Since 2017 Italy has introduced a special tax regime in favour of new tax residents with the aim of encouraging foreign investments.
The incentive mainly consists in the possibility of paying a substitute tax of €200,000 per fiscal year covering all income generated abroad.
WHAT ARE THE BENEFITS?
- Those who transfer their tax residence to Italy can opt for a flat-rate tax of €200,000 per fiscal year for all foreign-sourced income, irrespective of its type and amount, in lieu of the ordinary personal income tax. Only Italian-sourced income is taxable under ordinary rules.
- The incentive regime may be extended to family members who move their residence to Italy by paying just €25,000. The extension applies even if they transfer their tax residence to Italy at a later time;
- The option is valid for a period of 15 years (except in case of its revocation by the taxpayer);
- The exemption from inheritance and gift taxes for assets and rights held abroad. During the period of the substitute tax regime, the inheritance and gift tax will have to be paid only only on properties, rights and assets located in Italy;
- The exemption from tax reporting requirements concerning financial assets and investments held abroad;
- The exemption from the payment of the tax on the value of properties held abroad (Ivie). The Ivie is a tax due on the value of real estate located abroad and held as property or other real right by individuals residing in the territory of the Italian State, regardless of their use;
- The exemption from the payment of the tax on the value of financial assets, current accounts and savings accounts (Ivafe). Ivafe is a tax payable by Italian residents on financial assets held abroad as property or other real right.
WHO QUALIFIES?
This 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.
WHAT IS THE PROCEDURE?
Those interested in benefiting from the tax incentive can contact the Italian Revenue Agency for an opinion (Tax Ruling) on the existence of the conditions necessary to benefit from it. The request can be submitted even when the person concerned has not yet moved his/her residence to Italy.
The Revenue Agency shall respond to the request within 120 days of receipt (without prejudice to the possibility of requesting additional documents), notifying its opinion on the occurrence or non-occurrence of the conditions to benefit from the regime. The reply to the tax ruling is binding for the Revenue Agency in relation to the specific case submitted.
The option of the substitute tax regime on income generated abroad shall be chosen in the tax return relating to the tax period in which the taxpayer has moved his/her tax residence to Italy or in the tax return for the following tax period.
If a request for tax ruling has been submitted, the tax return shall only include minimum information.
Conversely, if no ruling request has been submitted, it is still possible to opt in directly via the tax return, but in this case it is mandatory to indicate further information for the verification of the requirements.
THE ‘ITALO-MOEGASQUE’ RELOCATION PROGRAMME
The partnership between the Italian Tax Law Firm ‘Studio Legale Europeo’ of Milan and Rome and the Franco-Monegasque Firm ‘BOISBOUVIER ROBERT LAW & TAX OFFICES’ of Monaco aims to assist clients by providing them with an integrated platform of advisory services in all legal areas by ensuring that their relocation project in the border areas between Italy, France and Monaco runs and perfects smoothly.
As regards the abovementioned areas, a particular attention is dedicated to the ‘Italian Riviera’ (or ‘Ligurian Riviera’, in Italian ‘Riviera ligure’).
The geographical proximity of Liguria, and in particular the Province of Imperia and Savona (with its idyllic, charming and calm seaside resorts of Alassio, Sanremo, Bordighera and Ventimiglia, to name a few), to the French Riviera and the Principality of Monaco allows to combine the Italian joyful lifestyle and the richness of the Italian cultural heritage with Monaco’s sights and with its vibrant lifestyle, enjoying breathtaking landscapes between crystal clear sea and mountains and one of the mildest climates in the world (with around 300 sunny days a year).
The Principality of Monaco is not only luxury and glamour, but it is also a place of cultural, artistic and sporting events with a cosmopolitan community (of more than 140 nationalities, with the British community ranked fourth by number or residents).
Monaco is also an international business centre in the middle of the Mediterranean with flourishing economic interests and numerous investment opportunities in different sectors (real estate and construction, yachting and shipuilding, motoring, restaurant and catering services, tourism and hospitality, consultancy and administrative services, pharmaceutic, chemical, scientific and technical activities, financial and insurance activities, brokerage services, international trade, sport, design, fashion, art, ecology and energy transition).
In fact, the economic fabric of the Principality boasts some 5,000 businesess.
The Principality’s economic interests have spread to Italy with strategic investments giving rise to the construction of the third official port of Monaco in Ventimiglia (Cala del Forte marina) with gardens, restaurants, bars, offices and boat services, fostering the local economy.
The marina has set in motion a huge urban regeneration project for the city of Ventimiglia with a residential-hotel complex completed by a multi-purpose large international educational-sports and leisure campus surrounded by a public park, sports facilities and student accommodations (‘Borgo del Forte’ and ‘Borgo del Forte Campus’).
OUR QUALIFIED ASSISTANCE
Moving your residence for tax purposes to another country is not just a matter of taxes.
To be guided through every step of this important life choice, we strongly advise you to consult with qualified experts with a multidsciplinary background and years of experience in relocation procedures.
As for the tax aspects, our assistance is structured as follows:
- eligibility check;
- analysis of your assets and income;
- analysis of the impact of the regime, highlighting its consequences;
- drafting and submission of a tax ruling application to the Italian Revenue Agency if advisable;
- Italian tax compliance when the special tax regime is in place and family office services;
- drafting and filing of the annual Tax return.
However, by virtue of our multidisciplinary practice we follow an holistic approach, taking care of all the legal aspects involved in your relocation project, including assistance and consulting on real estate (for your housing arrangements in Italy) and contractual matters.
Please get in touch with us if you would like to take advantage of this interesting opportunity.
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