Guide to Flat Tax in Italy for foreigners

The Flat Tax in Italy was introduced in March 2017 to attract people who own large assets and decide to transfer their tax residence to Italy.
Those who want to transfer their tax residence to Italy will benefit from a substitute tax on income produced abroad.

The option provides for the payment of a lump sum tax of € 100,000 for each tax period exercised.

This initiative brings a great advantage, both to the state coffers, and to the sellers of luxury properties, who see an increase in demand for their prestigious residences.

The flat-rate scheme can also be extended to one or more family members who meet the requirements.

For this eventuality, a specific indication is provided in the tax return, referring to the tax period in which the family member transfers the tax residence or to the next one.

The substitute tax, in this case, is equal to € 25,000 for each of the family members to whom the effects of the same option are extended.

Taxpayers who meet the requirements can join the new regime at the time of submitting the tax return.

The latter must refer to the tax period in which the tax residence was transferred or to the one immediately following.

The rule is aimed at individuals who transfer their tax residence to Italy, but who have not previously been resident in at least nine years compared to the ten years prior to the start of the Flat Tax option in Italy.

This substitute tax refers to income produced abroad.

It should be remembered that, in the absence of an agreement against double taxation, the income is considered to be made abroad on the basis of reciprocal principles with respect to those reported in art. 23 t.u.i.r., which recognizes the income created in the territory of the State by evaluating the different types.

The application can be submitted even if the terms for establishing the tax residence in Italy have not yet passed. The payment of the substitute tax, in the amount of € 100,000, must be made in a single solution.

For each tax period, the balance of income taxes must be paid by the due date.