{{vm.title}}
25{{vm.includesText}}
{{item}}
{{vm.selectText}}
{{ vm.welcomeLabel.trim() }},
{{ vm.userName }}
{{ vm.text }}
{{vm.newUser1}} {{vm.newUser2}} {{vm.newUser3}} {{vm.newUser4}}
{{ vm.unknownUser }}
{{ vm.title }}
{{ vm.title }}
{{ vm.title }}
- {{ vm.siteSelectorList.flyout.cell1.heading }} {{ site.countryLocale }} {{ vm.siteSelectorList.flyout.cell1.global.countryLocale }}
{{ vm.closeTabLabel }}
- {{ vm.flyout.cell2.title }} {{ vm.flyout.cell2.newTabAllow }} {{ vm.flyout.cell2.title }}
- {{ vm.flyout.cell3.title }} {{ vm.flyout.cell3.newTabAllow }} {{ vm.flyout.cell3.title }}
- {{ vm.flyout.cell1.viewAll.label }} {{ vm.flyout.cell1.viewAll.newTabAllow }} {{ vm.flyout.cell1.viewAll.label }}
Italy: Flat tax for new individual residents, new guidance
Italy: Flat tax for new individual residents
Guidance from the tax authority aims to clarify an optional tax regime for new individual tax residents of Italy. Under the new regime, individuals that are new tax residents of Italy can elect to be subject to a flat-tax regime if: (1) transfer their tax residence to Italy; and (2) have had foreign residence status for at least nine of the last 10 fiscal years.
Background
Under the flat-tax regime, individuals who previously have not been tax residents of Italy and who transfer their tax residence to Italy will pay, instead of ordinary tax, a flat-rate substitute tax of €100,000 per year on all their non-Italian sourced income (and a flat tax of €25,000 for eligible family member). Under the flat-tax regime, foreign income subject to the flat tax includes:
- Employment income
- Rental income
- Capital income
- Self-employment income
- Corporate income (with or without permanent establishment)
- Other income
New guidance
The circular provides that to qualify for the flat tax, the individual must actually move to Italy. The authorities may remove an individual from the register if, after visiting the person’s residence at appropriate intervals, the authorities cannot find the person at the address.
The circular further provides:
- Tax rulings are optional, and thus, it may be advisable for taxpayers to consider whether to verify in advance that they satisfy the requirements for the flat-tax regime.
- Newly domiciled individuals must show they are not subject to the controlled foreign corporation rules or the rules on the full taxation of dividends and capital gains arising from ownership or transfer of shares in companies that benefit from a preferential tax regime.
- Taxpayers may “cherry-pick” one or more foreign countries or territories and exclude the income generated from those areas from the flat-rate substitute tax, thus benefitting from foreign tax credits that might otherwise be excluded. However, these individuals will have to pay inheritance and gift tax on assets located in the countries that they have chosen to exclude.
- Individuals who exercise the option are also considered to be residents for purposes of relevant income tax treaties.
Read a June 2017 report [PDF 174 KB] prepared by the KPMG member firm in Italy
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.
