entrepreneurial - and consists of 70% exemption from taxation of income from work from Italian sources. For those who choose to transfer their residence to a Southern Italian Region (i.e. Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia), the exemption is 90%.

For professional sportsmen and sportswomen, income is always tax-free - without territorial differentiation for those who move to a Southern Region - at the rate of 50%, provided that they pay a contribution equal to 0.5% of the taxable income, intended to strengthen the youth sectors.

For professors and researchers, income is always tax-free - without territorial differentiation for those who move to a Southern Region - at 90%.

Are there any further advantages?

No, further advantages are not provided for.

Which are the conditions and requirements?

There are three conditions and requirements that the subject must meet: (i) he/she must not have been an Italian tax resident in the last two years (ii) he/she must transfer his/her tax residence to Italy and undertake to maintain it for at least two years (iii) he/she must work mainly in Italy.

How can it be requested?

Employee income holders must submit a written request to the employer, who applies the benefit from the pay period following the request; if the employer has not been able to recognize the benefit, the taxpayer can benefit directly in the tax return.

Holders of self-employment income can access the facilitated scheme directly in their tax return.

It is advisable to submit, with the help of qualified professionals, a specific request to the Italian Tax Administration in order to confirm the entitlement to the incentives and resolve any doubtful cases. 

How long does the facilitated scheme last and in which cases can it end?

It is possible to apply for the Impatriates regime for a maximum of five years, with the possibility of renewal for a further five years. However, in case of renewal, the income exemption is 50% and the person will also have to meet the following requirements: (i) purchase of a residential property in Italy (directly from the taxpayer, or from the spouse, cohabitant or children) and (ii) having at least one minor or dependent child; if the subject has at least three minor or dependent children, the income exemption is 90%.

For professors and researchers, the favourable regime, which usually lasts 6 years, can be extended to eight years if the person concerned also meets one of the following requirements: (i) purchase of a residential property in Italy (directly from the taxpayer, or from the spouse, cohabitant or children) or (ii) having a minor or dependent child; if the subject has more than two or three children, the facilitated scheme may be increased up to eleven or thirteen years respectively.

It may cease early in the event of a negative assessment of the requirements provided for, or when they cease to exist, or even in the event of non-payment or insufficient payment, within the terms, of the tax.

Are there any advantages for the family members?

There are no specific tax benefits or advantages for the family members of the person opting for the Impatriates regime, but family members, if the conditions are met, can also benefit from the incentives.

 

 

 

Retirees regime

Who can apply and what is the favourable regime?

The benefit is aimed at foreign retirees who transfer their residence to a Southern Italian Region and consists in the possibility of taxing all income produced abroad through the payment of a proportional tax equal to 7%.

The Retirees regime is currently available only to individuals resident in States that have concluded an administrative cooperation agreement with Italy (DTA, TIEA, FATCA, etc.).

Are there any further advantages?

The Retirees regime provides for the exemption from the tax on the value of real estate abroad (IVIE), from the tax on the value of financial assets abroad (IVAFE) and from tax monitoring obligations (RW Form).

Unlike the res non-dom regime, the application of inheritance and gift taxes according to the ordinary rules remains unchanged. It is therefore advisable to carry out a prior ad hoc analysis in order to assess the convenience of choosing the facilitated regime also in terms of wealth planning and wealth management.

Which are the conditions and requirements?

There are two conditions and requirements that the subject must meet: (i) he must not have been an Italian tax resident in the last five years and (ii) he must transfer his tax residence to an Italian Municipality with less than 20,000 inhabitants, located in a Southern Italian Region (i.e. Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia).

How can it be requested?

The procedure for applying for the favorable regime can be carried out by exercising an option in the Italian tax return for the tax period in which the subject transferred his tax residence to the South of Italy.

It is advisable to submit, with the help of qualified professionals, a specific request to the Italian Tax Administration for confirmation of the entitlement to the incentives and to resolve any doubtful cases.

How long does the facilitated scheme last and in which cases can it end?

It is possible to apply for the Retirees regime for a maximum of ten years, with no possibility of renewal, and it is always possible to revoke it.

The facilitated regime may be terminated early in the event of a negative assessment of the requirements or if the requirements are no longer met, or even in the event of non-payment or insufficient payment, within the terms, of the tax.

Are there advantages for the family members?

There are no tax benefits or advantages for the family members of the subject who benefits from the Retirees regime.

 

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