The united arab emirates exit the FATF “grey list”: what are the tax implications for italian investors in the region?

21 March 2024 | News

Financial Transparency and Investor Confidence

The United Arab Emirates authorities have recently received significant recognition from the Financial Action Task Force (FATF) as they have been removed from the so-called “Grey List” for combating money laundering and terrorism financing.

The Financial Action Task Force (FATF), established in 1989 during the G7 in Paris, is an intergovernmental organization dedicated to protecting the global financial system and economy from threats such as money laundering, terrorism financing, and proliferation of weapons of mass destruction. The FATF Secretariat is located at the Organization for Economic Co-operation and Development (OECD), while the presidency, lasting two years, is entrusted to senior officials appointed by member states.

Currently, the presidency of the FATF is held by Singapore, represented by Raja Kumar, for the period from July 1, 2022, to June 30, 2024.

The decision to remove the United Arab Emirates from the “Grey List” reflects the country’s efforts to promote financial transparency and ensure a safe environment for international investors.

Dubai as new destination for Italian real estate investments – Tax regulations and implications for Italian residents

Despite these significant advancements, Italian investors must be aware of the Italian tax implications associated with foreign income and property in the UAE.

Dubai, a key Emirate in the United Arab Emirates, is ambitiously pursuing its growth vision until 2040, focusing on infrastructure development and attracting investments and talent.  The recently approved Masterplan 2040 outlines an integrated project aimed at enhancing residential areas, expanding public transportation, preserving natural landscapes, and promoting economic activities. With a bustling construction environment, Dubai offers favourable conditions for investment, backed by security, quality education, healthcare services, and a culture of tolerance.

The real estate market in Dubai has seen significant growth, with Italian investors among the prominent buyers, attracted by the quality construction and lucrative returns offered by the market.

Under fiscal perspective, it important to note that Italian tax law requires Italian residents to declare all foreign incomes, including those derived from rentals in the UAE, and pay the corresponding taxes in Italy. This means that incomes generated in the UAE are subject to Italian taxation, even if they are tax-exempt in the country of origin.

Additionally, it is important to highlight that although the FATF has excluded the UAE from the “Grey List,” according to the Italian ministerial decree of May 4, 1999 (published in the Official Gazette no. 107 of May 10, 1999), the United Arab Emirates continue to be included in Italy’s “blacklist” of countries with privileged fiscal status for tax purposes.

The primary tax consequence of transferring fiscal residence to countries included in Italy’s blacklist is the legal presumption of maintaining fiscal residence in Italy until proven otherwise by the expatriate.

Consequently, the presence of a country on Italy’s blacklist triggers a shift in the burden of proof regarding the actual fiscal residence of Italian citizens who have emigrated to the countries listed (under Article 2, paragraph 2-bis of the Italian Consolidated Italian Income Tax Act).

In particular, Article 2, paragraph 2, stipulates that in the event a person establishes permanent residence in one of these countries, it is their responsibility to provide evidence contrasting the presumption of fictitious foreign residence. Therefore, according to our tax regulations, individuals who emigrate to Italy’s blacklisted countries are required to demonstrate that the transfer of residence is genuine and not related to tax evasion mechanisms.

For individuals removed from the records of the resident population and enrolled in the Registry of Italians Residing Abroad (AIRE) transferred to blacklisted countries, the presumption of residence in Italy applies. This unless the taxpayer can provide evidence to the contrary. This is a crucial aspect. The contrary evidence must be specific, precise, and able to convince the tax administration to consider the taxpayer’s foreign fiscal residence. Therefore, it is advisable to seek assistance from experienced tax consultants.

Hence, the mere transfer of residence to the UAE and registration with AIRE may not be a definitive solution to escape Italian taxes.

It is also worth noting that since December 29, 2023, after Legislative Decree no. 209/2023, the rules for determining the fiscal residence of individuals and legal entities in Italy have been strengthened, making it even more crucial for Italian investors to fully understand the implications of their tax status. Therefore, seeking assistance from experts in international taxation is advisable.

Penalties for Non-Compliance with Tax Obligations

It is essential to emphasize that failure to comply with tax obligations can have serious consequences for Italian investors. Penalties for failure to declare foreign income are significant and may include doubling of penalties and extension of assessment periods.


In conclusion, Italian investors operating in the United Arab Emirates must be aware of their tax responsibilities in both countries. It is essential to consult qualified tax experts and stay updated on relevant tax and financial regulations to ensure compliance with tax obligations and mitigate risks associated with international investments.