Tax Regularisation Explained For Italian Expatriates

By Editorial 16 March, 2010

In a recently-issued circular, the Italian Revenue Agency has given instructions for Italians working outside of Italy, whether for state institutions or private companies, who wish to regularize the non-declaration of any funds they hold abroad.

The amount of such funds held abroad should be included in an individual's annual tax returns. However, expatriate workers have now been given an extended period over which to rectify any incompleteness in the declarations they should have made, even if that entailed the lack of any declaration at all. Those declarations can be made without suffering the penalty fees imposed by the current Italian tax amnesty.

Italian residents employed by the European Union or other international institutions, or in public service abroad (such as in embassies or consulates), are, in any case, exempted from any need to declare funds in foreign current or deposit accounts, as long as those accounts have been reserved for the crediting of earnings derived directly from overseas employment. An obligation to declare arises only if a resident has financial or other assets abroad, even if they were purchased from those overseas earnings.

That exemption lasts only as long as the overseas employment lasts. If a resident returned to Italy by December 31, 2008, and declared his or her income but failed to declare any assets left abroad, this can be rectified by September 30, 2010 (one year after due date), against payment of a charge of only EUR25 (USD34).

Previously, that charge would have been reduced to EUR21, only if the rectification had been effected by December 29, 2009. However, by a further time extension, a resident returning from international or state agency employment abroad will now be able to pay the reduced penalty for the regularization of both 2008 earnings and assets held abroad, if the relevant declaration is made by April 30, 2010.

Expatriates who have kept their Italian tax residency while working abroad for Italian or foreign companies (including those who work across the frontier, for example in Switzerland, but live in Italy) may also utilize the above reduced charges for regularizing their tax declarations, both for their earnings in 2008 and eventual assets held abroad.

A comprehensive report in our Intelligence Report series devoted to a study of the ways in which expatriate executives and employees can optimise their remuneration and taxation situations in a number of the main English-speaking countries is available in the Lowtax Library at and a description of the report can be seen at

Tags: Expatriates | Compliance | Tax | Investment | Tax Compliance | Law | Offshore | Professionals | Italy | Switzerland | Individual Income Tax |


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