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On August 7, 2024, the Italian Council of Ministers approved a law decree which, among other things, increases from 100,000 to 200,000 euros the substitute tax payable by individuals who transfer their residence to Italy and elect for the special regime provided for by article 24-bis of the TUIR, also known as the “Flat tax”. The decree will enter into force with its publication in the Official Gazette and must be converted into law within 60 days. During this period, Parliament may make changes to the text approved by the Council of Ministers.
Irrespective of any consideration on the advisability of changing this regime, the question arises as to the temporal effectiveness of the change.
The press release of the Council of Ministers no. 91 dated 7/8/2024 indicated that the higher amount would be payable "on the income generated abroad by individuals who transfer their tax residence to Italy, within the meaning of Article 43 of the Civil Code, after the date of entry into force of the Decree".
The clarification contained in the aforementioned press release refers to the transfer of tax residence, although the normative reference is to Article 43 of the Civil Code. In view of the similarity of the circumstances (in both cases, we are dealing with regimes available to individuals transferring their residence to Italy), it is useful to recall that a similar situation occurred at the end of 2023, when the modification of the preferential regime in favour of "inbound workers” were enacted.
At that time, taking into account the fact that the transfer of residence is a lengthy process and respecting the principle of "pacta sunt servanda", in the final version of the legislative decree containing the amendments, the application of the pre-amendment regime was safeguarded for those who would have transferred their registered residence by 31.12.2023.
For the same reasons that led the legislator to amend the rule for inbound workers, it would seem appropriate that, in this case too, the decree be amended to allow access to the pre-amendment rule for those who will transfer their registered residence before the end of the year. In this way, the expectations of those who have already transferred their registered residence (or are in the process of doing so) during 2024, but who will meet the "major part of the tax period" requirement after the date of entry into force of the Decree and will acquire tax residence in Italy only in 2025, would not be disappointed.
Finally, it would also seem appropriate to clarify that those who have already exercised the election, assuming a duration of 15 years, are entitled to benefit from the (more favourable) entry regime for the entire duration of the election and therefore continue to pay the amount of €100,000 per year until the end of the validity of the election.
