New rules are starting to be set up by the Italian legislator in the after-Brexit European scenario. In tax fields, action comes on two fronts: foreign gift tax and foreign income tax.
On the one hand, relative to gift tax, Marche’s Regional Tax Commission – Commissione Tributaria Regionale delle Marche – in a recent ruling, sentence 594/3/2016, stated that in the case of donations realized from a person who resides abroad, he is to be taxed on domestic immovable property, i.e. limited to those assets located in Italy. The Commission hence confirmed that taxation exclusively on domestic assets is still a basic and fundamental principle under Italian Tax Law referring to donations.
Specifically, the case dealt with a subject, resident in San Marino, who registered in San Marino a donation act in favour of a family member, an Italian resident. The donation involved the transfer of assets partially located outside the Italian territory. However, those assets were not taxable for gift tax purposes, even though transferred to an Italian resident.
The Commission indeed stressed that article 55 of Consolidated Act on Successions and Donations – Art. comma 1-bis del Testo Unico sull’Imposta di Successione e Donazione (D. Lgs 346/1990) – refers merely to registration modes and setting, since all donation acts are mandatorily subject to registration.
The two different tax obligations – on donation itself and on the registrar duty – are autonomous and distinct charges, due to the fact that they have diverse legal justification. The D. Lgs 346/1990 regulates the general tax rules for donation, and the above-mentioned art. 55 simply states a duty to register in Italy also all foreign acts of donations in favour of Italian resident individuals. However, this provision and duty has nothing to do to become liable for the donation tax itself.
On the other hand, conversely, for what concerns foreign incomes, assets, properties and financial activities, the new Italian Budget Law introduced some peculiar provisions in order to attract multimillionaires to invest in the country and especially to bring back all those Italians residing abroad for tax reasons.
The legislative measure establishes a new special tax regime for those who had moved their residence abroad and are willing to come back, as for the case for instance of those who had left Italy and are currently living the UK looking for lighter tax levies and now are likely to fear the Brexit’s effect on taxation.
Obviously the favourable tax charging on income, assets and financial activities realized and owned abroad aims at attracting billionaires’ capitals and it is a system inspired by the Anglo-Saxon tax principle of “resident but non domiciled”, which brought back several foreign multimillionaires during the past years.
What the Italian legislator did was then basically to turn upside-down the principle under which Italian resident are bound to pay taxes for worldwide income, except the ones realized in countries where there are existing Double Taxation Conventions. More specifically, it is stated that who had left Italy for at least 9 assessment periods is allowed to come back paying lump-sum of 100.000 euros (25.000 euros for family members), provision undoubtedly aiming at favouring new investments and capitals in the country and consequently increase employment.
According to some technicians and professionals however, the manoeuvre constitutes merely a fiscal guarantee protecting solely those who left Italy in a more distant past and are now living in the UK, paying less taxes. It essentially is a legislative move willing to play with the fear of uncertainty left after Brexit in the European and domestic Tax field.
Article by Dott.sa Daniela Pacino & Dott. Fabrizio Di Patti