Following on from the UK’s assault on the resident non-domiciled rules, Italy has introduced a very attractive alternative for those seeking certainty at a reasonable cost right in the heart of Europe.
From 1st January 2017 individuals can transfer tax residence to Italy and gain benefit from a fixed flat rate of tax for all income earned abroad. To be eligible for the scheme individuals must have not been fiscally resident in Italy for nine out of the last ten years. Unlike the UK, the scheme can apply to both Italian and non-citizens provided that the condition for tax residence is met.
The scheme can also apply to dependents of the main taxpayer. This can include children, parents, parents in law and siblings of the main taxpayer. Dependents can access the scheme in different periods but also need to meet the requirement of not being in Italy for the requisite period. This may even happen in different tax periods to the main applicant.
The scheme only applies to overseas income which is subject to the fixed tax regime. In order to do so it must be connected to a source outside of Italy. This would include employment income outside of Italy.
It is also possible to cherry pick jurisdictions that the regime applies to although the choice then applies to all income from that country.
Given the tightening up of the UK res-non-dom scheme, the Italian version provides an interesting alternative of domicile for HNW individuals.