Tax amnesty for foreign incomes

SPECIAL REGULARIZATION (Ravvedimento speciale)

The Italian Financial Law for FY2023 has released an important Tax amnesty for foreign incomes addressed to taxpayers who did not comply with tax reporting and payments.

In particular, Italian tax resident taxpayers must to submit a supplementary income tax return for each year still subject to assessment, by paying taxes due on foreign dividends/interests, foreign capital gains, foreign rental incomes, etc. plus a penalty of 2.22% of the tax due,within MARCH 31, 2023.

Tax & penalty payments may be done also in quarterly instalments (up to 8), starting from MARCH 31, 2023.

Years still open for formal assessments are: 2016, 2017, 2018, 2019, 2020 and 2021, unless incomes were generated in Tax Havens¹. In those cases, the statute of limitation doubles.

If the above-mentioned regularization is not carried out, the Italian Tax Authority will proceed to the notification of the formal assessment notice on the basis of the data collected during the exchange of information, applying full penalties (40%).

Taxpayers cannot regularize the missed declaration of foreign assets/estate properties, which is subject to the ordinary regularization regime (i.e. 1/8th of 3% for FY2021 = 0.375%).

SELF ASSESSMENTS IN CASE OF MISSED RETURN

Missed returns can be regularized only via a self-assessment procedure before the Italian tax authority by reporting in a special return the following information:

• foreign incomes (dividends, interests, rentals, capital gains, etc.);
• foreign assets (shares, bonds, real estate properties, stock options, etc.)

Penalties shall always be equal to 2.22% on taxes on foreign incomes and could be lowered to 0.17% on the assets’ value as of December, the 31^st. IVIE/IVAFE (wealth tax on real estate and foreign assets) are subject to 1.67% penalty.

Failure to comply with the above procedure of tax amnesty for foreign incomes will result in a penalty ranging from 3% to 15% (up to 6%/30% in case of assets located in Tax Havens – see note n. 1).

To sum up, in case of missed return, both the final Assessment Notice and the Compliance Act shall be object of a specific negotiation between our Firm and the Italian tax authority.

1 Alderney, Andorra, Anguilla, Antigua & Barbuda, Dutch Antilles, Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, Brunei, Costa Rica, Dominica, UAE, Ecuador, Philippines, Gibraltar, Gibuti, Grenada, Guernsey, Hong Kong, Isle of Man, Cayman Islands, Cook Islands, Marshall Islands, British Virgin Islands, Jersey, Lebanon, Liberia, Liechtenstein, Macao, Malaysia, Maldives, Mauritius, Monserrat, Nauru, Niue, Oman, Panama, French Polynesia, Monaco, Sark, Seychelles, Singapore, Saint Kitts & Nevis, Saint Vincent & Grenadine, Switzerland, Taiwan, Tonga, Turks & Caicos, Tuvalu, Uruguay, Vanuatu, Samoa.