Italian legislator introduces a more attractive flat tax regime on foreign-source incomes and gains: Is it what Cristiano Ronaldo was looking for?
- Friday, July 13, 2018
The Italian legislator, with Budget Law for fiscal year 2017, introduced a special tax regime tailored for individuals who transfer their tax residence to Italy. Such a regime - entered into force on the 1st of January 2017 - is indeed very attractive for high net worth individuals, irrespective of their working status.
The substitutive flat tax and its requirements
The special regime provides for an optional flat taxation on foreign-source incomes and gains, instead of the ordinary progressive tax rates, under the terms as set forth by the law.
The option for a substitute tax on foreign-source income and gains is available to individuals, both Italian or foreign nationals, who obtain the Italian tax residence, provided that:
The benefits of the special tax regime
The main characteristics of the optional regime are as follows:
Extension upon request to family members
The substitute tax regime could be extended to one or more family members against the payment of an annual substitute flat tax of 25,000,00 Euro for each family member benefitting from such a regime. Please note that the individuals to be considered as a family are listed in Section 433 of the Italian Civil Code and they shall satisfy the same conditions as the main taxpayer (i.e. transfer their residence to Italy after 9 out of 10 years as foreign-resident).
For instance, in case of a transfer to Italy of a family composed by two spouses and if both of them wish to benefit from the substitute tax regime, the overall substitute tax would be 125,000,00 Euro on annual basis.
Duration of the optional new tax regime
The option for the substitute tax regime is valid for 15 years and is revocable; if revoked, the concerned individual waives the right to opt for such a regime in the future.
Is it what Cristiano Ronaldo was looking for?
Many international football players (among those Cristiano Ronaldo) may benefit from this new regime. They come after a great number of business men who have chosen to join the Italian "bella vita" in their retirement days.