Martedì 28 Marzo 2017 - Aggiornato alle 19:59
Italy’s Revenue Agency points out the guidelines on the application of the new favorable tax regime designated for non-domiciled residents Eligible taxpayers can profit of tax benefits already from 2017
The option for the new flat-rate scheme is to be exercised within the season of tax returns in relation with the fiscal period in which the residence will be transferred in Italy and will be effective starting from the same tax year. Thus, it follows that the option for the current year may be exercised before 30 September 2018. Therefore, taxpayers wishing to do so could benefit or take advantage of the new preferential tax scheme as early as this year. These are some of the key points set by the fiscal Ordinance issued today by the Agency in order to clear application, timetable and procedures regarding the new tax measure launched months ago by Government and Parliament.
Italy “Non-Dom-Regime”, a new favorable look to foreign investors – Mostly, the measure is part of a variegated set of new rules aiming to attract foreign taxpayers to invest in Italy. Among these, for example, other measures may be included as the simplified procedure to obtain an Italian visa for non-EU individuals who can make substantial investments in the country (e.g. startups, R&D, etc.) and reduced rates of income tax for highly skilled Italian citizens moving back to Italy from abroad.
The new tax regime in pills – The “Non-Dom-Regime” aims to reduce the effect of the Italian worldwide tax principle for eligible new Italian tax residents by introducing a substitute flat tax on their foreign-sourced income for individual income tax purposes. Eligible taxpayers can in fact choose the country, or countries, where the foreign income has been realized subject to the Non-Dom Regime (the so-called “cherry picking” principle). However, is important to notice how any income generated in the countries excluded from the Non-Dom-Regime will be subjected to ordinary income tax and benefit arising from tax relief on taxes paid abroad and from relevant tax treaty protection (if any). In addition, the new regime sets out an exemption from certain report obligations - namely the so-called RW section of the Italian tax return, which addresses certain assets held by Italian taxpayers outside Italy - and wealth taxes.
A tax ruling request on the road to the new favorable fiscal regime – Practically, the option to become an Italian tax resident is subject to the previous approval by the Italian Revenue Agency. To obtain this authorization, the taxpayers have to apply for an ad hoc tax ruling with the Italian fiscal Administration and show that the eligibility criteria are satisfied. The application can also include approval requests concerning the taxpayer’s family members. Obviously, they also need to possess the required criteria. Particularly, as explained by the Agency’s today fiscal Ordinance, the ruling request can be filed by taxpayers to the Central Tax Enforcement Office either by hand deliver or delivered by registered mail with return receipt, otherwise presented electronically through the use of a specific certified electronic mail address. In the latter case, the request is sent to the certified e-mail firstname.lastname@example.org.
The new soft profile of branded “Non-Dom” taxation – First of all, the new favorable tax regime on income produced abroad by new non-domiciled residents includes a “flat rate” tax of €100.000, which become €25.000 for the taxpayer’s relatives, on certain foreign income including those from rental activities, from capital, employment, and corporate income (with or without a permanent establishment). An exemption is also granted from certain reporting requirements with respect to the wealth tax, as we have already seen before. More benefits contemplates the ordinary taxation with respect to capital gains from “qualifying holdings” realized in the first five fiscal years and also on Italian sourced income, the application of the inheritance and gift tax on Italian assets only, therefore excluding the assets held abroad, and a simplified procedural-scheme for visa and residency permits for foreign investors.
A special lasting timetable designed on effective payments – The new regime, once chosen, is available from fiscal year 2017 and will apply for 15 years. The chance to benefit of the special tax regime can be revoked at any time, and the favorable tax treatment will end immediately if any tax is not paid, or is only partially paid, by the due date fixed for the payment of the tax.
Brand-new fiscal opportunities make never so easy to invest in Italy - 2
An overview on the most important measures to attract capitals
Within the new tax framework to foster investments in Italy, companies and individuals also have the possibility to plan and know what is the correct taxation model before put in place business operations. In fact, several initiatives have been taken by the Italian Revenue Agency in order to promote the dialogue with taxpayers and to ensure certainty and compliance with tax laws.
Advance tax ruling on new investments - To give more certainty to the economic operators in the determination of fiscal burdens connected to relevant and long-lasting investments in Italy, the Revenue Agency enables resident and non-resident investors to require a preventive opinion about the tax treatment applicable to business plans and related extraordinary operations. The investment project must have a significant impact on employment levels and must be worth at least 30 million euro. The reply is binding for the Italian Revenue Agency with respect to the specific business plan as described by the investors and it is valid in so far as the legal and factual circumstances remain unchanged.
Cooperative compliance - It is a program aimed at promoting an enhanced cooperation between the Italian Tax Administration and taxpayers in order to increase the level of certainty on relevant tax issues and, consequently, to prevent tax litigations. This specific program is reserved for several specific types of business taxpayers, for example resident and non-resident entities having a permanent establishment in Italy with a total turnover or operating revenues exceeding 10 billion euros and entities granting execution to the opinion of the Italian Revenue Agency in response to the advance ruling on new investments, notwithstanding threshold of turnover or revenues. Admission to the cooperative compliance program allows taxpayers to benefit from some advantages. In particular, it is granted a fast track ruling regarding the application of tax provisions and tax penalties are reduced of 50% and applied to an amount not exceeding the minimum provided by law.
Advance ruling - It is a general "tax compliance institute" allowing taxpayers to orient their behavior and, consequently, to prevent litigations with the Revenue Agency. Essentially, resident and non-resident businesses and individuals can submit to the Tax Administration formal queries to obtain, in advance, clarifications on the correct application of a specific tax provision. The Revenue Agency cannot issue assessments or impose fines or penalties that would be in contrast with the opinion expressed in the advance ruling. There are four types of advance ruling: ordinary, probatory, anti-abuse and anti-avoidance.
Advance tax agreements for enterprises with international activities - Based on mutual cooperation and transparency between enterprises with international activities and the Italian Revenue Agency, these binding agreements aim at ensuring taxpayers certainty on international tax issues in advance, through the assessment of facts and circumstances by the Italian Revenue Agency.
Enterprises can reach a prior settlement and a shared evaluation with the Tax Administration, for example, on methods and criteria applicable to determine the arm's-length price of intercompany transactions or on entry or exit value of assets in transfer of residence cases. An advance tax agreement may be requested by resident companies conducting international activities or by non-resident enterprises conducting or wishing to conduct their business in Italy through a permanent establishment. Non-resident companies, wishing to start a new business in Italy, can verify, through prior assessment, if the conditions for permanent establishment to exist in Italy are met.
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The first part has been published on 28th february