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Italy Introduces Non-Dom Tax Incentive

by Ulrika Lomas, Tax-News.com, Brussels

10 March 2017


In a bid to attract wealthy individuals to relocate to the country, and high net worth Italian expats to return there, the Italian authorities have introduced a EUR100,000 (USD106,251) per year substitute tax on foreign income and gains for previous non-doms who declare Italy as their primary tax residence.

According to the Italian Revenue Agency: "This favorable tax regime is available for 'newly resident' individuals in Italy, who (regardless of their nationality or domicile) have been non-tax resident in Italy for at least 9 years out of the 10 years preceding their transfer to Italy. The incentive regime may be also extended to the family members of these individuals."

"High-net-worth individuals transferring their tax residence to Italy are enabled to apply a substitute tax to their foreign income and gains, amounting to EUR100,000 for each fiscal year, in lieu of the Italian Income Tax. Therefore, this taxation represents an alternative to the application of the ordinary taxation and the option is valid for a period of 15 years."

"The election for the regime may be extended to family members through the payment on their foreign income and gains of a substitute tax amounting to EUR25,000 per member."

Italian-sourced income and gains for individuals opting into the scheme will remain taxable in the normal, progressive way, although there are also benefits for applicants in terms of gift and succession taxes and tax reporting.

Observers have suggested that the Italian authorities may have their eyes on capturing wealthy UK expats post-Brexit.

TAGS: capital gains tax (CGT) | inheritance tax | Wealth | tax | tax planning | gift tax | Italy | individual income tax

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