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Tax Pills

Tax regime for new residents, in 2020 there were 400 beneficiaries

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According to data published by the Finance Department of the Ministry of Economy and referring to the 2021 tax returns on the 2020 fiscal year, were 400 the High-Net-Worth Individual, HNWI, who decided to transfer their residence in Italy in order to benefit of favourable tax regime tailored for new residents.

Looking through the data – The tax returns for 2020 show more than 400 individuals who filled out the "NR - New Residents" section. Particularly, 46 percent of these individuals produced in Italy a total income of 94.4 million euros represented mainly by income from employment (accounting for 74% of the total).

The tax regime for new residents at glance – Starting in 2017, the tax regime for new residents is dedicated to individuals transferring their residence to Italy and envisages a substitute tax on their foreign income. This beneficial regime aims at enhancing investments and attracting to Italy high-net-worth individuals. Qualifying persons must be individuals who have been non-tax resident in Italy for at least 9 years out of the 10 years preceding their transfer to Italy. Moreover, the tax benefit consists in enabling HNWI, who meet all the conditions, to apply a substitute tax to their foreign income, amounting to €100,000 for each fiscal year, in lieu of the ordinary Italian Income Tax. The regime may also be extended to family members (€25,000 per member). Therefore, this taxation represents an alternative to the application of the ordinary taxation and the option is valid for a period of 15 years. Naturally, all income produced in Italy, and not abroad, cannot be subject to substitute tax and are therefore taxed under domestic tax rates.

How to apply for this tax regime - Taxpayers may access to the regime submitting an advance tax ruling to the Italian Revenue Agency or exercising the option for substitute taxation directly through their tax return filling out the "NR - New Residents" section, as already pointed out. Furthermore, individuals transferring their tax residence have to pay inheritance and donation tax only for properties and assets existing within the Italian territory.

Stefano Latini

URL: https://www.fiscooggi.it/tax-pills/articolo/tax-regime-for-new-residents-2020-there-were-400-beneficiaries