The Italian non-dom residency scheme offers one of the best tax regimes in Europe

The Italian tax authorities (Agenzia delle Entrate) have been promoting the new enhanced non-dom rules since 2017 in the hope of attracting high net worth individuals (HNWI) including successful business executives, sportspeople, artists and fashion designers.

Giambrone’s wealth management team, recognising the significant advantages the tax regime brings has been advising many clients ever  since.  The rules - Article 24-bis of Italy’s Tax Code (TUIR) brought in March 2017 offer at high net worth foreigners the highly competitive flat-rate tax of €100,000 per annum for an individual’s entire global income, and provide a raft of other tax advantages related to foreign property and other foreign assets and provide exemptions on succession and gift taxes.  Another perceived advantage is that non-doms are exempt from disclosing their assets held outside of Italy as the ordinary reporting provisions do not apply.

An annual charge of €100,000, must be paid in a lump sum within the deadline for paying Italian income tax in Italy. There is no provision for an instalment payment plan as a partial payment will terminate this beneficial tax regime.  Family members can be attached to the scheme and their assets are taxed at an additional annual flat rate of €25,000.

The applicants are required to complete a checklist aimed at providing evidence of their non-Italian domiciled status and focused on their link with Italy. The non-dom status renews automatically year on year, until the final 15-year term expires but the clients can give up their status at any time before the final term expires, either by opting-out in their Italian tax return or by moving their residence abroad and duly notifying the Italian tax authorities. There is no exit taxation for residential non-dom leavers.

Preliminary Ruling – Richiesta di Interpello

Normally, the application for the scheme is made with the first annual tax return at the end of the fiscal year where the applicants have moved to Italy. If someone moves during 2021 fiscal year, they will need to apply with the 2022 tax return, without knowing whether the application will be successful. This poses some risks to the applicants as they have no certainty from the outset that the application will be successful.

Being in Italy, one element of discretion for the Italian Tax Authorities is that they are entitled to decline an application if the applicants do not disclose sufficient evidence of personal, economic, and cultural/social links with Italy, covering at least two of the previous ten years before the application is made; more importantly, the same details are required for all family members who are to be included in the application.

In order to provide a degree of certainty from the outset, we advise potential applicants to apply for a preliminary “approval” with the tax administration by filing a ruling before becoming an Italian resident.  The process is known as “istanza di interpello” which is filed by an associate in the tax team in Italy.

Any family member included under the regime must sign the preliminary ruling (when filed to the tax authorities) together with the main applicant and, more importantly, include the details relating to the subjective conditions and links with Italy). In same-sex relationships, which are now recognised in Italy, the civil partners are included among the relevant family members.

The advantage of the preliminary ruling application is that the applicant can safely have some certainty in advance of lodging the full application without experiencing unexpected obstacles. The tax authorities only have 120 days to approve or deny the request.

If you require further information or advice from our team of specialist lawyers, please contact our Client Relations Team by:

• Completing the online enquiry form here
• Emailing us at clientservice@giambronelaw.com
• Calling us on +44 (0)20 7183 948