By Hans Esser, for Expatbriefing.com 29 March, 2018
Fabrizio Pagani, Italian Finance Minister Pier Carlo Padoan’s Chief of Staff, has said that around 150 wealthy expats have taken up residency in Italy under a recently introduced flat tax scheme intended to attract investors to the country.
Pagani told Bloomberg in an interview published on February 27 that the tax regime, which he said has had a “very good” first year, has attracted millionaires from all parts of the world, including the United States, the United Kingdom, Russia, Switzerland, the Netherlands, and Norway.
Some of these individuals, he said, have wealth in the “hundreds of millions.”
Introduced in 2017, the tax regime is available for “newly resident” individuals in Italy, who (regardless of their nationality or domicile) have been non-tax resident in Italy for at least nine years out of the 10 years preceding their transfer to Italy. The incentive regime may be also extended to the family members of these individuals.
High-net-worth individuals transferring their tax residence to Italy can choose to apply a substitute tax to their foreign income and gains, amounting to EUR100,000 (USD123,000) for each fiscal year, as an alternative to the application of ordinary income taxation. The option is valid for a period of 15 years.”
The election for the regime may be extended to family members through the payment on their foreign income and gains of a substitute tax amounting to EUR25,000 per member.
Italian-sourced income and gains for individuals opting into the scheme will remain taxable in the normal, progressive way, although there are also benefits for applicants in terms of gift and succession taxes and tax reporting.
Observers have suggested that the Italian authorities may have their eyes on luring wealthy UK expats post-Brexit.