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Tax Pills

  • Here are the new tax measures to attract foreign pensioners to Italy


    Basically, if they decide to transfer their fiscal residence to one of the municipalities of Southern Italy, with a maximum of 20,000 inhabitants, they can opt for a substitute tax or flat rate of 7%
    The 2019 Italian Budget Law introduced a new special tax regime, aimed at attracting individuals who hold foreign pensions to transfer their tax residence to one of southern Italy’s municipalities. This is known as the “Foreign Pensioners’ regime” as it requires the individual to be already in receipt of a foreign pension. That said, starting from 1 January 2019, beneficiaries of this special regime, may opt to pay a substitutive tax of 7% on all foreign source income rather than to apply the progressive tax rates, which in Italy may range from 23% to 43% plus 3% as local taxes. Moreover, they can benefit from the exemption from the declarative obligations regarding fiscal monitoring and from the payment of Ivie and Ivafe. Indeed, this is a tax measure very similar to the 2017 “New Resident regime”, aimed at attracting high net worth individuals by allowing them to pay a flat tax of 100.000 euro on their foreign sourced income, irrespective of the actual amount of income.

    The measures in details - This special regime, which took effect from 1 January 2019, allows taxpayers holding foreign pensions, who have not qualified as Italian tax residents for at least the previous five tax periods, to opt for the application of a flat tax of 7% to all foreign source income. Particularly, taxpayers can opt for the flat tax of 7%, regardless of their age and citizenship if they: transfer their tax residence from a country with an administrative cooperation agreement with Italy to one of the following Italian southern regions: Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sicily and Sardinia, in a Municipality with a population of less than 20,000 inhabitants; and have not been tax residents in Italy for at least five tax periods prior to the transfer to Italy; and currently are in receipt of a foreign pension.

    How to claim the benefit - Taxpayer can exercise the option for the flat tax in the tax period in which they transfer the tax residency to Italy. To begin, the option can be exercised through the first Italian tax return and it is valid for that tax period and the following five tax periods. Moreover, by claiming the special tax regime, taxpayers will be exempt from additional income tax, local taxes and wealth taxes on all foreign source income. Furthermore, for the entire length of the option no foreign asset monitoring obligations will apply, as specified above.

    When to pay - The flat tax should be paid in a lump sum, for each period of the application and within the ordinary deadline for paying individual income taxes. Obviously, ordinary individual progressive income tax still applies to Italian source income.

    Other features - The “Foreign Pensioners regime” has certain particular features: no anti-abuse clause applies to capital gains realized from the disposal of qualified shareholdings in the first five years; inheritance and gift taxes are not covered by the 7% flat tax; the option cannot be extended to family members , unless such members currently hold foreign pensions. The option can also be applied only to some foreign countries and it does not apply to foreign source income everywhere. Where an individual who elects for this option also has income from a country not covered by this, the ordinary progressive income tax rates would apply to income from that country and foreign tax credits would be available.

    The measures aim at financing higher education in Southern Italy - Finally, it is foreseen that the resources coming from the extra-revenues deriving from the implementation of the regime are addressed to the financing of the universities that have their headquarters in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia (to be identified with a ministerial decree ), in which at least one department is present in technical-scientific and sociological disciplines.



  • Starts the new fiscal age of the Synthetic Reliability Indexes or SRIs. Ready and online all the 175 models that will enter the 2019 income tax return

    The Revenue Agency has elaborated the new “fiscal report cards”, or Synthetic Reliability Indexes (SRIs), to replace an equivalent number of preexistent “studi di settore”. Particularly, the new 175 fiscal indexes elaborated this year, will involve, on a regular basis, about 4 million economic operators representing the entire spectrum of taxpayers involved in the old “sector studies”. However, the 175 models for the application of the new Synthetic Reliability Indexes are now online in their final version on the Tax Agency official-website. Approved by the Director of the Revenue Agency, the models must be completed by taxpayers who in 2018 have prevalently exercised one of the activities subject to the indexes.
    The Revenue-Act also identifies the full list of data, information and figures to be communicated for the 2019 tax period through the new ISRs. Particularly, the Synthetic Reliability Indexes cover various economic activities related to agriculture, manufacturing, trade, services and professional sectors. The approval of the models, already available in a draft version on the website of the Revenue Agency, follows the publication in the Official Gazette (Official Gazette of January 4, 2019) of the decree of the Minister of Economy and Finance that approved the introduction of 106 new SRIs, after the first 69 introduced in March 2018. With this second Revenue-Act publishe the SRIs program revision is therefore fixed and completed, ready to star from the year 2019.
    How the new ISRs work - The 175 models for the communication of data relevant to the application of the new Synthetic Reliability Indexes must be transmitted electronically together with the tax return, directly, via Entratel or Fisconline, or through a professional intermediary, according to the technical specifications that will be approved forward with a specific provision. 
    The data relevant for 2019 have been defined - The same provision establishes that the economic, accounting and structural data relevant for the application of the SRIs for 2019 are those indicated in the decrees of the Minister of Economy and Finance of March 23 and December 28 2018, to which will be added those already available to the Agency which, if significant, will be required for its application. It is however possible that, during the processing of the indices, the number of data relating to 2019 may be reduced and, in particular, that the accounting data are merged or replaced with those already provided for determining the income reported in the tax return.
    The program of auditing activities - With a second Revenue-Act are also identified the economic activities for which is expected the revision of the SRIs applicable starting from the year 2019. The number of the ISRs approved by decree of the Minister of Economy and Finance is 89: of these, 31 relating to economic activities in the commerce sector, 25 relating to services, 18 to professional activities and 15 to manufacturing.
    How the new fiscal report cards work – From now on, businesses and professionals will thus have a clear view of the correctness of their tax behaviors through a new statistical and economic methodology that will establish the degree (on a scale 1 to 10) of effective and verifiable reliability to comply with tax obligations.
    In fact, Synthetic Reliability Indexes are made up of a set of indicators of reliability and anomaly and make it possible to size the level of taxpayers' tax reliability, as already cited, on a scale from 1 to 10.
    The aims of the new SIRs - In short, the SIR Project is aimed at allowing taxpayers to know their degree of reliability as determined by the Tax Administration. With the goal of reaching tax compliance, taxpayers can also improve or adjust their fiscal declaration. They also provide, in case of a high reliability level of the synthetic index, a diversified reward mechanism, in order to ensure a clearer and better relation between the taxpayers and the Tax Administration. Particularly, the most "reliable" taxpayers will have access to important reward benefits, such as, for example, the exclusion from analytical-presumptive assessments, the reduction of the deadlines for assessment and exemption, within the limits set, by the application of the visa for compliance with tax credits.