Moving (back) to Italy can be a life-changing decision, not only to
enjoy the Italian life-style, but to boost your personal wealth also;
in fact Italy welcomes high net worth / high income individuals with a
flat income-tax and an estate-tax holiday for as long as 15 years
Italian or foreign citizen can access this special rule if:
A tax ruling can (but does not necessarily have to be) applied for, should your case be very complicated (beneficiary of trusts or other complicated structures in which some tax issues may arise and the individual would like a binding agreement with the Italian Revenue Service)
How does it work? The individual can apply for a flat tax of euro 100.000 per year on all or part of the foreign-source income (Italian income is taxed at ordinary rate no matter what).
So, in order to do some quick-math, all you have to do is to compare the flat-tax and the taxes you would anyhow pay on foreign-source income (foreign from the Italian point of view) to what you pay now where you live.
Why did I write “all or part of the foreign produced income”? Because you can enjoy cherry-picking; it is possible to opt-out for some foreign-source income and apply for ordinary (Italian) taxation, should this be more efficient.
What does it mean in practical terms? Let’s make a simplified example.
You collect interests on bonds, dividends, capital gains from publicly-traded stocks, compensations as member of board of directors and rents from your real estate investments.
None of these assets is deemed to be an Italian asset for income tax purposes.
Your Italian taxes (if you move here) will be equal to the sum of the taxes (if any) that you pay in the (foreign) countries where your income is earned – according to double taxation treaties – + 100.000 flat in Italy (and perhaps 25.000 for each family member if you choose to do so). Easy!
No need to disclose any of these incomes in your tax return (privacy guaranteed!).
The only relevant anti-abuse rule is that qualified capital gain arising from sale of qualified participations in foreign institutions is taxed in Italy at ordinary rates, if capital gain arises within the first 5 years.
Spouses, children and parents may move to Italy and opt for the flat-tax too, at only 25.000 Euro per person per year. Again, it is an option: you can always do our math and choose between flat and ordinary taxation based upon worldwide taxation rules.
Should the individual that applied for the 100.000 euro flat-tax lose his/her status (move abroad, give-up the flat tax option, fail to pay taxes timely or die), so would the other members of the family, unless they choose to remain in the flat-tax system, paying 100.000 Euro/year each.
Like Bitcoin, Ethereum or other cryptocurrencies? A 2015 European Court of Justice decision and the Italian Revenue Service directive of Sept. 2016 provide the clear legal framework that any crypto-user or investor would like to have. Cryptos are legal and welcome here.
Perhaps the most interesting tax advantage (and less spoken about) is the donation/estate-tax holiday. This means that any donation, contribution in a trust, other transactions without consideration and any inheritance that takes place as long as the individual enjoys the flat-tax regime triggers no donation/estate/inheritance tax (currently from 4% to 8% with some exemptions) on all the assets deemed to be outside of Italy. Isn’t this a great asset/estate planning opportunity?
No IVIE tax is due (a tax on foreign-owned real estate that all Italian tax resident – that cannot qualify for this regime – have to pay)
No IVAFE tax is due (a 0,2% tax per year on the market value of financial investments, excluding gold, participations in private companies and money on current accounts; a tax that all Italian tax resident – that cannot qualify for this regime – have to pay ).
No disclosure of your foreign owned asset is required in the tax return (this means 100% privacy guaranteed), whereas all other Italian tax residents must fill-in the so-called form RW of the tax return, in which the taxpayer has to disclose where foreign assets are held and their value.
A fast-lane is granted to apply for a Visa in Italy, should you need one.
Do you need to buy a house, make investments in Italy or move your bank-assets to Italy?
No, all you need is a permanent home, which can be simply rented.
Needless to say, I would think, you have to be KYC rules / anti-money-laundry rules compliant.
Too good to be true? How can you trust a country that has the reputation not to be the most reliable one (as far as taxes are concerned) because of the habit of changing rules too often?
Well, the Italian Revenue Service has already issued a long official guideline, and the Italian board of notaries public has just released a study that made many things very clear.
We cannot guarantee for the future but, besides considering that Italy needs to attract investments and wealthy individuals and that it would not be smart to kill this strategy by changing the rules (especially if a binding ruling has been signed, which cannot be deemed as void or non-existing, even if rules are changed), it is always wise to plan for your next move on the chessboard, should the rules be changed.
Therefore, as an escape, plan your relocation from Italy to another jurisdiction, and plan how to do it in a tax-efficient manner.
Leaving Italy should not be difficult, since none of your assets had to be moved to Italy when you joined the flat-tax system; you did not even have to buy a house. But may I dare to say that it will not happen?
What can Studio Rubini e Partners do for you?
We have been a reputable boutique consulting firm in Verona since 1947.
We work in English, German and French.
We have foreign and Italian HNWI clients, and we know what it means to work with them: flexibility, effectiveness, knowledge, confidentiality, credibility, reliability.
You will deal with a partner of ours who will personally take care of you and of your matters; no juniors in the back-office dealing with your business.
We can leverage our unique and valuable network of personal relationships (international lawyers, architects, engineers, bankers, medical doctors, city administration etc.), some of which have been in place form decades; this is the only way to get the personal touch you deserve and the information you cannot google on the net.
From the simple question like “I would like to buy that landmark house/apt. and I would like to know in advance what renovations I can do” or “what is the best hospital for this matter” to the sophisticated tax or legal matter, we can provide an answer or help.
We know how to work with and coordinate your foreign advisors; we have done it since the ‘70s of the past century.
Verona is also a perfect hub to do business in Italy, in the heart of the North East of Italy in which state-of-the-art craftsmanship combines with math-labs and young entrepreneur dealing with cryptography, physics, start-ups and investors that enjoy unique tax-incentives for high-tech investments.
Our fees will be competitive because we do not have all the overheads of the big international firms, while the services provided will be the one you are looking for.
Again, welcome to Italy and hope to meet you soon.