Shortly before Christmas 2016 and notwithstanding the political crisis, the new Italian budget (“Bilancio 2017”) was passed by the Italian Parliament in record time. It introduces a few opportunities for non-residents.
Italian non-doms – Special rules are introduced for wealthy individuals who take up residence in Italy.
By making a special application (“Interpello”) to the Italian Revenue wealthy individuals may elect to pay a flat annual tax (Euro 100,000) that will replace a number of Italian taxes on foreign assets. The first is Italian income tax on foreign (non-Italian) income, but also the Italian capital taxes on foreign assets held by residents ( IVIE and IVAFE), Italian Inheritance tax and gift taxes on foreign (non-Italian) assets are excluded. The applicants, newly residents will also be entitled to special facilities if they apply for visas and residence permits in Italy.
This new tax is reduced to Euro 25,000, for members of the family of the electing taxpayer. Each election is valid for 15 years only and cannot be extended or renewed.
It will be possible to select the States to which this option will not apply. The newly resident will be in a position to elect that foreign income from selected, specific States or territories will be taxed in the usual way in Italy, so that foreign taxes can be deducted, under the general Italian law or the available Conventions for the avoidance of double taxation.
This option will also make available other tax reductions and rebates usually available only to Italian residents. Thus if the newly resident buys an Italian property, he will also be entitled to the “Prima casa “ tax rebate and pay Italian registration tax at the rate of 2%, rather than the standard 9% rate.
This is an option to be carefully considered if you have sufficient foreign income / assets to justify the annual Euro 100,000 outlay, instead of Italian taxes at usual rates and you are interested in moving to Italy.
Other, special tax rebates are also introduced for specialised / highly qualified foreign employees and professionals, who become resident and live in Italy for the following 2 years. Only 50% of their income will be taxed in Italy.
Investors` Visa – A new and special visa is introduced by this legislation.
It applies to foreigners intending to invest at least Euro 2,000,000 in Italian Government bonds, or to invest at least Euro 1,000,000 in an Italian company (the qualifying amount is reduced to Euro 500,000 where the investment is in a registered innovative start-up company).
This visa is also available if the foreign investor intends to donate funds (Euro 1,000,000 at least) to specified projects of public interest, relating generally to culture, instruction, immigration management and preservation of cultural assets / the environment (“Beni culturali e paesaggistici ”).
Where a non-resident in Italy is interested, he /she should apply, making a special declaration and producing evidence of sufficient financial means. In this case a special investors` visa (“Visto Investitori ”) will be granted for a period of 2 years, which can be extended for a further 3 years.
This special visa can be extended to the investors` family.
(Almost) self-financing property improvements – This new legislation extends for at least one further year, the current tax rebates for property improvement and restoration (“Ristrutturazione edilizia”) and new furniture purchase (“Acquisto di mobili”).
The problem with these facilities is that they materialise in a tax credit that can be set against any available taxable income. If you do not have any Italian taxable income you cannot benefit from these facilities.
To get round this particular problem, which normally afflicts poorer taxpayers, the new legislation provides that the benefit of some new tax provisions, the tax credit, will be transferable to suppliers, or other private enterprises (excluding banks). In turn, it is reasonable to expect, these suppliers will grant a proportionate price reduction.
The benefit of these new facilities will also be available to non-resident Italian property owners that do not have sufficient Italian taxable income, to benefit from the earlier provisions. It is not necessary to be resident in Italy to benefit from these new rules.
This new, transferable tax credit is only available for improvements to the common parts, normally of a condominium (“Parti comuni condominiali”).
Where the common parts are made more energy efficient (“Riqualificazione energetica”), a 70% (in some cases up to 75%) transferable tax credit is available. For each individual property, up to a maximum of Euro 40,000.
Where the works relate to specific, listed measures to improve the resistance of the common parts to earthquakes (“Riqualificazione antisismica”), then 75% (in some cases, up to 85%) of the costs incurred will turn into a transferable tax credit. Up to a maximum of Euro 96,000 for each individual property.
If a substantial tax credit can be transferred to suppliers, it can be used as part payment and reduce the price actually paid for these property improvements.
This new legislation was only published on the 21st December 2016, came into force on the 1st January 2017 and will need to be implemented by delegated legislation. As usual, the devil will be in the detail of the implementing regulations.
Dr Claudio Del Giudice 01.01.2017 – Copyrights reserved