According to the new legislation, said individuals will be subject to a flat rate tax (7 per cent) on any kind of foreign source income (therefore, not only on foreign pension income).
The pension holder may also exclude some of the above-mentioned kind of income from the flat tax regime with the consequence that such income will be subject to the ordinary personal income tax levied at progressive rates (IRPEF) and will be possible to recover foreign taxes imposed on such income (if any) according to the foreign tax credit mechanism.
The option for the new regime may be exercised in the tax return to be filed for the first year of residence in Italy and may be renewed for the following five years.
This regime is subject to the following conditions: (i) the individual must have not been resident in Italy during the five tax years preceding the one in which the option has been exercised; (ii) Italy must have in force an administrative cooperation treaty with the individual’s country of residence; (iii) the residence must be moved in a small municipality (less than 20,000 inhabitants) in one of the regions of south of Italy: Sicily, Calabria, Sardinia, Campania, Basilicata Abruzzo, Molise and Puglia.
The option for the regime at hand exempts the individuals from any duty of declaration of the foreign assets in the tax return and from the wealth taxes applicable on foreign real estate and financial assets.
This regime follows the one which provides for an annual substitute tax of Euro 100,000 on foreign source income and gains applicable to individuals who move their residence in Italy (without any territorial restriction) and another granting a partial exemption of the Italian source employment and self- employment income for skilled workers.
by Stefano Serbini
