Italy introduces a preferential tax regime to attract high-net-worth individuals
With the Italian Budget Law for 2017 (Law n. 232 of 11 December 2016), a new preferential tax regime aimed at attracting high-net-worth individuals to Italy has been enacted. In essence, this "new residents regime" allows individuals who transfer their tax residence to Italy to opt for an annual flat tax of Euros 100,000 (for each fiscal year) on their non-Italian source income and/or gains.
The Italian Tax Agency has also recently released guidelines concerning the operation of this regime, notably the exercise of the option, its modification and revocation, as well as the payment of the flat tax.
Who Can Benefit from the "New Residents Regime"?
The option is reserved to individuals transferring their tax residence to Italy, irrespective of their nationality or domicile (i.e., it is available for both non-Italian and Italian nationals). Juridical persons cannot benefit from this favorable regime.
Individuals wishing to benefit from the "new residents regime" must have been non-tax resident in Italy for at least 9 out of the 10 fiscal years preceding the beginning of the validity of the option.
Another interesting aspect of this new provision is the possibility for the individual electing for the "new residents regime" to extend its application to family members. In this respect, it is important to highlight that:
the range of family members to whom the application of the tax regime can be extended encompasses spouses, sons and daughters, including sons-in-law and daughters-in-law (in absence of sons and daughters, the regime may be extended to close descendants), parents, including parents in-law (in absence of parents, the regime may be extended to close ascendants), brothers and sisters; and in order to benefit from this tax regime, these family members must transfer their tax residence to Italy and must have been non-tax resident in Italy for at least 9 out of the 10 fiscal years preceding the beginning of the validity of the option. II. Benefits of the "New Residents Regime"
Type of Income and Gains Concerned and Amount of the Flat Tax
The "new residents regime" enables opting for, in lieu of the ordinary Italian income tax, a flat tax amounting to € 100,000 for each fiscal year applicable to any income and/or gains of non-Italian source of the newly resident individual, regardless of the effective amount of such income and/or gains.