Cristiano Ronaldo and foreign high net worth individuals

Cristiano Ronaldo’s arrival at Juve highlights Italy’s attractive new tax regime for foreign high net worth individuals.

Cristiano Ronaldo’s summer switch to Juventus has sparked debate about not only sporting performance and statistics, but also the fiscal implications of his transfer to the club. In particular, Cristiano’s move has drawn attention to the optional tax regime for new residents in Italy. Find out more below in this article from partners Giorgio Marcolongo and Paolo Bifulco, a version of which also appeared in a recent copy of Rolling Stone magazine.

These days, we are very accustomed to tax and financial scandals linked to the names of the great champions of this sport, going right back to Maradona. However, the intention here is not to fuel debate about financial scandals but instead to raise awareness of the new tax regime (the “Tax Regime”) brought in by the 2017 Finance Act (law no. 232/2016) aimed at attracting new resident High Net Worth Individuals (“HNWIs”) to Italy.

Now that he is in Turin, one of the world’s most recognized individuals could take advantage of an Italian tax law that would enable him to pay the Italian tax authorities a lump sum of Euros 100,000 in each tax period. This would cover all the income he receives from foreign sources, regardless of the country in which these incomes were generated.

Features of the Tax Regime

In essence, the Tax Regime permits individuals who have been resident outside Italy for at least nine out of the last ten years to become Italian residents and to opt for a yearly payment of Euros 100,000 flat tax (the “Flat Tax”), which would be paid instead of:

(i) income taxes on non-Italian source income

(ii) wealth taxes on foreign real estate properties (currently at 0.76% rate) and on foreign financial assets (currently at 0.2% rate)

(iii) gift or inheritance taxes on foreign assets.

With respect to (i), the sole exception where income would not be covered by the Flat Tax is if any capital gains resulted from the disposal of qualified shareholdings within the first five years (i.e. five tax years, since one tax year is equivalent to one calendar year in Italy). Qualified shareholdings are those which represent more than 20% of the voting rights or more than 25% of the capital of the relevant company, or for companies listed on official markets, this would reduce to 2% and 5% respectively.

Based on the above, taxpayers who choose this Tax Regime will be considered Italian residents for tax purposes. As such, in instances where the existing tax treaties entered into by Italy apply, no other specific agreements are intended to be negotiated between Italy and foreign countries (including EU countries).

Consequently, the Tax Regime does not provide any particular exemption from foreign taxes; the avoidance of double taxation is granted by the existing treaties. However, the option for the Flat Tax prevents foreign taxes being eligible for foreign tax credit in Italy given that there is no income tax due in Italy as it was replaced by the Flat Tax.

Taxpayers who opt for the new regime may decide not to include in the tax regime items of income arising from one or more States. The reason for this is that it allows taxpayers to benefit from treaty provisions with respect to the specific items of income.

The Tax Regime applies irrespective of the taxpayer’s nationality and former State of residence.

Accordingly, it may also be applicable to US resident individuals who intend to become Italian residents.

The Tax Regime does not require a minimum number of tax years (i.e. it can also apply for a single tax year). Nor does the tax regime require a minimum number of days to be spent in Italy in order to qualify. However, the tax treaties entered into by Italy still apply, as pointed out above, meaning that any foreign State is still allowed to claim that the tax residence of an individual is not Italy if, for example, he or she spends more than 183 days in that State.

The new regime ceases after 15 years of tax residence in Italy.

Taxpayers can extend the new regime to family members (spouses, lineal ascendants and descendants, siblings and persons related by affinity of first degree) on the condition that these family members also meet the requirements of the law. In such cases, the yearly flat tax would be equal to Euros 25,000 per family member for which the option has been exercised.

How to apply

Taxpayers can opt for the new regime in the tax return for the relevant tax year.

Previously, the law required taxpayers who intend to benefit from the new tax regime to submit a special ruling request to the Italian tax authorities. However, the guidelines have clarified that the ruling is now not mandatory and that taxpayers can provide the relevant information either in the ruling request or in the first tax return in which they choose the option.

The guidelines provide a checklist of twenty factual elements that must be disclosed and documented (either in the ruling request or in the tax return) in order to provide evidence of possible connections with Italy that could undermine the (previous) status of qualified non-tax resident.

The payment of the Flat Tax is a precondition for the option.


The new regime ceases after 15 years of tax residence or if the taxpayer fails to pay in full or in part the flat tax. The guidelines also specify that the option ceases if taxpayer transfers his/her tax residence abroad.

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