FLAT TAX FOR NEW ITALIAN RESIDENTS
In 2017, the Italian Budget Law introduced a new tax package designed to attract high net worth individuals who want to become residents of Italy.
The new regime, provided under Article 24-bis of the Italian Tax Code, offers a substitutive flat tax of €100,000 on all foreign income for eligible individuals.
To qualify for the flat tax regime, individuals must become Italian residents after having resided outside Italy for at least nine years. Once they become residents, they can choose which country or countries to tax with the substitutive flat tax. Incomes from non-chosen countries are excluded from the flat tax regime and subject to ordinary Italian taxation.
However, individuals can benefit from tax credits for taxes paid abroad under ordinary Italian and international treaty regulations and limits.
New residents who opt for the flat tax regime may apply the ordinary tax regime to incomes arising from one or more specified countries. However, incomes from one excluded country are taxed using ordinary rules. Taxpayers cannot pick and choose each income but must apply ordinary rules to all incomes from a specific country. This system may allow new residents to benefit from international tax treaties regarding related incomes.
Our professionals offer tax advice, planning, and help with income tax and inheritance tax on an individual level. When providing personal tax advice, we make sure we understand our clients’ goals and ensure that they understand the consequences of any tax planning we undertake. Our focus is to help our clients pay only the tax they need to and to save them tax when possible.
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