Globe-Trotting Sportsman Or Entertainer: Italy

An Italian citizen with extensive, international, multi-sourced income is not in a good tax situation unless he or she can establish non-residence, since full, world-wide taxation of income and capital gains will apply.

If resident in Italy, the peripatetic professional may well find himself paying withholding tax in a number of countries which cannot in some cases be reclaimed or set off against Italian taxation because of the absence of a tax treaty.

Such an individual will almost certainly resort to corporate structures to market his or her skills and manage derivative income flows. Revenue protection measures apply to countries having "preferential" tax regimes; offshore trusts or companies are deemed to be resident and must make annual tax returns. Complex structures may be necessary if the anti-avoidance rules are to be avoided. The Italian authorities have maintained a 'black-list' of offshore jurisdictions, but plan as of late 2009 to switch to a 'white-list' system of acceptable countries.

Apart from the extra difficulty of minimising tax on the income side, an Italian-resident sportsman or entertainer will be in the same position as any other Italian resident. (Select 'High-Tax Country Resident' and 'Italy' for a fuller description).

In order to lose tax residence it is first necessary to stop fulfilling residence criteria in a given tax year. The departing individual should make sure that their name is deleted from the Residents' Register (Anagrafe della popolazione residente).

Establishing non-residence for an Italian tax resident sometimes amounts to demonstrating that residence has been established in another high-tax jurisdiction, since there is a provision in the law which presumes continued residence on the part of an Italian citizen who moves to a 'low-tax' jurisdiction, 'unless it can be proved otherwise'.

The effect of this law was famously demonstrated in the case of the late Luciano Pavarotti, and success in moving to a low-tax jurisdiction probably requires a complete separation from Italian property and business assets.

Foreign sportsmen and entertainers' earnings in Italy are likely to be subject to withholding tax at a swingeing 30%, although double tax treaties will often apply.

If a foreign sportsman or entertainer becomes an Italian resident, then he or she is in the same position as an expatriate executive (select 'Expatriate Executive' and 'Italy').

www.lowtax.net contains details of the offshore business sectors of 50 jurisdictions, and their taxation.

NB: The suggestions given above do not constitute investment advice. They are intended only to assist individuals in finding appropriate professional advice, which is essential for anyone planning offshore investment.