Developments in the Italian “Resident Non-Dom” Regime: Tax Treaties and Inheritance Tax

By Sergio Finulli and Andrea Angheleddu,COMMA 10 Chartered Accountants & Lawyers

Thanks to the new resident non-domiciled regime enacted in 2017, Italy, along with other countries, takes part in the challenge of attracting high-networth (HNW) individuals.

The regime does not require a preliminary ruling and has a maximum duration of 15 years. It is intended for those who have never been resident in Italy or who have not been resident in the last nine years. It provides for a yearly tax of EUR 100,000 on foreign income, which can be reduced to EUR 25,000 for the wife, children and other relatives qualified as optional eligible taxpayers. It should also be noted that there is no general tax on capital in Italy. The substitute tax does not cover Italian income and, for a holding period corresponding to the first five years, capital gains on qualified participation (i.e. a participation in the capital of a listed company higher than 2% or higher than 20% in the case of a non-listed company).

It has also been confirmed that lump-sum taxation still covers employment income earned abroad and stock options or stock grants related to overseas activity. Under the new Italian legislation, lump-sum tax also applies to foreign-source income brought back to Italy (remittance) and there is no disclosure of foreign assets.

With reference to double taxation treaties signed by Italy, it should be noted that “new residents” enjoying the resident non-domiciled regime are subject to taxation in Italy on a worldwide basis with a flat tax for foreign income. This comprehensive tax liability means that most of the treaties signed by Italy may also apply to those qualified under the new regime. A specific analysis of individuals will always be necessary.

However, it is possible to exclude the income of some foreign countries from the regime by subjecting to ordinary taxation in Italy, resulting in the potential benefit of foreign tax credits. In the case of conflict of residence with another country, being subject to full taxation in Italy on income from that country may enable access to a treaty by deeming Italian residence on the basis of tie breaker rules. Indeed, the application of the treaty to settle conflicts of residence with the country of origin or with that where working activity or economic interests are maintained would be even harder if foreign income is included in the Italian flat-rate tax with the risk of having taxes to be paid also in the other country.

During the period of validity of the scheme, inheritance and donation tax in Italy is limited to assets and rights existing in Italy at the time of the inheritance or donation. The same exemption applies if the deceased party or the donor has been qualified as an optional eligible taxpayer with the payment of reduced substitute tax. This exemption also applies to trusts. The maximum rate of donation and inheritance tax in Italy is currently 8%.

The assessment for joining this new regime should be done on a caseby- case basis, but based on an initial evaluation it would seem beneficial for those with an income of EUR 500,000 or more per year.

Sergio Finulli

Sergio Finulli

COMMA 10 Chartered Accountants & Lawyers, Milan, Italy
T: +39 02 481 9258
E: This email address is being protected from spambots. You need JavaScript enabled to view it.; W:

COMMA 10 is a firm built on the cornerstone of professional collaboration between chartered accountants and lawyers. The company provides their clients with comprehensive accounting, corporate and tax services, as well as legal support, corporate restructuring and bankruptcy services in multiple industries. COMMA 10 is based in Milan and provides integrated services to individuals, private and public companies, as well as non-profit organisations.

Sergio Finulli is a Founding Partner of COMMA 10, a GGI member since 1997. He is a Chartered Accountant and Legal Auditor, and currently Regional Vice Chairperson Europe of the GGI International Taxation Practice Group (ITPG).
Andrea Angheleddu

Andrea Angheleddu

COMMA 10 Chartered Accountants & Lawyers, Milan, Italy
T: +39 02 481 9258
E: This email address is being protected from spambots. You need JavaScript enabled to view it.; W:

Andrea Angheleddu is a Chartered Accountant and earned a LL.M in International Tax Law from Bocconi University. He has more than ten years of experience in international tax advising large companies as well as family business often with an international background.

Published: Winter 2017 l Photo: Kavalenkava -


GGI Logo 70x50px

GGI Geneva Group
International AG

Schaffhauserstrasse 550
P.O. Box 286
8052 Zurich


T: +41 44 2561818
F: +41 44 2561811
This email address is being protected from spambots. You need JavaScript enabled to view it.