A lump-sum tax in exchange for a tax residence
The "flat tax" allows the most affluent foreign taxpayers to benefit from a tax advantage, and this is facilitated by low-binding eligibility criteria to benefit from it. The tax scheme consists of a flat-rate tax of EUR 100 000 per annum in Exchange for the transfer of the tax residence of the foreign taxpayer to Italy.
Eligibility conditions
Any taxpayer may benefit under the following conditions:
- Transfer its tax residence to Italy, and
- Not have been a tax resident in Italy more than one year in the last ten years.
Once these criteria have been fulfilled, the taxpayers concerned may be taxed on a lump sum of 100 000 euros annually on all their income and gains made abroad. However, these taxpayers remain subject to the common law regime regarding their Italian-source income of any kind.
Tax interest for Cristiano Ronaldo
The Portuguese Footballer enjoys this feature on his foreign-source income, which accounts for about 64 million euros a year. On this sum, he will therefore be indebted to the Italian tax authorities for 100,000 euros per year or an effective tax rate of 0.15%! On the other hand, on the salary he receives at Juventus, amounting to 30 million euro per annum, CR7 is taxed at a rate between 45 and 50% in Italy. Ultimately, its overall tax will be 15 100 000 € for 94 million euros of annual revenue or an effective total tax rate of about 16%. The Portuguese Footballer achieves a tax savings of around 30 million euros a year by settling in Italy! Since his ancillary income is well above his Italian salary, this tax exemption scheme is therefore a considerable advantage for Cristiano Ronaldo, who will benefit during the four years of his contract concluded under the Italian tax system . And this is all the more profitable to him, that in 2017, the Spanish Justice condemned the Portuguese football star to a fine of 18 million euros following his examination for tax evasion. One can easily infer that the Italian tax system is not foreign to the signature of Cristiano Ronaldo to Juventus nor to the numerous transfers to Italy of world-renowned sportsmen.
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