High earners, more expensive tax in Italy: flat tax doubles to 200,000 euro

A doubling from EUR 100,000 to EUR 200,000 of the flat tax on Paperoni who move to Italy has arrived. In the omnibus decree-law expected on 7 August in the Council of Ministers, according to the first drafts circulated, an upward revision of the substitute tax that applies to those who transfer their residence to Italy is introduced. The rule had been introduced by the 2017 manoeuvre (Law 232/2016) precisely to incentivise the entry of wealthy taxpayers into Italy, so as to also allow a shift of capital to be invested in our country. A provision aimed in particular at professional footballers and sportsmen, managers and professionals.

With this in mind, a fixed taxation of EUR 100,000 was introduced, but applicable only on income earned abroad, instead of the more onerous Irpef levy with increasing rates according to income. An optional scheme that can also be extended to family members, in this case with a substitute taxation of 25 thousand euro.

The scheme is optional and therefore a choice must be exercised. The numbers show a growing appeal. As the Court of Auditors explains in its latest report on the General State Accounts, 'the steady increase in the number of new residents benefiting from the facility emerges (1,136 subjects of whom 818 are main taxpayers and 318 family members in 2022)'.

According to the reconnaissance of the accounting judges, 'in the five-year period 2018-2022, payments of approximately 254 million were referable to this scheme, of which 232 million for principal taxpayers and just under 22 million for family members'.

However, as also explained by the Court of Auditors, 'the Agency has no knowledge either of the amount of foreign income on which the substitute tax acts or of the ordinary taxes that would actually have been levied on such income in the absence of the substitute regime'. Nor were specific surveys carried out to assess the measure's real compliance with the purpose declared in the explanatory report to the Budget Law for 2017, according to which the aim was 'to encourage investment in Italy by non-residents'. The discipline, the accounting magistrates conclude, 'appears mainly aimed at favouring subjects who can draw sources of income from several countries and who transfer their residence to Italy for work purposes (as in the probably frequent case of professional sportsmen), residential or other reasons, without however requiring - as should have been expected - an effective and tangible connection with the realisation of productive investments in our country'.