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19 April 2017
The Italian Budget law for 2017, entered into force on 1. Januay 2017, introduces the new “flat tax” valid for 15 years offering high-net-worth individuals considerable tax advantages when transferring their tax residence to Italy.
This becomes interesting for people who are used to regularly pay more than 100.000 euros income tax a year in their home countries, as flat tax itself is a lump sum tax of annually 100.000 euros, which the applicant must have produced abroad and pays to the Italian state in a single instalment within the applicated deadlines. The application of the flat tax offers additional advantages too, as it doesn’t require the usual extra tax payments of business activities or properties abroad – they don’t even have to be explicitly specified in the tax return. The flat tax furthermore is applicable to the law of succession and endowment.
Since March 8. 2017 it is possible to submit an application for the flat tax at the Tax Revenue Agency. In order to make use of the attractive tax benefits some conditions must be fulfilled:
Once the tax authority office approves the application, the right of application for the flat tax is obtained for 15 years and can be extended to other family members by filing another application. Their annual lump sum tax amounts to 25.000 euros if they fulfill all qualifications.
As a matter of fact one can withdraw from this arrangement at any time. But be careful: The entitlement of the application for the flat tax automatically is cancelled when an incorrect amount has been paid, an amount has not been paid on time or has not been paid at all.