The new Italian flat tax regime for new residents: Law and Regulations
Law No. 143 of Oct. 7, 2024, converting, with amendments, Decree-Law No. 113 of Aug. 9, 2024 (Law Decree Omnibus), introduced important changes to the flat tax regime for new residents designed for those who, owning significant economic resources, decide to move to Italy for tax purposes and thus benefit from a flat tax on income, even if produced abroad.
Access to the regime has as its main benefit the exemption from the obligation of monitoring (filling out RW framework), payment of IVIE and IVAFE.
But let's see in detail what this new tax regime consists of, how to access it, and what are the deadlines for paying taxes.
The new Italian flat tax regime for new residents: What is it and who is it for?
The new Italian flat tax regime for new residents, initially introduced by the 2017 Budget Law and recently revised by the Law Decree Omnibus, is a tax option that allows newly wealthy residents to pay a fixed substitute tax on income earned abroad. Such income, instead of being taxed at ordinary Italian rates, will be taxed at a fixed annual rate, regardless of the amount.
The Italian flat tax for new residents is aimed primarily at:
-High-income individuals who transfer their tax residence to Italy;
- Persons who have not been tax residents in Italy for at least nine of the previous 10 years.
The new Italian flat tax regime for new residents: requirements and procedure for accessing the tax system
In order to benefit from the tax advantages offered by the new Italian flat tax regime on foreign income, it is necessary to meet certain requirements and follow a specific procedure.
In more detail, the requirements are:
1. Transfer of Tax Residence in Italy: The applicant is required to transfer his or her tax residence to Italy, meaning that he or she must reside for at least 183 days per year on Italian territory;
2. Obligation to submit specific "petition of interpello" (in the past only optional) to the territorially competent Revenue Agency;
3. Payment of fixed substitute tax: If the application is accepted, the taxpayer will have to pay a fixed substitute tax amounting to: 100,000 euros for those who had already moved to Italy as of August 10, 2024; 200,000 euros for those who move as of August 10, 2024, as provided by the reform;
4. Duration of the Scheme: The flat tax scheme can be applied for a maximum of 15 years, with no possibility of extension. During this period, the person may decide to revoke the option at any time, but the revocation will be final and will not allow a subsequent re-entry into the favorable regime.
The new Italian flat tax regime for new residents: deadline for paying taxes
Payment of the fixed substitute tax must be made, via F24 form, by the deadline for paying the balance of income taxes, usually set for June 30 each year. It is possible to pay the amount in a lump sum, using the specific tax code provided by the Authority.
If the tax is not paid by the deadline, the taxpayer will lose the right to the preferential regime and will be subject to the normal tax rates applicable to residents of Italy.
The new Italian flat tax regime for new residents: the advantages
From the above, the advantages of the new Italian flat tax regime are obvious. These include:
-Reduced Tax Burden: By paying a flat tax, wealthy taxpayers will save a great deal in terms of paying taxes in Italy, which are already very high in themselves;
- Exemption from payment of Gift and Inheritance Taxes for assets located abroad;
- Extension of the scheme to cohabiting family members, spouse and children, thus allowing for additional tax benefits.
The new Italian flat tax regime for new residents: How can help you?
As seen, the Law Decree Omnibus made important changes to the flat tax regime in Italy, aimed at individuals with high earning capacity and mostly foreigners.
With this regime the Italian state thinks it can attract investors and wealthy individuals from all over the world. But it is clear that accessing the tax procedure requires knowledge of a whole series of rules and procedures that cannot be overlooked if one wants to be certain of being able to access the regime in question.
This is why relying on an international law firm, such as Arnone&Sicomo International Law Firm, can make all the difference.
For years we have been assisting entrepreneurs and, more generally, foreign businessmen/women who wish to transfer their tax residence to Italy, thus enjoying a tax benefit, which they would not otherwise have in other countries.
The procedure for accessing the Italian flat tax requires an excellent mastery of tax and fiscal matters, which is why it is advisable to rely on professionals experienced in international taxation to avoid mistakes and obtain the maximum benefit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.