In order to take advantage of that option, retired foreign individuals have to transfer their residence to one of southern Italy’s regions (i.e. Sicily, Calabria, Sardinia, Campania, Abruzzo, Molise and Puglia) and live in municipalities with a population not exceeding twenty thousand.
Taxpayers may opt for this regime not only for income received from retirement funds but also for worldwide income of any kind: in this case a flat rate of 7% will be levied, instead of ordinary progressive taxation (up to 43% in further additional taxes) on the taxpayer’s income. The brand-new optional income tax regime is applicable for a maximum of five financial years only.
Taxpayers who opt for ordinary taxation levied on overseas income can obtain a tax credit for the taxes paid abroad. In addition, thanks to this regime, the individuals are exempt from wealth tax on foreign financial assets (IVAFE) and foreign real estate tax properties (IVIE).
For this reason, it is not mandatory to report those assets in their tax returns, explain the Ecovis experts. Further clarification will be released by the Italian revenue tax agency in the next months. Italy has recently introduced several proposals to attract foreign individuals and investors.
Authors
Antonio Argenio, tax and business consultant – Certified Public Accountant, partner, ECOVIS STLex Studio Legale Tributario, Milan, Italy
Email: antonio.argenio@ecovis.it
Salvatore Tripolone and Mario Iervolino, tax consultants, ECOVIS STLex Studio Legale Tributario, Milan, Italy
Email: salvatore.tripolone@ecovis.it, mario.iervolino@ecovis.it