New favorable tax regimes for high net worth individuals

1.3 | New resident tax regime

On December 21, 2016, the 2017 Italian Budget Law (the "Budget Law") was published in the Italian Official Gazette after its approval by the Italian Parliament on December 7th. The Budget Law contains a number of tax related provisions aimed at fostering investments in Italy, among other goals.

Under Italian law, individuals with tax residency in Italy are taxed on a worldwide basis, i.e. on their income wherever sourced. No exceptions to this general rule have been permitted until now.

Pursuant to the Budget Law provisions, individuals that move their tax residency to Italy are now allowed to opt for their non-Italian sourced income to be taxed in Italy through a "new resident tax regime", a yearly forfeiture substitutive tax, at a fixed amount of 100,000 Euros. ("new resident tax regime"). In order to opt for the favorable regime, individuals must (i) move their tax residency to Italy, (ii) have been tax residents outside of Italy for at least nine out of the ten tax periods preceding the one for which the option is exercised and can obtain an advance ruling from the Italian tax authorities.

 

2.3 | Investor programme

The Budget Law also introduces a new category of visa called the "investment visa" for foreign investors who would like to invest at least one million Euros in Italy in a company that has a legal seat in Italy, or two million Euros in Italian Public Bonds, or one million Euros as a donation aimed to support public projects in preservation of cultural heritage, managing of immigration and organizations operating in the field or research. The investments in Italian Public Bonds or in the Italian company must be granted for a minimum period of two years. The investment visa will allow the foreign citizen to obtain an Italian resident permit for two years, with the possibility to extend it for additional three years periods. The dependents will be allowed to join the investor in Italy and receive a family permit of stay.

The investors must file a list of specific documents to demonstrate their investments in Italy.  After that, Italian Immigration offices will evaluate them and, if all the requirements are met, they will issue the authorization to obtain the proper visa.


 

3.3 | Inbound employees new resident in Italy

Through the Executive Decree dated May 26, 2016 the Finance Ministry (the “Decree”) has defined the guideline to apply the «inbound employees» special prevision issued by the Legislative Decree n. 147/2015. The Decree establishes that, if certain conditions are met, the employment income produced in Italy by workers who transfer their tax residency to Italy is subject to a reduction of 30% for fiscal year 2016 and 50% starting from the fiscal year 2017. Starting from fiscal year 2017 the regime is applicable also to self-employees.