Italian Government Press Release
The Press Release reports that the Italian Council of Ministers, in a meeting on 7 August 2024, approved the text of a Decree-Law introducing a series of urgent tax and other measures. A Decree-Law is an executive measure of the Council of Ministers but subject to Parliamentary approval within 60 days after the issue of the Decree-Law.
Doubling the Flat Tax
As Economy Minister Giorgetti is reported to have said at the press conference and as reported in the Press Release, the various measures include a provision that doubles the flat tax owed annually by “high-net-worth individuals” from Euro 100,000 to Euro 200,000.
Family Members
The Press Release makes no provision for adjustment of the flat Euro 25,000 due by family members, but that may a natural consequence, with provision being made for this in the Press Release.
Entry into Force
It is not clear at this stage exactly when the new rules will come into force. In the Press Release, the Government state that the flat tax increase will apply in place of scale rates on income produced outside Italy by individuals who transfer their tax residence to Italy after the date of entry into force of the decree (presumably sometime later this year). It is not clear at this stage, if reference will be made to the date of registration as resident, or to the first year of tax residence.
Last year, a draft Decree proposed by the Government, making a significant change to the Impatriates Regime, was amended during the Parliamentary approval process, such that the old regime would continue to apply to anyone registering as resident before the end of FY 2023, even if FY 2024 was going to be their first year of tax residence. This was necessary in recognition of a fundamental principle of non-retroactivity of tax legislation, and of the rights of people who had already moved to Italy in the latter half of FY 2023 or were preparing to move at the time the new legislation was announced, and who were expecting a more favorable tax regime.
Like the Impatriates Regime, the HNWI regime applies to the first whole year that an individual is tax resident in Italy.
It is to be hoped that the Government will adopt a similar stance in this case.
No Change for Existing Adherents to the Regime
What does seem more clear, at this stage, is that there will be no adjustment to the Euro 100k annual payment for those who are already benefitting from the regime – i.e. for those who moved to Italy such that their fist year of Italian tax residence was FY 2023 or before that.
Next steps: Watch This Space
However we need to wait for the final version of the Decree and further news as it passes through the Parliamentary approval process. We will update this post as soon as we have further news.
Leave a Reply