ROME: At the start of 2017, in a bid to attract more wealthy citizens and capital to Italy, Rome introduced a non-domiciled tax regime. Now, citizens can move their tax domicile to Italy without too much administrative effort. All income they receive from non-Italian sources is taxed at a flat rate of €100,000 ($117, 666) per year, plus €25,000 ($29, 412) per year for every additional participating family member, for a maximum of 15 years. Non-EU citizens can receive a residence permit by taking part in a specific investment programme in Italy. However, all participants are only eligible for the programme if they have not been liable for taxation in Italy for more than one year out of the last 10. World Finance spoke with Benedikt Kaiser, Partner at Kaiser Partner, about what this move could mean for the Italian economy and how the application process works. Italy hopes to follow in the footsteps of other countries that have introduced a non-dom tax regime and seen a positive impact on their economies. To put the potential financial gain into perspective, according to The Independent, the UK Exchequer could lose £6bn ($7.9bn) a year from abolishing privileges for UK non-doms. The potential advantages for the Italian economy are numerous. “Those participating will need a residence, so they invest in real estate,” Kaiser explained to World Finance. “They will also create new job opportunities and will also spend money shopping, most likely on high-end, Italian-made goods.” Applications are made through the Italian tax authorities, and are relatively simple to administer with the right partners on board. “We highly recommend that applicants begin the approval far in advance, especially if they are currently based in another country,” Kaiser explained. This is because it takes three months for the application to be processed, regardless of whether it is successful or not. “It is also worth looking into in more detail first, before you start transferring your tax residency, so you can find out to what extent you will benefit from the ruling,” he added. Following the country’s legal tradition, and as a part of the Italian tax regime, Kaiser predicts that the programme is likely to become more and more intricate as time passes, as it is still in its early stages. “In any case, with the right advisor and tax specialist, the transition will be smooth,” said Kaiser. “Assuming that the application is prepared in the right way, you could very well lower your tax burden for you and your family, and do so efficiently.” That said, US citizens are not able to benefit from the regime, as they are taxed by their global income. Kaiser noted: “A non-dom programme is not particularly attractive for US citizens. However, they often consider transferring funds abroad in order to geographically diversify their wealth. Kaiser Partner does exactly this from our
In order to support clients with the process, the team at Kaiser Partner advises clients to first ask the Italian tax authorities for a preliminary tax ruling. “We believe that you should discuss the result with your wealth manager and tax advisor before going further,” Kaiser told World Finance. “Another important action to start off with is to revise the structuring of your wealth. Do you really profit within given wealth structures? Will your privacy effectively be protected? Wealth restructuring can address crucial questions like these.”