ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
The Pensioners’ Regime terminates after ten years. The applicant can revoke the election at any time in his/her tax return. The inbound workers regime (the “Impatriati Regime”) Income of workers who transfer their tax residence to Italy, up to the annual limit of EUR600,000, contributes to the formation of the overall income, and taxation is limited to 50% of its amount if the following condi - tions are met: • the workers undertake to reside in Italy for tax pur - poses for four years; • the workers have not been tax resident in Italy dur - ing the three tax years preceding their relocation – however, if the activity is carried out for the same entity by which the worker was employed abroad before the transfer or for an entity belonging to the same group of companies, the minimum require - ment for residence abroad is: (a) six tax years, if the worker has not previously been employed in Italy by the same entity or an entity belonging to the same group; or (b) seven tax years, if the worker, prior to his/her transfer abroad, was employed in Italy by the same entity or an entity belonging to the same group; • the work activity is performed for the greater part of the tax year in Italy; and • the workers are highly qualified or specialised. Relief may be granted at the rate of 60% in the follow - ing circumstances: • where the worker relocates to Italy accompanied by a minor child; or • in the event of the birth of a child or the adoption of a minor during the period in which the regime is applied – in such cases, the enhanced relief takes effect from the tax year in which the birth or adop - tion occurs and shall continue for the remaining duration of the entitlement to the relief. The increased relief is subject to the condition that, throughout the period during which the worker ben - efits from the regime, the minor child, whether by birth or adoption, is resident in Italy.
The Impatriati Regime terminates after five years. Taxation of Trusts General principles Trusts are subject to Italian corporate income tax (CIT). Italian tax resident trusts are subject to CIT on their worldwide income. Non-resident trusts are taxed only on Italian-source income. The definition of tax residence for trusts is derived from that provided for corporations (Article 73, TUIR). A trust is considered resident in Italy for tax purposes if, for the greater part of the tax year, it has its place of effective management or its place of ordinary man - agement in Italy (the third criterion provided for the tax residence of companies – the legal seat – is not applicable to trusts). Trusts established in low-tax jurisdictions are consid - ered to be resident in Italy, unless proven otherwise: • when at least one of the settlors and at least one of the beneficiaries are tax residents in Italy; or • when, subsequent to a trust’s establishment, a person resident in Italy attributes the ownership of immovable property or real property rights, includ - ing by shares, as well as destination bonds on the same. For Italian income tax purposes, trusts are classified into the following main categories. • Transparent trusts, ie, trusts with identified benefi - ciaries, whose income is attributed and taxed on a transparency basis to the beneficiaries. The identi - fied beneficiary is the holder of the right to request from the trustee the attribution of the part of the income that is attributed to him/her on a transpar - ency basis. • Opaque trusts (or discretionary trusts), ie, trusts with no identified beneficiaries, whose income is taxed in the hands of the trust. In this case, the trustee has the discretionary power to choose whether, when, to what extent and to whom to attribute the trust income. • Mixed trusts (both opaque and transparent), for example, where the trust deed provides that part of
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