The Flat Tax 100,000 for Residency Transfers to Italy
Italy continues to emerge as an attractive destination for high-net-worth individuals seeking significant tax advantages and a favorable economic climate. Among the various tax incentives offered by the country, the Flat Tax 100,000, established under Article 24-bis of the Consolidated Income Tax Act (TUIR), stands out as a particularly advantageous regime for those transferring their residency to Italy.
The Flat Tax 100,000 allows individuals transferring their residency to Italy to pay a substitute tax of €100,000 per year on income generated abroad, without having to declare that income. This preferential tax regime especially appeals to high-income individuals with foreign income sources such as dividends, interest, royalties, or capital gains from international investments.
Case 1. Consider a French citizen, Macron, who has accumulated a diversified portfolio of investments abroad, including stocks, bonds, and real estate. By transferring his residency to Italy and opting for the Flat Tax 100,000, Macron can significantly simplify his tax situation and enjoy the returns on his international investments without facing additional taxation, allowing him to efficiently manage his global financial assets.
Case 2. Another example could be Elena from Kiev, a professional working as a financial consultant, who has amassed a substantial wealth through managing international investment funds. Elena wishes to transfer her residency to Italy for personal reasons but fears dealing with a complex tax procedure. However, with the option of the Flat Tax 100,000, Elena can benefit from a preferential tax regime and substantially reduce the tax burden on her foreign income, enabling her to focus on her professional and personal activities without excessive tax-related concerns.
Case 3. Additionally, it’s worth noting the case of Henk, a Dutch entrepreneur who has established a company based in Dubai to manage his international investments. By using this company as a vehicle to restructure his foreign incomes, Henk can receive dividends without facing additional taxation, thanks to the option of the Flat Tax 100,000 in Italy. Thus, Henk can enjoy the tax benefits offered by the Italian regime, paying only €100,000 in taxes annually on the income derived from dividends of his foreign company.
For Americans! Furthermore, the €100,000 tax paid in Italy can be deducted from American taxes using Form 1116. This means that US residents transferring their residency to Italy and opting for the Flat Tax 100,000 can benefit from a reduced overall tax burden, allowing them to optimize the management of their international financial assets.
Procedure! To access the Flat Tax 100,000, taxpayers must apply to the Revenue Agency and provide the necessary documentation to demonstrate the effective transfer of residency to Italy. Once the application is approved, taxpayers can enjoy the tax benefits of the regime for a period of 15 years.
Additionally, to ensure greater tax security, taxpayers can request a preventive ruling from the Revenue Agency to confirm the applicability of the Flat Tax 100,000 to their specific case.
This ruling acts as insurance against future audits by the agency, providing additional certainty regarding the tax treatment of foreign income. In addition, filing your tax returns in Italy allows you to access to local financing options from Italian banks
In conclusion, the Flat Tax 100,000 represents a unique opportunity for those transferring their residency to Italy to optimize their tax situation and enjoy the benefits of a preferential tax regime. With a simple application procedure and the option to request a preventive ruling, taxpayers can access a convenient and secure tax regime, efficiently managing their international financial assets while enjoying the beauty and charm of Italy as their new home.
And of course De Hoon & Partners can help you with this from A to Z, just mail us at: info@dehoon-dhp.com !
