Italy has always been known for its high taxes, corruption, and byzantine bureaucracy, making it look like hell on Earth; why would you even consider moving there?
This picture cannot be farther from the truth. Yes, Italy has a bad reputation in regards to bureaucracy and takes, but it also took several steps forward to make it more competitive, especially for new residents.
Let’s discover how Italy is really like!
Italian taxes, are they actually that high?
If you check the international reports on taxation and competitiveness of any jurisdiction Italy ranks at the bottom of the charts, this is because the reports normally accounts for nominal tax rates instead of effective tax rates. Nobody pays the full tax rate in Italy.
No, I am not implying the people are smart and they dodge taxes, or they trick the system; they simply follow the rules and make an efficient use of the tax breaks available. Furthermore new residents get amazing deals on taxes, have you heard of the flat tax regime of Italy? Or the 90% tax off ruling? What about the 7% flat rate for pensioners?
Let’s check them out!
70% – 90% Italian tax ruling, what is it?
Since 2016 Italy introduced new tax schemes to attract workers and entrepreneurs overseas, basically it offers a discount on taxes for new residents for a period of minimum 5 years.
The rules are very simple:
- You need not to be a resident of Italy for the past two years
- You need to employed or self-employed in Italy
You can benefit of a 70% tax exemption on your income, which means that if you make € 100,000 only € 30,000 is taxable; furthermore, if you move to the South this exemption is increased to 90%. Imagine that you make € 1,000,000 and move to Naples, you are only taxed on € 100,000 and your tax liability is in the € 30,000 region resulting in a 3% effective tax rate. Not bad, right?
In addition, if you have one dependent child or you purchase any residential property in Italy you can extend the regime for further 5 years.
Full article here
Italian € 100,000 flat tax
Italy has never been HNWI friendly jurisdiction. In a progressive tax system, higher rate taxpayers end up paying the highest tax brackets (43% +), therefore many rich individuals have sought new residency overseas in a much friendlier jurisdiction to them, in an attempt to seek relief on high taxes.
In 2015 Italy introduced a new flat tax for new residents, which is very similar to the RBC system in the UK. If you have never been a tax resident of Italy in 9 out of the past 10 years, you can pay a flat rate € 100,000 against all your foreign income.
This means that you can place your business in jurisdictions where the corporate tax is nil or negligible, and pay yourself a large dividend each year and you are fine.
Unlike the RBC, you can repatriate the money earned in Italy without triggering any further tax liability, as well as invest it in any activity in Italy or overseas.
In addition, no CFC rules apply nor wealth tax is due if you opt for the flat tax.
It is also possible to extend the regime for any family member, for an extra € 25,000 payment per year
Full article here
Pensioners 7% tax regime in the South
We already covered the tax break available to employed, self-employed, and HNWI, but what about pensioners? Italy has thought about them too! Since 2019, pensioners moving to qualifying areas of Italy enjoy a nice 7% flat tax rate on all their foreign income for 10 years, as well as not paying any wealth tax.
Southern municipalities with less than 20,000 inhabitants qualify, as well as certain municipalities in Lazio, Le Marche, and Umbria if they have 3,000 inhabitants or less. Upon moving to a qualifying municipality, you need to receive a foreign pension, and then all your foreign income is taxed at 7%. That’s it.
This regime is very useful if you need to withdraw large sums of money from your private pension fund and minimize your taxation, or you have large capital gains and other income sources from overseas meanwhile you receive your pension.
Full article here
How can I move to Italy on a VISA? Do I need a lot of money?
Now that you know that Italian taxes are not so bad, let’s find out how to move to Italy and give a vacation to your wallet paying low taxes. If you are an EU national, you can establish your residency to Italy without any particular issue, EU citizens are granted freedom of movement in any EU member country, thus if you hold any EU passport you can become an Italian resident without a VISA.
If you are a non EU citizen, you must first obtain a VISA to enter Italy, and then you can convert it into a residence permit. Once you renew your residence permit for 5 years, you are granted the EU residence permit, allowing you (and your family members) to stay in the EU indefinitely. Let’s find out which are the best VISA options to move to Italy.
Elective Residence VISA requirements
The Elective Residence VISA is the fastest Italian VISA route because it does not require any clearance certificate from the Italian immigration office. In order to qualify for the Italian Elective Residence VISA you must prove to have sufficient passive income sources to self sustain while in Italy; according to the Italian laws, the following income sources are passive:
- Pensions and disability payments;
- Capital gains;
Basically every income sources except employment or self employment. You need to prove at least € 31,000 passive income sources per year for a single applicant and € 37,000 as a couple, any further applicant requires the threshold to increase by 5%.
