The Non-Domiciled Regime in Italy (RND) is a set of tax regulations carefully designed to encourage wealthy individuals to move and invest in the country. While many other countries in Europe have similar regulations, Italy’s includes unique benefits and criteria, with the hope of boosting local investment throughout the country. This set of tax regulations offers massive gains, including a flat-rate tax on all foreign income.
Are you considering moving staff or operations to Italy and want to learn more about the resident non-domiciled regime in Italy? Here’s everything you need to know to safely manage your tax compliance in Italy.
What Is the Non-Domiciled Regime in Italy?
The Non-Domiciled Regime in Italy, also known as the Resident Non-Domiciled Regime, is a special tax regime designed to attract high-net-worth individuals and investors to establish their residence in Italy. This regime started in 2017, and it provides certain tax benefits and incentives, making it an appealing option for individuals with substantial foreign income and assets.
Many countries have some sort of tax incentive for high-wealth individuals. Under the non-domiciled regime in Italy, eligible individuals can opt to pay a flat-rate tax of EUR 100,000 annually on their foreign source income rather than being subject to the standard Italian personal income tax rates, which reach as high as 43%.
Individuals can exclude specific countries from the flat tax rate based on Double Taxation Agreements, allowing them to further benefit from exemptions and deductions for taxable income generated in those countries.
The regime can be extended to family members, such as partners and children, for an additional fee per member. Individuals under the RND regime are exempt from paying inheritance and gift tax on assets located abroad.
The Non-Domiciled Regime in Italy aims to attract wealthy individuals and investors, offering them a favorable tax framework for foreign income while promoting investments and economic growth in the country. According to some, it has been successful in bringing significantly wealthy people to Italy, particularly those involved in luxury industries.
Eligibility Requirements for the RND Regime in Italy
Eligibility for Italy’s Resident Non-Domiciled (RND) regime is open to individuals who meet specific criteria. These criteria are:
- Residency History: Applicants must have been non-tax residents in Italy for at least 9 out of the 10 years before moving to Italy, regardless of their country of origin or domicile.
- Family Members: The regime may also extend to the family members of the primary applicant, including partners and children, for an additional fee per member.
- Non-European Investors: A special investment visa program is available for non-European high-net-worth individuals or sports professionals, offering opportunities to obtain residency in Italy.
- Investment Options: Eligibility may be linked to making specific financial investments in Italy, such as investing in Italian companies, government bonds, or charitable donations.
How To Apply for the Resident Non-Domiciled Regime in Italy
Understanding the application process is crucial if you’re thinking about taking advantage of Italy’s Resident Non-Domiciled (RND) regime, designed to attract high-net-worth individuals.
1. Check Eligibility
Ensure you meet the criteria, which typically include having not had Italian tax residence for at least 9 out of the 10 years prior to your move to Italy. This will mean proving that you haven’t been subject to any previous tax processes in Italy.
2. Gather Documents
Prepare the necessary documentation, including proof of your tax residency history, financial records, and personal identification. If you have Italian ancestry, ensure that you also have the necessary documents on hand.
3. Submit Tax Ruling or Tax Return
You can access the RND regime by either submitting an advance tax ruling to the Italian Revenue Agency or exercising the substitute taxation option in your annual tax return.
4. Determine Tax Liability
Beyond the flat rate of EUR 100,000 for foreign sources of income, any Italian income is subject to ordinary Italian income tax rates. It’s important to ensure that any amounts taxed this way are calculated correctly.
5. Cherry Pick Exemptions
Decide if you want to exclude specific countries from the flat tax paid through the non-domiciled regime in Italy based on the country’s Double Taxation Agreements. This can be beneficial for certain income types.
6. Consider Investment Vehicles
Know that worldwide income derived through investment vehicles and funds established outside Italy is included in the regime. Italy’s fiscal transparency rules won’t apply in this case.
7. Family Members
Explore extending the regime to family members (e.g., partner, children) for an additional fee per member. Each family member added will cost another €25,000 under the non-domiciled regime in Italy.
8. Investment Visa (If Applicable)
If you’re a non-European high-net-worth individual, consider the investment visa program. This program may require specific financial investments in Italy that we discuss below.
Once you apply for the regime, it will renew automatically for 15 years. However, you can give this up early by moving out of Italy or opting for standard Italian tax rates.
Can I Apply If I’m Not European?
Non-European individuals can apply for Italy’s Resident Non-Domiciled (RND) regime. In fact, the RND regime has been designed in part to attract high-net-worth individuals from outside the European Union (EU) and European Free Trade Association (EFTA) countries.
To qualify, non-European investors should be willing to make specific investments in Italy. These financial commitments come with an investor visa that helps ensure residency in Italy.
The financial commitments that individuals can make include:
- 1 million euros invested in Italian companies
- 2 million euros invested in Italian government bonds
- 1 million euros donated to Italian charities
What Happens After 15 Years in Italy?
After 15 years of benefitting from the Resident Non-Domiciled regime in Italy, individuals typically revert to the standard Italian tax rules. This means they would be subject to ordinary Italian taxation on their global income and assets.
It’s essential to plan for this transition and consult with tax professionals to ensure compliance with the new tax obligations.
Can You Apply Again After 15 Years?
The Resident Non-Domiciled regime in Italy typically lasts for 15 years. After this period, individuals are no longer eligible for the RND regime. They would need to follow the standard Italian tax rules and may not reapply for the RND regime.
The Benefits of Partnering with INS Global for Total Global Compliance Assurance
INS Global offers your operations the knowledge and experience necessary to help you navigate the global market in Italy and more than 100 countries worldwide. INS Global’s international expansion services can assist you in navigating even the most complicated labor and tax rules. Whether you’re planning to relocate your firm overseas or grow into new markets, it helps to have professional support.
If you have staff who can benefit from the non-domiciled regime in Italy, tax rules can become even more complex. This is an issue made worse if you are unfamiliar with local laws or don’t have the necessary local resources.
INS Global has been giving businesses easy and efficient options to support their global expansion strategy for more than 15 years. Today, we provide cutting-edge payroll, recruitment, compliance assurance, and EOR (Employer of Record) services so you can explore and develop in a way that works for you.
INS Global knows all about the problems of global expansion. To learn more about how you can grow swiftly, easily, and safely, contact one of our expert advisors today.