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Why Italy should be your first choice escape route

Whether you’re a middle-aged professional with an established career, an entrepreneur or just starting out in the world of work, Italy should be top of your list thanks to favourable new tax regimes.

Italy offers a broad range of regions and cities each with their own unique identity and appeal as well as all the benefits of great food, culture and better weather.

Now there are incredible tax regimes that can make you significantly better off.

A new tax regime to be rolled out in 2020 was approved by the Italian parliament in June this year.

The Law Decree 34/2019 is designed to provide attractive regimes for:

  • workers and entrepreneurs;
  • professors and researchers;
  • high net worth individuals and families;
  • retired individuals moving to the South of Italy;
  • professional sportsmen (players, coaches, sport managers).

 

This opportunity is available regardless of nationality so even an Italian who has been based abroad for at least two years can return home and benefit from move favourable.

 

How the new regime works

 

From 2020 (the financial year in Italy runs from January to December), an individual such as an employee, a self-employed professional, a manager or an individual entrepreneur shall be subject to Italian personal income tax on only 30% of the income once they become resident in Italy.

The individual must not have not been tax resident in Italy for the previous two years and they must remain in Italy as a tax resident for the following two years and carry out most of their work activities in the country.

The new incentives apply for five years and can be extended for further five years (in total ten years) – with a 50% income exemption in the extended period. The extension is subject to additional conditions: purchasing a residential property, or if there is a dependent child; if there are three dependent children, the exemption in the extended period is increased to 90%.

The regime is even more favourable to individuals who move to one of the southern Italian regions (i.e. Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia or Sicily) which are in need of regeneration and have a way of life that provides the perfect antidote to the city life.

An individual moving to a southern region will be subject to tax on only 10% of their income.

The regime’s benefits have been increased for professors and researchers who will only be subject to tax on 10% of their income rather than 30%.

 

Tax benefits attracting professional athletes

One early adopter of the new regime is Aaron Ramsey who left Arsenal on a free transfer to join Juventus. Rather than being taxed on 30%, professional athletes are taxed on 50%. Joining on a free transfer meant that Ramsey could negotiate a higher salary and is now the paid British player (based on basic salary) earning €400,000 per week. The even better news for him is that he is only paying tax on €200,000.

Furthermore, there is even another attractive regime that allows ultra-high net worth individuals to pay a flat tax of €100,00 per year on foreign earned income. For athletes this could include sponsorship and endorsements which in the case of a global megastar like Cristiano Ronaldo are very significant!

If more footballers follow suit then it could generate significant sums for the state as well as boosting a league that has fallen behind England, Spain and Germany in its global appeal.

 

Here at Valiant Wealth we know what it’s like to be British expats in Italy because that’s exactly what we are!

We are the only independent financial advisors in Italy who operate a 100% transparent, fee-based, UK-regulated company.

Although we have a global client base of all nationalities we have significant experience and expertise assisting people moving to Italy from the UK – whether British expats or returning Italians – and can assist with financial planning that encompasses everything from tax planning, pension management (SIPPs and QROPS), investments and insurance.

If you’d like to speak to us about your situation then please get in touch via the form below.

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