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San Marino Introduces Tax-Related Amendments for Individuals — Orbitax Tax News & Alerts

San Marino has published Law No. 94 of 24 June 2022 on changes to the budget for 2022. This includes amendments to the conditions for the new foreign financial assets held by individuals (imposta per il riequilibrio delle attività finanziarie estere - IRAFE). The IRAFE was introduced as part of the original budget measures for 2022 and is levied at a rate of 0.2% on qualifying foreign financial assets held directly or indirectly by an individual resident in San Marino. It was originally provided that the IRAFE applied to an individual who has been resident in San Marino for more than 5 continuous years, or not subject to a special tax regime on foreign income. Law No. 94 increases the residence requirement to more than 10 continuous years. It is also provided that the tax is not due if not exceeding EUR 10.

Law No. 94 has also replaced article 22-bis of Law No. 71/2013 regarding residence for economic reasons, including new conditions for such residence. Under the new article 22-bis, individuals may qualify for residence for economic residence if they undertake an economic activity through a company formed in San Marino where the following conditions are met:

  • They hold at least 51% of the share capital of the resident company;
  • They hire at least three employees previously registered in the job placement lists, for an indefinite period, or one employee if operating in an incentivized sector;
  • They do not have registered tax debts exceeding EUR 20,000; and
  • They have established a guarantee on a bank deposit or a bank or insurance surety with a value equal to EUR 75,000, which must be increased to EUR 150,000 within 2 years or substituted by the purchase of immovable property with a value of at least EUR 150,000;

Lastly, Law No. 94 has postponed the deadline for individuals to submit their annual tax return for tax year 2021 and the related payment from 30 June 2022 to 31 July 2022.