ITALY Trends and Developments Contributed by: Giuliano Foglia, Foglia & Partners
shareholdings realised within the first five years from the transfer of residence to Italy). Moreover, the fol - lowing additional benefits apply: • with regard to successions opened and gifts made during the validity of the regime for the deceased or donor, inheritance and gift tax do not apply in relation to assets and rights located outside Italy at the time of the succession or gift; • no obligation to report the ownership of assets, investments and rights held outside Italy in the tax return applies, except for the holding of substantial shareholdings in foreign companies during the first five years from the transfer of residence to Italy; and • an exemption from the wealth taxes due on real estate assets and financial products held outside Italy applies. According to clarifications issued by the Italian Tax Authorities, individuals opting for the Flat Tax Regime are considered residents of Italy for the purposes of the double taxation conventions concluded by Italy. It follows that all electing individuals are entitled to receive an Italian tax residence certificate for tax treaty purposes. However, the actual entitlement to the ben - efits of the double taxation conventions needs to be verified on a case-by-case basis, taking into consid - eration the approach of the other contracting State (ie, the source State). Special tax regime for inpatriates (“Inpatriates Regime”) The regime was originally introduced in 2015, with effect from 2016, and has been deeply modified over the years, finding its latest form in 2013, with effect from 2014. It has been conceived as a permanent measure to increase the internationalisation of Ital - ian companies and to promote the Italian economy, culture and technological developments by attracting different categories of taxpayers, regardless of their nationality, who move to Italy to carry out a work - ing activity therein and has proven to be particularly attractive for (still) active individuals who relocate to Italy. It currently provides, for a period of five years, a 50% exemption (60% in the case of workers with underage
children) on employment income (within the annual threshold of EUR600,000 of taxable income) derived from any employment activities carried out in Italy. The remaining 50% is fully taxable under ordinary tax rules. The Inpatriates Regime applies to workers who meet the following cumulative conditions: • move their tax residence to Italy; • commit to maintain their tax residence in Italy for at least four years; • have not been resident in Italy in the three tax peri - ods preceding the year of the transfer of residence (increased to six or seven tax periods, in case the working activity in Italy is under a working agree - ment with the previous employer or with other enti - ties belonging to the same group); • carry on their working activity mainly in Italy; and • meet the requirement of “highly qualified and spe - cialised” (ie, university degree and working activi - ties in a specifically identified industry). The Inpatriates Regime can also apply to artistic and professional activities. However, the benefit deriv - ing from the application of the Inpatriate Regime to self-employment income is subject to the so-called de minimis regime established by EU Regulation No 1407 of 18 December 2013. Special tax regime for researchers and teachers The special tax regime for researchers and teachers was introduced in 2010, with effect from the 2011 tax period. Originally created as a temporary measure, it has been made permanent to attract researchers and university lecturers to Italy, regardless of their nation - ality. Pursuant to such a regime, 90% of the remuneration received by researchers and lecturers is exempt (ie, the remaining 10% is ordinarily taxed as income from employment or self-employment). Other income not covered by the regime, including income from a for - eign source, is subject to standard personal income tax.
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