Transfer of residence to states with subsidized regimes. The consequences are deriving from the transfer of residence abroad to countries with privileged taxation (blacklist countries).
The tax consequences deriving from the transfer of tax residence to blacklist states. The transfer of residence to countries with facilitated tax regimes.
When a natural person decides to make a transfer of residence abroad, he must inevitably ask himself some questions also from a fiscal point of view. Essentially, it is a question of problems concerning income taxation and aspects linked to double taxation phenomena.
I have already dealt with in this article, “Transfer of residence abroad: a guide”, all the aspects related to a transfer abroad. Now, however, I want to focus in particular on the effects of a transfer of residence carried out in a country with a favourable tax regime. These are the so-called “Blacklist countries”.
Moving to these countries, in fact, has important consequences as regards the taxation of income received, and the verification of the tax residence of the expatriate person. Precisely to avoid making these mistakes, I decided to dedicate this article to deepen these aspects. Of course, if all this is not enough for you, at the end of the article, you will find the link to contact me directly for personalized advice.
Tax discipline linked to the transfer of residence in blacklist states
Pursuant to art. 2 paragraph 2-bis of the TUIR (DPR n. 917/86) in force: “Unless proven otherwise, Italian citizens who have been cancelled from the registries of the resident population and emigrated to States or territories with a privileged tax regime, identified by decree of the Ministry of Finance to be published in the Official Gazette, are also considered residents.”
The states or territories with a privileged tax regime have been identified with the D.M. of May 4 1999 and are highlighted in the following list:
Table: Transfer of residence to blacklisted states for natural persons – list
Below is the list of blacklist states for the transfer of residence of individuals. These are the states identified by the D.M. May 4 1999 (as amended).
|Alderney||Andorra||Anguilla||Antigua e Barbuda|
|Costa Rica||Dominica||Emirati Arabi Uniti||Ecuador|
|Guernsey||Hong kong||Isola di Man||Isole Cayman|
|Isole Cook||Isole Marshall||Isole Vergini Britanniche||Jersey|
|Saint Kitts e Nevis||Saint Lucia||Saint Vincent e Grenadine||Svizzera|
|Taiwan||Tonga||Turks e Caicos||Tuvalu|
Particular situations of some states for the transfer of residence to blacklist states
It should be noted that the following have been removed from the list:
– Cyprus and Malta (D.M. 27/07/2010);
– San Marino (D.M. 12/02/2014).
Despite the agreements with Switzerland, Monte Carlo and Liechtenstein regarding voluntary disclosure, these countries remain heavenly, for the purposes of the D.M. 4/5/99 regarding the residence of natural persons.
The consequences of moving to blacklist countries
The transfer of residence to blacklisted states has consequences for individuals. Basically, through the above provision, the principle is introduced whereby a person, even if he has removed himself from the resident population, must continue to declare his income in Italy.
This, by virtue of the relative legal presumption, contained in the rule in question, that the transfer, even when it has occurred by passing through a third country not included among those in the list above, is only instrumental to obtaining an undue tax benefit.
With this provision, the taxpayer bears the burden of providing, by any means, excluding testimony and oath, a valid document to overcome the presumption of tax residence in Italy. This evidence may consist of facts or deeds that confirm the effectiveness of the situation that materialized through the cancellation of the resident population from the registry office. This, in line with the assumption of a real and lasting relationship with the immigration state and with the interruption of significant relations with the Italian state.
The content of the taxpayer’s proof
As we have seen in the transfer of residence in blacklist states, proof of the taxpayer is essential. As regards the content of the test, the same circumstances can be used, in negative, in order to substantiate the formality of the cancellation of the resident population registry. The aim is the demonstration of the non-existence in our country of the habitual residence (residence) or of the complex of relationships concerning business and interests, extended not only to economic aspects but also to family, social and moral ones (domicile).
The list of white list countries still not applicable
The 2008 budget amended the criteria for identifying the so-called tax havens by replacing art. 2, paragraph 2-bis, of the TUIR, which reads as follows:
“Unless proven otherwise, Italian citizens are also considered residents who have been deleted from the resident population registers and transferred to states or territories other than those identified by the decree of the Ministry of Economy and Finance to be published in the Official Gazette.”
This rule will come into force when the Ministry of Economy and Finance proceeds with the identification of the states and territories that will make up the so-called “white list”. Therefore, when the white list is published, reference will no longer be made to blacklists like the one above.
Until the eventual issue of this new white list, the old list contained in the D.M. September 4, 1996.
The burden of proof in the event of a transfer of residence abroad
Let’s see, now with a simple example the effect in terms of transfer of residence in blacklist states by the taxpayer.
On this aspect, it is necessary to point out application problems that have not yet been confirmed at the level of practice. I refer to situations in which the financial year of a natural person does not coincide with the calendar year. This is the case, for example, of the United Kingdom, where the tax period runs from April to April.
Transfer of residence to blacklist states and assessment
In particular, the elements to be monitored that could lead to the identification of suspicious situations regarding the effectiveness of the foreign tax residence of the subjects registered with AIRE may be different.
In particular, based on the information and experience in this area, we can identify a number of elements that can lead the tax administration to assess the tax residence in Italy of a taxpayer. These elements can be summarized as follows:
-Declared residence in one of the states and territories with privileged taxation, identified by the Decree of the Ministry of Finance of 4 May 1999; (relevant for the purposes of Article 2, paragraph 2-bis of Presidential Decree no. 917/86);
-Capital movements to and from abroad, transmitted by financial operators as part of the tax monitoring referred to in Legislative Decree n. 167/1990;
-Information relating to real estate and financial assets held abroad, transmitted by foreign tax administrations in the context of European directives and automatic exchange of information agreements;
-Residence in Italy of the taxpayer’s family unit (“center of vital interests”);
-Deeds of the register indicating the effective presence in Italy of the taxpayer;
-Active electricity, water, gas and telephone utilities;
-Availability of motor vehicles, motor vehicles and pleasure craft;
-Ownership of an active VAT number;
-Significant equity investments in resident partnerships or companies with a restricted share base;
-Ownership of corporate offices;
-Payment of contributions for domestic workers;
-Information transmitted by withholding agents with the single certification and with the 770 declaration form;
-Information relating to transactions relevant for VAT purposes, communicated pursuant to art. 21, D.L. n. 78/2010 as well as pursuant to Legislative Decree no. 127/2015.
Expatriates and tax residence assessment: advice and consultancy
If you are thinking of moving abroad and you have read this article, you will surely have doubts about the transfer procedure you are implementing. Getting on a selective list of subjects to check is not pleasant.
For this reason, you can contact me to receive personalized advice on your:
Personal position and on
How to better manage your transfer of residence abroad.
This is in terms of fulfilments and chrono-program of the aspects to be implemented and of the documentation to be kept in order to face a future tax assessment in the best possible way.
If, on the other hand, you have already moved abroad and believe you have not adopted the right procedure, contact me to understand your situation better. And to eventually have all the tools that I will show you available for a possible check. Being prepared for the arrival of an invitation or questionnaire is essential for a successful check.