The approval of the Budget Law on December 7, 2016 marks the debut of an attractive tax regime for high net worth individuals wishing to move their tax residency in Italy.
THE GOAL OF THE REGIME
The “Non-Dom Regime” of the Article 24 bis of TUIR aims to encourage the international elite to transfer their residency within Italian borders.
This measure exempts from taxation any income made abroad by the taxpayer, in order to limit the effect of the Italian worldwide tax principle and promote Italy as an interesting destination for enterpreneurs and investors.
The Resident Non-Domiciled Regime allows individuals to apply a substitute tax to their foreign gains and income, amounting to € 100,000 per year.
THE BENEFITS FOR THE FAMILY MEMBERS
The legislation gives the opportunity to extend the benefit to family members by paying a further € 25,000 per person, only if their residence is transferred together with the taxpayer.
The members of the family who can take advantage of the Regime are spouses, sons and daughters (including sons-in-law and daughters-in-law), parents (including parents-in-law), brothers and sisters. If the individual does not have any sons or daughters, the benefit can move to his closest descendant.
THE MAIN REQUIREMENTS FOR THE APPLICATION OF THE FLAT TAX REGIME
The main requirements to apply are :
– No Tax residency for at least 9 out of the previous 10 fiscal years.
– Obtaining a formal approval.
The taxpayers have to file a preliminary ruling request with the the tax authorities, indicating the last state of residence and the sources of foreign income. The authorities have 120 days to give a reply (a further 60 days extension in certain conditions).
The Non-Dom Status is effective up to a period of 15 years. The taxpayer can revoke the option at any time. However, the status will automatically be abrogated if if he fails to pay the annual fee.