The Elective Residence VISA can be a good way to move to Italy, however you must bear in mind that you need to pay for your own healthcare, as well as you can’t undertake any business or employment activity once in Italy. Furthermore, you can’t convert your Elective Residence VISA.
Full article here.
Representative office VISA
There are various business VISA option, however the representative office route is often overlooked; this is a great opportunity to move to Italy, and all you need is a non Italian business which has been operating for at least 6 months.
The process is quite straightforward. Firstly, you need to establish the representative office in Italy, and register it at the local Chamber of Commerce; in order to do so you need the company’s incorporation statement, its sworn translation into Italian, and an Italian registered address.
You must bear in mind that this office does not need to generate any income, nor employ any people, and you don’t need to file any tax return. All you have to do is to pay for its registration once, and use it for your immigration purposes.
After your representative office is up and running, you must obtain the Chamber of commerce clearance certificate, and the immigration office clearing certificate.
Finally, you need to apply to foreign consulate and you will be rewarded with a business VISA to move to Italy. Once in Italy, you can switch the VISA into any other type of VISA (if you meet the relevant criteria), and you can renew it as long as you make € 8,500 in passive income sources.
Full article here.
Italy grants you a two year VISA (renewable for further 3 years) if you commit to any of the following investments:
- € 2,000,000 in Italian government bonds;
- € 1,000,000 in any Italian charity;
- € 500,000 in the paid up capital of an Italian limited company;
- € 250,000 in the paid up capital of an Italian innovative startup.
In order to apply for the investor VISA, you need to file an application to a central committee in Italy, disclosing your intent to invest in any of the above options. Note that you don’t need to make any investment prior being accepted into the program!
Once your application has been accepted, you obtain the Nulla Osta, and you can apply for the VISA at the foreign Italian consulate. You are required to make the investment within three months from your entry in Italy.
Finally, you need to maintain your investment to renew your residence permit.
This VISA option can be very appealing, especially if you can invest in your own company that you setup in Italy; you can invest in it without risking your own capital to be used (or misused) by other entrepreneurs. Finally, you can invest in somebody else’s company or startup, but you can ring fence the use of your funds for certain activity through a so called patrimonio destinato. In this way you can protect your wealth and enjoy your VISA for Italy
Full article here.
How to claim your Italian citizenship
The Italian passport is among the most powerful in the world, and you can move to hundreds of countries VISA free, as well as enjoy all the benefits of being an EU citizen. Italy citizenship laws are based on the jure sanguinis principle, meaning that if you have an Italian ancestor you can pass on the Italian citizenship to the next generation.
If you have any ancestor born in Italy after 1861, you can try to claim your Italian citizenship, as long as you have the birth certificates and the clear lineage and succession from you to the ancestor. The procedure is normally undertook in the foreign jurisdiction where you live, through the local Italian consulate; it is also possible to obtain a one year VISA to move to Italy in order to claim the Italian passport; the latter procedure is normally faster.
Full article here.
I wish to buy a home in Italy, but I am not sure it is the right move, can you help me?
The Italian real estate market has greatly suffered the recession of the early 2000’s and it never recovered since then. Real estate prices continue to decrease in several areas of Italy and the government has created incentives and cut taxes to stop this decrease.
Buying a property in Italy is quite a straightforward process, and albeit you don’t need to be assisted by experts to go through the process, it may be useful to do so in order to find the best tax breaks available.
Did you know that you can renovate Italian properties using the government money? If you didn’t know, let me introduce you the Superbonus scheme. With this scheme you can undertake major renovation on the property structure, as well as energy efficiency improvements and claim the full cost to be reimbursed.
There are other schemes to further reduce your renovation costs, but the Superbonus is definitely the most important one.
Basically, you can renovate the property for free even if you don’t pay tax to Italy because you can trade the credit directly to a bank (or the post office) for hard cash.
Furthermore, if you hold your residential property for 5 years, there is no capital gains tax.
How can Accounting Bolla help you
We are a team of experienced accountants, and attorneys at law. Our boutique firm can help you strategize your next move to Italy on the immigration, tax, and real estate side; our team members are fluent in English and other major European languages.
We can help you find the best strategy for immigration and taxes, and we can implement it directly; we don’t outsource our work to third parties, and you can use us as a one stop shop for your transition to Italy.
We can guarantee the highest industry standards, and our proven track record speaks for ourselves (check out our reviews in Google and Trustpilot).
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