A guide to relocating to Italy

If you are considering a move to Italy right now, you are most certainly not alone. Covid-19 has caused a great deal of uncertainty and yet, has also perhaps helped many more people gain clarity when it comes to the importance of our health, and safety of our families.

Aside from the pandemic, the UK’s exit from the EU has left more than just a bad taste in the mouth. Arguably, considering the anguish reported with respect to British settlement status, and residency rights for Europeans in the UK being uncertain for so long, many Europeans have reported feeling less than ‘at home’.

Overall, the fallout between coronavirus and Brexit has been a catalyst for many of us to consider career changes, relocation and perhaps the bringing forward of future plans.

British and EU citizens are looking at their options, now more than ever. When it comes to relocation or retirement abroad, a clear understanding of different requirements and all associated financial and taxation elements is key.

In Italy, the authorities have launched specific and attractive tax regimes and investment programmes in order to encourage and assist potential new Italian residents to settle comfortably in Italy.

We have broken down some of the most relevant information for you, regarding what needs to be considered and ways to approach moving to Italy, and to bring to light some financial or tax advantages and visa options that you may not have been aware were an option.

Tax concessions

The Italian government has introduced a range of attractive tax regimes, the aim of which is to encourage new tax residents, as well as to appeal to Italians considering moving back to Italy. In fact, a recent article in the New York Times reported how there was a definite trend of more Italians moving back to Italy throughout 2020, offsetting some of the emigration numbers for younger people leaving Italy to work abroad in the UK or USA and Asia.

There are three principal tax schemes that have been introduced that will appeal to both retired new residents and working people.

Pensioners

One of the available tax-concession schemes that directly benefits pensioners and retirees consists of a maximum 7% tax on all foreign income for all qualifying pensioners, regardless of their nationality.

This tax regime came into play with the Italian Budget Law of 2019 and is designed to encourage both Italian and foreign retirees to move to a less populated municipality within specific regions of Southern Italy, in order to stimulate growth in those areas.

New residents must be entitled to a foreign pension (from a private or public entity) in order to qualify for this special tax relief and you need to have been non- tax resident in Italy for a minimum of five years prior to establishing your new tax residency in Italy.

As mentioned, this tax rate is applicable to all foreign source income. Some foreign incomes can also be excluded if a new resident is paying foreign income tax already. There is no requirement to disclose any wealth that is held outside of Italy.

Starting from the year that follows a person’s residency being permanently established within Italy, this particular tax regime applies for a maximum of 9 years.

A less-populated area for the purpose of this concession, is a municipality with less than 20,000 people in its population within the qualifying regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Puglia Abruzzo or Molise.

Working new residents

This current tax concession is directly beneficial for any person who has not been a tax-resident in Italy within the past two years that works in Italy as an employee (or entrepreneur providing any sort of services).

This regime means that for the employed, at least 70% of their gross employment income will be completely exempt from any income tax for up to 5 years. This tax exemption is also increased if the person relocates to a list of certain southern Italian regions (Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, Sicily) to a massive 90%.

This particular tax exemption period can be extended for longer than a 5-year period if the new resident either purchases a home in Italy within the first 12 months of arrival, or if they have children.

High income/ wealthy residents

This scheme consists of a new tax-resident flat tax regime. It is aimed at residents with high income and provides the option to select the regime upon becoming resident and pay a fixed annual maximum amount of tax being €100,000 per year for 15 years (and consequently all foreign assets and income types need not be declared). Any local Italian income earned must be taxed under ordinary Italian income tax rules and regulations.

Residency Visa options

There are different visa options available to gain your residence in Italy, two of which are explained in more detail below. A decision which is ultimately unique to each person, depending on what is right for you. It is important to remember that seeking professional advice is highly recommended when considering your visa options for relocation.

Italian Elective Residence Visa

This type of visa is suitable for both retiree’s and workers that have an existing self-sustaining income (see thresholds below) and want to reside in Italy permanently, without needing to rely on employment within Italy, to live. A recent change in legislation now allows elective resident visa holders to obtain a work permit and so work if they choose to do so.

Some of the main requirements only, for this type of visa include:

• Proof that you have the necessary financial means to be able to support yourself without Italian-based work income (A minimum income from foreign sources such as pensions and investments, property income, company shareholding etc of €31,000 per year (or €38,000 if applying as a married couple)
• International health insurance in place before making an application
• A lease or rental agreement, or proof of property purchase for your residence in Italy (minimum 12-month contract for rental)
• Police clearances provided from your home country, and other reference checks.

Investor visa

The Investor Visa is a residency scheme and its main purpose is to encourage substantial economic investments within a particular country, in exchange for helping the investor (and also their families) the ability to become legally resident, (and in the EU’s case, allow free movement throughout Europe as well)

In Italy this visa now requires a minimum investment of €250,000, which has been reduced right down from €500,000, when investing in an Italian start-up company. The minimum required investment for investing in an existing listed company is €500,000 which again, has been reduced downward from one million as of last year (2020).

An Investor visa program can provide a two-year renewable special residency visa for non-EU citizens that provides freedom of movement throughout the EU including Italy, travel that is much less restricted.

This Investment visa does not require a history of the non-EU citizen to have worked or lived in Italy.

So overall, when looking at your investment options as a whole, there are four ways in which you can choose to invest to be able to qualify for the Italy Investor visa;

• Investing a minimum of €500,000 in any existing, listed Italian companies
• Investing a minimum of €250,000 into the overall share capital of a new Italian start-up company
• Investing at least €2 million via Italian government bonds
• Donating funds of €1 million to philanthropic projects (this includes migration management, education, culture and scientific research)

In light of Covid-19, many expats are making important decisions about relocation, and what funds they have that can allow them to consider programs like citizenship-by-investment such as this one.

Many people have relocated or have been considering where they can relocate, to feel safer for themselves and their families, and hence demand for new residency during this worrying time remains consistent. With major health and economic issues that come with the pandemic, it is a smart time to be considering your options.

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It is vital that you seek a financial assessment from an expert when considering your options in relocating. Consulting with a professional can efficiently manage your financials, avoiding any costly errors that you may miss.