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Tax Pills

The optional regime for new residents

immagine generica

The 2017 Budget Law No 232 of 2016 (paragraph 152) introduced a special scheme reserved for individuals transferring tax residence to Italy. Such persons may benefit from a flat-rate substitute tax of EUR 100 thousand for each tax period for which they are charged on income generated abroad. It should be noted that it is not strictly a flat tax with a fixed rate, since it is a flat-rate substitute tax, but is generally included as a flat tax. Secondly, this special fiscal regime is strictly applied only on foreign income, while for earnings raised in Italy it has applied the ordinary Irpef fiscal law.

The rule also applies to close relatives - This flat-rate scheme may also be extended to one or more eligible family members, by means of a specific indication in the tax return relating to the tax period in which the family member transfers his/her tax residence to Italy or the subsequent tax period. In this case, the substitute tax shall be EUR 25 thousand for each of the family members to whom the effects of the same option are extended.

General conditions to benefit of the special tax regime - To qualify for the preferential regime, taxpayers must not have been tax residents in Italy for a time at least equal to nine tax periods during the ten preceding the beginning of the period of validity of the option.

Data trends in details - Regarding the "new residents" fiscal incentive from the declarations for 2021 result being 690 subjects who filled out the "NR - New Residents" section of the tax return. Particularly, 46% of these individuals produced in Italy a total income of 106 million euros represented mainly by income from employment (accounting for 67% of the total).

The lasting period of the tax incentive - The option is revocable and in any case ceases to be effective fifteen years after the first tax period of validity and cannot be combined with the fiscal incentives designed to favour the return in Italy of "teachers and researchers", or highly skilled Italian professionals abroad, and the so-called "impatriates". As already said, all income produced in Italy are taxed under the ordinary provisions, therefore being taxed as common income.

Stefano Latini