The Internal Revenue Service rules now applicable for those who decide to transfer their residence in Italy.
The instructions of the Italian I.R.S. for foreigners wishing to transfer their tax residence in Italy, thus taking advantage from a flat tax on foreign income, have been released. The option, which was introduced with the Budget Act 2017, provides for the payment of a flat-rate tax of EUR 100,000 for each tax period for which it is exercised, in order to attract and encourage the transfer of residence in our Country of High Net Worth Individuals. With today’s I.R.S. Director’s decision, the checklist form to be attached to the request has also been approved. This allows a pre-assessment by the tax authorities on eligibility for this preferential regime.
How to choose the option - Taxpayers who meet the requirements can join the new regime at the time of submission of the tax return related to the tax year in which the fiscal residence was moved to Italy or in the next one. It is also possible to send a specific prior request to a specific office of the I.R.S. The request can be delivered by hand, by registered mail with return receipt or electronic communication, via certified mail.
In any case, the taxpayer must indicate:
•the personal data and, if already granted, the tax code, in addition to their home address in Italy, if already a resident;
•the status of non-residence in Italy for a time at least equal to nine fiscal years during the ten preceding the start of validity of the option;
•the jurisdiction or jurisdictions in which he/she had the last tax residence before choosing the validity of the option;
•the States or the overseas territories to which he intends to exercise the option of not using the flat tax.
The taxpayer must also indicate the existence of the elements necessary for the entry into the scheme by completing a checklist attached to today's measure, and to present, where requested, the related supporting documentation.
Option also extended to family members - The flat-rate scheme can be extended to one or more family members who meet the requirements, through a specific indication in the tax return relative to the tax period in which the family moved the tax residence in Italy or in the following. In this case, the flat-rate tax is equal to EUR 25,000 for each member of the family to which the effects of the same option are extended.
When to apply - The option must be chosen within the term for submission of tax returns, even in case the answer from the Revenue Service has not arrived yet. The application may be filed even if the term to entrench tax residence in Italy is not elapsed. The option is automatically renewed from year to year, while the effects cease, in any case, fifteen years from the first tax period of validity.
Payment of the tax in one amount - The tax payment, amounting to EUR 100,000, must be made in one amount, for each tax period, by the deadline for the payment of the balance of income tax.