Earlier this year, Italy expanded and strengthened its 'non-dom' tax regime by introducing new favourable measures with the aim of attracting foreign tax resident individuals holding foreign pensions (the “Retirees Regime”).
These measures broaden the spectrum of Italian tax regimes available to foreign individuals transferring their residence to Italy, by adding new tax incentives targeted at retirees on top of those already in place for foreign High Net Worth individuals, employees, self-employed professionals or entrepreneurs.
On Friday, the Italian Tax Authorities took a further step in consolidating the Italian non-dom tax regimes, by issuing the Retirees Regime's implementing measures, along with explanatory notes regarding some practical aspects of the regime. These new provisions are timely and bear witness to the Italian government's strong desire to attract wealth to Italy.
The Retirees Regime
As already highlighted, the Retirees Regime is available to any individual, holding a foreign pension, who is interested in moving to Southern Italy.
Under the Regime rules, all foreign source income earned during the next six years is subject to a 7% flat tax rate, to be paid in a lump sum no later than June 30th following a given tax period.
Moreover, the Retirees regime also provides for exemptions from wealth taxes on foreign assets (a.k.a. “IVIE” and “IVAFE”) and, more importantly, from the ordinary reporting regime set forth under Italian law (a.k.a. “RW Form”).
How to apply
The new implementing measures provide practical guidance on the Retirees Regime's application procedure.
In a nutshell, the application for the Retirees Regime is a straightforward process, allowing applicants to formalise their position through the first annual income tax return filed after their relocation to Italy.
Moreover, the Italian Tax Authorities took the opportunity to confirm that to apply for the Regime, the applicant shall relocate to a Municipality in Southern Italy, having less than 20.000 inhabitants. In this regard, the Italian Tax Authorities provided further insight, stating that the list of Municipalities compliant with the aforementioned characteristics can be easily consulted online, on the website of the Italian National Statistical Institute.
Coming out of the regime: a final tip
Retirees Regime status renews automatically year by year, until the 6-year term expires.
It is understood that applicants can legitimately decide to 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.