QROPS Advice: Taxation of Expatriates Living in Italy

Expatriates living in Italy will be classified as either resident or non-resident. An individual is considered resident if:
􀂃 for a period of 183 days they are registered with the registry office of the Population Registry (Anagrafe), or
􀂃 for a period of 183 days they have their principal place of business or residence in Italy, or
􀂃 for a period of 183 days they have their centre of vital interest (i.e. his family) in Italy
When moving to the country an individual needs to register with the Population Registry and in turn remove their name from the registry on departure.
If an individual is resident in Italy for a part year then any tax credits or allowances are pro-rated based upon the period of time the individual is resident in the country during the year.
In the case where part of a resident’s income is generated overseas, the greater part of foreign income taxes paid can be credited against Italian tax if paid in accordance with tax treaties stipulated by Italy.
Italy has tax treaties with most developed countries.
Self employed individuals living in Italy are taxed differently from employed individuals and are subject to a ‘regional tax on productive activities’ (IRAP). IRAP, typically 3.9%, is applied to the value of net production resulting from the business pursued within the relevant region. IRAP is payable in advance based upon the previous year’s tax return, with the final tax bill for the year being reconciled once the relevant tax return has been filed.
Italy has been implementing a series of tax reforms over the past few years with the aim of simplifying the fiscal system within the country, including that applicable to non-residents.

full details go to http://www.ailo.org/common/externalPage.asp?intURL=/publications/default.asp&extURL=/downloads/Italy_2009.pdf