What is the Italian flat tax 2017? It is the new fiscal system for high net worth individuals who are not resident in Italy and decide to transfer their tax residence in this country. The new residents will pay a flat-rate of 100.000 euros for income from assets that are abroad.
The flat tax does not cover: the income produced in Italy, which is subjected to the ordinary tax rates (Irpef), and capital gains that fall in the first five tax years of the flat tax, derived by transfer upon payment of qualifying holdings.
The new tax system is tacitly renewable from year to year up to fifteen years after the first tax period of validity. The flat-rate tax must be paid in a lump sum, for each tax period. You must pay the owed amount within the scheduled date for the balance of income taxes.
Who can apply for the flat tax 2017?
Only natural person taxpayers, not companies, can apply for the flat tax. Such taxpayers must not be resident in Italy at the time of application. If Italians, must not have been resident in Italy for at least nine years on the last ten. The new tax system is also applicable to family members. For each of them the foreign taxpayer will pay a substitute tax of 25.000 euros.
The new resident will then become a resident. According to article 2 of Tuir (the Italian fiscal code), he should spend more than half of his tax year in Italy.
So, the ideal beneficiaries of this new tax are those high net worth individuals, foreigner, with huge assets or income and with family members who should equally take advantage of the flat tax. The new residents will benefit from this tax system in complete privacy because the law does not obligate to declare their foreign assets. In addition, there is an exemption from inheritance and donation taxes.
When and how to apply
The norm has entered into force since March 9, 2017. You can easily apply to the flat tax 2017.
When. The option must be exercised within the deadlines for submission of the income tax return relative to the tax period in which you have transferred the tax residence in Italy or to the following one. You can apply even if the due date to entrench fiscal residence in Italy is not passed.
How. There are two options. Simply you must tick the appropriate box in your income tax return, specifying if the option is exercised also for family members. Or, in case you doubt that you have not the requirements to apply for the flat tax, you must send a specific prior request to the Inspection Central Department of the Italian Revenue Agency. By this request, you will be provided a prior judgment about your eligibility to the new tax system.
This prior request can be consigned by hand, by registered mail with return receipt, electronically by pec email. You have to attach the check list form specially prepared by the Italian Revenue Agency.
In the prior request, the new resident taxpayers must indicate:
- their personal data, including the new tax code and address of residence if already available;
- states or overseas territories for which they intend not to make use of this fiscal system;
- the status of non-resident in Italy for the period of time required to benefit from this tax regime;
- jurisdiction or jurisdictions in which they had the last tax residence before requesting the flat tax;
- the checklist form specially prepared, which serves to verify they have the access requirements.
Benefits of the flat tax for those who want to buy or sell luxury homes
This kind of tax is not new in Europe. Other countries such as the United Kingdom, Malta, Portugal and Spain have introduced similar fiscal solutions in recent years. However, the UK is now in a fairly nervous situation and its scenario is continuously evolving because of events related to Brexit. Those who have tax residence in England will find themselves with their financial assets out of Europe.
The Italian luxury real estate market can take advantage of this situation. The owners of luxury homes in the Emerald Coast and Porto Cervo who have decided to sell will find new buyers among new Italian residents. With the flat tax 2017 Italy becomes an excellent fiscal alternative for Russians, Arabs, as well as for some investment banks on the run from the City of London, or for lovers of luxury and exclusive locations such as football players and international singers.
Beyond the fiscal benefits linked to the flat tax 2017, the biggest advantage is an easier mode of access to the West and its lifestyle. The Emerald Coast and the most renowned locations of Gallura have the perfect features to welcome all those who wish to live in exclusive places on an island increasingly central in the Mediterranean sea and well connected to the rest of the world. In Porto Cervo and surroundings you can find high quality properties with comforts hard to get elsewhere both in Italy and abroad.
Immobilsarda, property finder of luxury real estate, provides a full range of consulting services. We are extremely sensitive to our international clientele’s needs. Giancarlo Bracco, founder of Immobilsarda, has long argued for the introduction of a flat tax in Italy to respond to the wishes of part of our foreign customers. His words, given to the historic Turin newspaper La Stampa, evidence this interest.