The Italian Budget Law 2017 introduced a new special tax regime for individuals who transfer their tax residence to Italy from January 1st, 2017. This special tax regime is particularly attractive for high net worth individuals and families, because it grants a reduction of the tax base limitedly to the domestic one only and, in comparison with other special regimes (e.g., the Swiss globalist or the UK res-not-dom), it gives an high degree of privacy to the taxpayer. On March 8th 2017 the Italian Tax Administration published the Director Decree n° 47060 and the form to be utilized for the application.
The special regime is applicable both for Italian and foreign citizens. The law provides also a preferential route (”golden visa”) for non EU citizens.
The new law sets a “substitute tax regime” on foreign-source income and gains, including effects related to inheritance and gift taxation, as better described below.
Who can access the regime?
This favorable tax regime is available for "newly resident" individuals in Italy, who (regardless of their nationality or domicile) have been non-tax resident in Italy for at least 9 years out of the 10 years preceding their transfer to Italy. The incentive regime may be also extended to the family members of these individuals.
High-net-worth individuals transferring their tax residence to Italy are enabled to apply a substitute tax to their foreign income and gains, amounting to €100,000 for each fiscal year, in lieu of the Italian Income Tax. Therefore, this taxation represents an alternative to the application of the ordinary taxation and the option is valid for a period of 15 years. The election for the regime may be extended to family members through the payment on their foreign income and gains of a substitute tax amounting to €25,000 per member. In order to benefit from the regime, all applicants have to submit a preliminary probatory ruling to the Italian Revenue Agency in order to prove the existence of the eligibility requirements. Individuals transferring their tax residence have to pay inheritance and donation tax only for properties and assets existing within the Italian territory.