Italy: from “CR7” to welcoming great fortunes
Popularized by the case of Cristiano Ronaldo, the Italian tax regime for new residents allows, under certain conditions, for a flat tax on foreign-source income. This note outlines the access conditions, benefits, reporting obligations, and clarifications provided by the Agenzia delle Entrate circulars.
I. Context: Italy, a strategic tax destination
According to a Henley & Partners study, more than 142,000 millionaires worldwide are considering changing their tax residence in 2025. Italy ranks third, behind the United Arab Emirates and the United States. This attractiveness is largely due to the introduction, in 2017, of the new residents regime under Article 24-bis of the TUIR (Consolidated Income Tax Act), also called the “CR7 regime.”
This regime allows beneficiaries to pay a flat tax of €200,000 per year on foreign-source income for 15 years. Family members can also benefit for €25,000 per year per person.
I share here (link) the introduction to an analysis note dedicated to this regime, its mechanisms, and the key risk areas identified as potential targets for Italian tax audits. The full document can be sent to interested parties.
I am available to discuss this, whether to provide an independent review of an existing structure or to support the planning of a relocation project.
Below is a summary table of the key features of this regime:
II. Conditions for Access (Art. 24-bis TUIR)
Main conditions:
- Must not have been an Italian tax resident for at least 9 of the previous 10 years (Art. 2, para. 2 TUIR).
- Must transfer tax residence to Italy.
Election procedure:
- Explicit indication in the income tax return.
- Full payment of the flat tax within the deadline (generally by June 30 of the following year). No late payment relief (ravvedimento operoso) is allowed (Circular 17/E-2017).
Extension to family members:
- Defined under Article 433 of the Italian Civil Code.
- Flat tax of €25,000 per person per year.
III. Additional Tax Benefits
- Exemption from inheritance and gift tax on foreign assets
Under Art. 1, § 158 of the 2017 Budget Law, transfers of foreign assets are exempt from tax even if the taxpayer is an Italian resident. - Exemption from IVIE and IVAFE
- IVIE (tax on foreign real estate): full exemption during the regime (Art. 19, § 13, DL 201/2011).
- IVAFE (tax on foreign financial assets): same rule (Art. 19, § 18, DL 201/2011).
These exemptions do not apply to states explicitly excluded by the option (Art. 24-bis, para. 5 TUIR).
- No obligation to report foreign assets
Taxpayers are exempt from reporting foreign assets (Art. 4 DL 167/1990), except for qualifying shareholdings (Circular 17/E-2017).
IV. Interpello probatorio: a safeguard tool
Taxpayers can request an advance ruling (“interpello probatorio”) from the Italian tax authority under Art. 11, para. 1, letter b) of Law No. 212/2000. A favorable ruling provides legal certainty on eligibility, limiting the risk of future challenges.
Required documentation:
- Personal and tax data.
- Proof of non-residence in Italy.
- Previous states of residence.
- Excluded jurisdictions.
- Checklist from Provvedimento 47060/2017.
V. Scope and Eligible Income
All foreign-source income (from jurisdictions covered by the option) is generally included: salaries, dividends, capital gains, crypto assets, stock options (Circular 83/2022; Ruling 397/2022).
Exception: capital gains on qualified shareholdings remain taxable under the ordinary regime if sold within the first 5 years (26%).
VI. Payment and Maintenance of the Regime
- Annual amount: €200,000 (€25,000 for family members).
- Single payment before June 30 of the following year.
- No delay allowed: failure or delay results in immediate loss of the regime.
Duration:
- Maximum 15 years, non-renewable.
- Option revocable but irreversible.
VII. Conclusion: a powerful but demanding regime
Despite its apparent simplicity, the new residents regime exposes taxpayers to several vulnerabilities. Income qualification, true source, and structuring are delicate areas. The Cristiano Ronaldo case is emblematic: despite foreign payers, the Italian court ruled that image rights income derived from professional activity carried out in Italy – making it ineligible for the flat tax.
Other scenarios also pose requalification risks. If a taxpayer effectively manages a foreign company from Italy, the company may be deemed Italian resident for tax purposes. Its dividends could lose their foreign-source nature. Similarly, the use of interposed structures or foreign-controlled entities (CFC) is closely scrutinized: the Italian tax authority will attribute income to the beneficial owner if real control is demonstrated, even through presumptions.
Finally, the regime’s international reach requires clear recognition of Italian tax residence by the country of origin. Otherwise, lack of treaty alignment can undermine expected benefits, especially regarding double taxation. The very nature of the substitute tax under Art. 24-bis TUIR – and its qualification as an “income tax” under tax treaties – remains a technical point not to underestimate.
These fault lines – income requalification, interposition, CFC rules, treaty recognition – are all areas where the Italian tax authority, discreetly, can trigger a real interpretative battle. A well-prepared taxpayer will need a solid defensive strategy.
S.ASSOGNA – sandro.assogna@avocat.fr
