Optional regime for neo-residents and recovery of tax withholdings

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With Reply no. 83/2022, the Revenue Agency recognized the possibility of recovering the tax withholdings provided for by the so called Neo Residenti Tax Regime. The Agency has in fact clarified that the withholdings made by the withholding agent in relation to the income from employment abroad – in the tax period for which the option is intended to be exercised and before the exercise of the same – may be recovered by filing a refund request.

Article 24-bis of the Tuir provides for an optional substitute tax regime on incomes produced abroad by individuals under specific conditions. The option is completed with the submission of the tax return relating to the tax period in which the individual has transferred the tax residence to Italy or the tax return relating to the subsequent tax period.

Taxpayers who make use of this scheme are required to pay a substitute income tax calculated at a flat rate of €100.000,00 for each tax year in which the option is valid, regardless of the type and quantification of the income produced abroad.

The circular of 23 May 2017, n. 17 / E, has also established the possibility of using as compensation the tax already withheld in the annual transfer of residence, pursuant to art. 17 of Legislative Decree 9 July 1997.

Alternatively, it is possible to recover the tax by submitting an application for reimbursement as governed by art. 38 of the Presidential Decree 29 September 1973, n. 602.

The aforementioned art. 24-bis of the TUIR provides that the substitute taxation provided for by the regime applies only to income produced abroad (paragraph 1), identified on the basis of the criteria set out in art. 23 of the Tuir to identify those produced on the territory of the State.

As clarified in circular letter no. 17 / E of 2017, based on the reverse reading of the criteria contained in art. 23, the income from employment provided outside the Italian territory, by a person who has exercised the option referred to in Article 24-bis of the Tuir, will be considered income produced abroad.

Therefore, in the case of an employee who provides, in whole or in part, his work abroad, the income attributable to the activity carried out abroad will be included in the flat-rate substitute tax. On the contrary, the salaried income provided in Italy is not included among those for which the substitute tax referred to in Article 24-bis of the Tuir is applicable, and therefore must be subject to the ordinary IRPEF regime.

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