Italy’s fiscal offer to woo rich foreigners: a €100 k flat rate


A new flat-rate tax: EUR 100 000 and you have finished with the Italian IRS (fisc)

Ancona, Italy
Ancona, Italy

The Italian government has created a flat tax to invite the wealthy foreigners to set up residence in Italy. It may be extended to members of the family, to which it applies a replacement fee of € 25,000

MILAN – Pay the flat rate tax of EUR 100,000 per year to obtain a kind of balance on all accounts with the Italian tax authorities: this is the offer  for foreigners who wish to transfer their tax residence in Italy, a “tax base” – a replacement tax – on income earned abroad. The measure had been introduced since the last law of stability and is used just to attract “wealthy individuals”. A choice that many have also interpreted as a lever to try to divert towards the peninsula, and especially towards Milan, professionals with big salaries who will be forced to leave London after the divorce with Brussels, or Brexit. The advantage of the single tax – to be paid in one solution – you can even extend it to family members, a flat rate of € 25,000 will be applied. The option for the 2017 fiscal period must be exercised before September 30, 2018. Once the green light (even via silence / consent) is received, the neo-resident alien will see his flat rate tax recognized for the next fifteen years. The main requirement for access is to not have been resident in Italy for at least nine of the last ten years: a way to avoid the back and forth to take advantage of this flat rate tax.

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How to exercise the option. Taxpayers can join the new scheme when filing an income tax return related to the tax period in which they were transferred to the tax residence in Italy or in the immediate wake. Prior to this, they must apply to the central income assessment. The application may be delivered by hand, by registered mail with acknowledgment of receipt or by electronic notification, using certified mail. The foreign person must indicate:

  1. Personal data and, if already granted, the tax code, in addition to his domicile in Italy, if he is already resident;
  2. Non-resident status in Italy for a period of at least nine tax years in the 10 years preceding the beginning of the option;
  3. The jurisdiction or jurisdictions in which the person had the last fiscal domicile before exercising the option;
  4. States or territories for which it intends to exercise the option of not using the substitute tax.
  5. A “checklist” is also required, which among other things is used to examine the state of no tax residence in at least nine out of ten tax years before entering the flat tax.

Members of the family may benefit

Again the tax agency states that the flat-rate scheme can be extended to one or more family members in possession of the requirements by a specific indication related to the tax period in which the family has moved tax residence in Italy or Income tax return. In this case, the replacement tax is equal to € 25,000 for each of the family to which the effects of the same option are extended.

When apply

The option must be exercised within the deadline for the filing of income tax returns, even if the questionnaire has not yet been answered by the tax authorities. The application can be filed even if the terms to declare residence in Italy have not yet run. The option is tacitly renewed from year to year, whereas the effects cease, in all cases, after fifteen years.

A lump sum for paying taxes

Payment of the replacement tax, in the amount of 100,000 euros, must be made in a lump sum, for each tax period, on the due date for payment of the balance of income tax.

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