Lower taxes on Italian new-residents

Tax Update

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The Italian Government has released a number of proposals in the Draft Budget Law aimed at encouraging international High Net worth individuals to live and invest in Italy.

These include easier entry visas for foreign individuals aiming at investing in Italy, a tax exemption for income produced by self-employed workers transferring their residence in Italy for work purposes, and a new favorable tax regime for those who want to settle in Italy, mirroring the UK resident-non-domiciled regime.

This last provision, if introduced, could push a significant number of High Net Worth Individuals to transfer their residence to Italy.

Looking at the proposals in more detail:

  • Introduction of a two-year special investor's visa regime (renewable, in some cases, for further three years) applicable to entry and residence in Italy lasting for more than three months. In order to benefit from the regime, the non-resident individual will need to prove, or to prove their intention, to make investments in Italy of at least:
    1. two million euro in Government's bonds, to be locked in for at least two years
    2. one million euro in equity instruments in the share capital of an Italian-resident and operating company, to be locked in for at least two years, or
    3. one million euro of philanthropic giving in culture, education, migration management, scientific research and recovery of cultural goods.
  • Amendments to the special regime for employees moving to Italy for business reasons. The regime is going to be extended in order to make it more appealing on the tax benefits side, so that it will cover even self-employed workers staying in Italy for at least two years. Moreover, the Government appears to be intending to widen the tax-free allowance, to date limited to 30% of working income received, to up to 50% of income from either employed or self-employed work in Italy.
  • The tax exemption currently covers only EU citizens. According to the draft law, it could be expanded to include even individuals resident in non-EU countries where a double tax treaty or an agreement on the mutual exchange of information is in force, so long as they hold a graduate degree and have been continuously employed (or self-employed) for the last twenty-four months.

  • A new tax regime for non-residents (meeting certain requirements) and their relatives willing to move in Italy, mirroring the resident-non-domiciled UK regime, providing that all income produced outside Italy could be subject, after the presentation of a formal request for preventive tax ruling, to a substitute fixed tax equal to euro 100,000 and euro 25,000 for the relatives. The eligibility period could last, save for cases of withdrawal or termination, for up to fifteen years.
  • Those eligible would also be exempt from the disclosure of foreign assets, the exemption from wealth tax, donations and inheritance tax due on assets held abroad.