Last 8 March 2017, the Revenue Agency issued order No. 47060 implementing the regime for new residents under Article 24-bis of the Consolidated Income Tax Code, introduced by the 2017 Budget Law.
Furthermore, the Revenue Agency declared that en explanatory circular would soon be issued providing all the necessary clarifications on the application of the new regime.
Article 24-bis of the Consolidated Income Tax Code provides for an optional favourable regime for new residents involving among the others a flat-rate tax of 100,000 Euro for non-Italian sourced income. Eligible for such regime are individuals who have been resident outside of Italy for at least nine tax years out of the ten preceding the beginning of the period of validity of the option.
The order concerns the terms for exercising the option for the new regime.
Eligible taxpayers can exercise the option when they file their tax return for the fiscal year during which they moved their residence in Italy, or during the immediately following year. A certain amount of information must be provided in the return, e.g. attesting foreign tax residence status for at least nine out of the previous ten tax years, the last jurisdiction where the taxpayer was resident before exercising the option and the foreign states where the taxpayer does not intend to use the new favourable regime.
The option for tax year 2017 must therefore be exercised by 30 September 2018.
Without prejudice to the necessity to meet the relevant requirements, the order confirmed the applicability of the favourable tax regime also to Italian citizens who in the past moved to States or territories with a favourable taxation regime and in respect of whom the presumption under Article 2, paragraph 2-bis of the Consolidated Income Tax Code applies.
The most important change introduced by the order is the optional nature of the request for a private letter ruling to be allowed to participate in the favourable tax regime.
In other words, the existence of the requirements for being allowed to participate in the regime is a matter for individual assessment by the person concerned, who may opt for making a request for a private letter ruling or not, it being understood, however, that the option is exercised upon filing the tax return.
The application can be filed with the Agency even before meeting the residence requirements under Article 2 of the Consolidated Income Tax Code.
Given the complex and delicate nature of this issue, in order to prevent any errors that may have adverse consequences, one should assess whether it may be appropriate to make a request for a private letter ruling to the Revenue Agency anyway, while in any event having himself/herself assisted by a trusted professional.