Maurizio Di Salvo –Tax Lawyer – BLCI Milan
Federico Vicino – CPA – BLCI Milan
In the draft of the Italian budget law for FY 2023, filed on 22 November 2022, a new possibility appears for the new year, with regards to Italian tax residents, who have accrued or had received pensions in Switzerland and who can now enjoy a 5% substitute taxation of IRPEF.
In particular, to date, all the amounts deriving from the compulsory occupational or voluntary private pension programs, due to an Italian resident who had worked in Switzerland and which were or are paid into his/her Swiss bank account, had to be subject to ordinary personal income taxes (“PIT”).
On the other hand, those who received the same amounts in an Italian bank account could benefit from the reduced rate of 5%.
With the new rules, all the amounts, wherever paid and in whatever form and under whatever title paid, by:
- Swiss invalidity, old age, and survivors’ insurance (AVS);
- the Swiss occupational old age, survivors, and invalidity insurance (LLP);
including benefits paid by Swiss early retirement institutions, or accrued on the basis of pension contributions taxed at source in Switzerland, will therefore be subject to a 5% flat tax, in lieu of the ordinary personal progressive income taxes.
Moreover, with the new provisions, which will take retroactive effect on 30 September 2015, it will therefore be possible to regularize the past tax positions, not already regularized by the past Italian VD program, by paying a 5% tax instead of the ordinary personal income tax.
With the consequence that:
- those who had not disclosed and declared the amounts paid out in Switzerland, and who are now at risk of being audited in the application of the administrative cooperation programs between Italy and Switzerland, will be able to regularize their past fiscal positions as tax residents in Italy, by paying the 5% substitute tax, plus a modest penalty;
- those who have paid the ordinary PITs in Italy, will not be able to request refunds;
The 5% flat tax will not allow, on the other hand, the application of the Swiss – Italian double tax treaty.