www.pwc-tls.it The Italian flat tax regime for new residents

PwC Tax and Legal Services

The Italian 2017 Budget Law has introduced several special tax regimes aimed at encouraging foreign PwC Italy services individuals to migrate and invest in Italy, including a new flat tax regime for high net worth individuals willing to migrate to Italy and entry visas for foreign individuals intending to invest in For the analysis and the Italy. election for the Italian flat tax regime, our assistance could Pursuant to the flat tax regime non-Italian resident individuals transferring their tax residence in Italy are allowed to elect for a flat substitutive tax that provides for relevant effects for individual direct tax be structured as follows: purposes, monitoring duties and Italian wealth, inheritance and gift taxes. • preliminary feasibility The access to the regime is possible upon election if: (i) the individual actually transfers the tax assessment with the residency in Italy, and (ii) the individual has not been Italiantaxresident for at least 9 out of the 10 individual willing to transfer years preceding the one for which the option is exercised. The option is available from January 1, 2017, expires after 15 years from election and - if revoked by to Italy; the individual - cannot be restored. An advance tax ruling may be filed with tax authorities to • analysis of the impact of the ascertain, on a preliminary basis, that the flat tax regime can be successfully opted for. regime, highlighting the main consequences of the regime; How does the “flat tax regime” work • drafting of the tax ruling with tax authorities; Under the flat tax regime, the individual is subject to a substitutive tax of € 100,000 per year on • day-by-day tax compliance of non-Italian source income, including that held through interposed entities. the individual and family The Italian CFC regime does not apply to non-Italian participations held by the individual and no office services; tax credit is granted for any tax paid abroad. • drafting and filing of the As an exception, for anti-avoidance purposes, capital gains realized upon the transfer of non-Italian annual Tax return of the "qualified" shareholdings in the first 5 years after the election remain subject to the ordinary Italian individual. tax rate. Qualified shareholdings are those entitling to >20% of the voting rights or representing >25% of the share capital of a company (reduced to 2% and 5% for listed companies). The individual can exclude from the flat tax regime determined Countries ("cherry picking Contacts mechanism"), the income derived therefrom is subject to Italian ordinary rules. Paolo Lucarini The Italian ordinary tax regime (i.e. effective taxation up to 45%) will remain applicable on Italian Partner source income, capital gains on non-Italian "qualified" shareholdings in the first 5 years and on PwC Tax and Legal Services income sourced in Countries elected under the "cherry picking mechanism". Repatriation to Italy of Direct: +39 02 43516923 foreign assets and income is possible at any time and does not trigger income taxationin Italy. [email protected] Individuals electing for the Italian flat tax regime are subject to Italian inheritance and gift taxes solely with respect to assets physically located in the Italian territory. No tax will be due on the value Pasquale Salvatore of real estate and financial investments located abroad. Partner PwC Tax and Legal Services Are individuals’ family members entitled to benefit by the Direct: +39 02 43516923 favourable tax regime? [email protected] The regime can be extended to the individual’s family members provided that they fulfil the above mentioned condition, and every of them can be included in the regime in different moments in time. Marco Ruzza The amount of the substitute tax is reduced to €25,000 per year for each relative included. Director PwC Tax and Legal Services Investor Programme Direct: +39 02 43516923 [email protected] The 2017 Budget Law introduced the new “investment visa” for foreign investors who are willing to invest at least (i) 1 million Euro in Italian companies; (ii) 2 million Euro in Italian Public Bonds; or (iii) 1 million Euro to be donate in immigration or research organization. The mentioned investments must be granted for a minimum period of 2 years. The investment visa allows the foreign citizen to obtain an Italianresident permit for 2 years, that can be extended for additional 3 years. The family members can receive a family permit of stay in Italy. The request for the investment visa shall be evaluated by the Italian Immigration offices. Italian Government has recently introduced a fast track procedure for the request of an investor visa at the competent Italian Consulate and for the application of the Italian residence permit once in Italy. This procedure applies to the investor and to all his/her dependents.

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