The new Italian «Resident Non-Domiciled» tax regime

The Italian Tax Authorities have provided the rules for the application of the new Italian «Resident Non-Domiciled» tax regime

March 2017

On March 8^th, 2017, the Italian Tax Authorities issued a regulation regarding the implementation of the new «Resident Non-Domiciled» tax regime (the “Regime”) introduced by the Financial Bill for 2017 aimed at attracting wealthy individuals wishing to transfer their tax residency in Italy.

In particular, starting from the fiscal year 2017, the Regime excludes from taxation any income produced abroad by the taxpayer, irrespective of its financial transfer to Italy (i.e. no remittance basis). In other words, the Regime is applicable also when the income produced abroad is remitted to Italy.

The option for the Regime also involves: (i) the non-application of wealth taxes (i.e. IVIE and IVAFE) on real estates and financial assets held abroad and (ii) the exclusion from tax monitoring obligations.

In addition to the above, the application for the Regime grants the exclusion from gift and inheritance tax for assets and rights located or held abroad.

To be eligible for the Regime an individual has to jointly meet the following conditions:

• the tax residency has to be transferred in Italy according to art. 2, par. 2, of the Italian Consolidated Tax Act (D.P.R. n. 917/1986);
• he has been fiscally resident outside Italy for nine years out of the ten prior to the application of the Regime.

The regulation issued by the Italian Tax Authorities has clarified that the filing of an advance ruling, in order to ascertain that the eligibility’s conditions are met, is optional and not mandatory.

The taxpayer who opt for the Regime has to pay an yearly flat tax of euro 100.000. The Regime can be extended to any family member who is eligible as well by paying an additional annual flat tax in the amount of euro 25.000 for each member.

The option for the Regime is valid for 15 years and it can be revoked by the taxpayer at any time. In case of termination or revocation of the option, it cannot be renewed.