ITALY Trends and Developments Contributed by: Giuliano Foglia, Foglia & Partners
Italy is currently involved in implementing the major tax reform outlined in the Delegation Law No 111/2023, which authorised the Government to revise extensive parts of the Italian tax system and rationalise exist - ing legislative provisions (including the preparation of recast and consolidated tax acts). Moreover, Italy has continued to implement the new legislation in line with the latest developments in the international and European contexts. In particular, within the framework of the amendments to the inter- national aspects, Italy has implemented, effective from 1 January 2024, Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the EU, according to the solutions adopted in the so-called OECD Pillar Two. The relevant amendments have often been accompa - nied by public consultations on draft legislation and/or related administrative guidelines, offering tax experts and practitioners the opportunity to contribute to the drafting and interpretation of the new rules. Moreover, it should be noted that, in recent years, the administrative practice of the Italian Tax Authori - ties has been consolidated, with the publication of the answers to ruling requests and more extensive circular letters on the most important new pieces of legislation. The above aspects have contributed to Italy’s renewed attractiveness as an investment hub. That has been incentivised by the Italian Government through the introduction of several favourable tax regimes for both individuals and companies. Such attractiveness is also strengthened by the availability of a wide range of advance ruling procedures to obtain advance cer - tainty on tax matters and by a cooperative tax regime for companies that offers several benefits to taxpay - ers. Measure to Attract Individuals Since 2010, Italy has progressively introduced sev - eral beneficial tax regimes, with the aim of attracting human and financial capital to Italy and, ultimately, promoting inward investment.
Notwithstanding the various amendments over the years, these attractive regimes have proven very suc - cessful and have been confirmed by the Italian Gov - ernment as stable features of the Italian tax regime. Flat tax regime for new resident individuals (“Flat Tax Regime”) If Italy has become one of the favourite destinations for wealthy individuals wishing to relocate to Europe, most of its tax attractiveness stems from the Flat Tax Regime, in effect since 1 January 2017, with the spe - cific aim of encouraging HNWIs to move to Italy. The regime has proven to be very appealing and effec - tive, fostered by an open and tax-friendly approach towards cases of people applying for the tax regime by the Italian Tax Authorities, and stable over the time, with only two changes due to the increase of the amount of the flat tax to EUR200,000 and, currently, EUR300,000 (EUR50,000 for each family member to whom the option is extended). The regime is available to Italian, EU and non-EU citi - zens who cumulatively meet the following conditions: • transfer their tax residence to Italy; and • not having been tax resident in Italy for at least nine of the ten years preceding the first tax period for which the regime applies. The option for the regime can be extended to fam - ily members (ie, spouses, children, parents, siblings, children-in-law and parents-in-law) who meet the eli - gibility requirements, upon payment of an additional annual flat tax of EUR50,000 for each of them. The election for the Flat Tax Regime is made in the tax return for the relevant year, after payment of the flat tax. Before the election, taxpayers who wish to apply for the Flat Tax Regime can file a ruling request with the Italian Revenue Agency to obtain confirma - tion of eligibility requirements and the application of the regime to specific income items. Upon payment of the flat tax, under the Flat Tax Regime, electing taxpayers are not subject to any further taxation on any foreign-sourced income (with the sole exception of capital gains from substantial
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