Italy's new tax strategy aimed at attracting wealthy foreigners will seriously dent the advantages offered by other countries. The new flat rate tax, unveiled in Italy's 2017 budget in March, is set at the rate of €100,000 per annum and will apply to all worldwide income for foreigners who wish to use Italy residency for tax purposes. Additionally family members can be included at the rate of €25,000 per annum. It is estimated that for the scheme to be beneficial to the Italian government those participating in the scheme should have a net worth of at least €15 million. However, it is not limited only to those who have that level of wealth.
This highly attractive measure is expected to draw a considerable number of individuals. However, there are qualifying rules. All those wishing to take advantage of Italy's new scheme must be able to demonstrate that they have resided abroad for at least nine of the previous ten years, thereafter they must be resident in Italy for at least 183 days per year (or six months) this will allow the possibility of renewing the flat rate tax advantage year on year for 15 years.
The low rate and simplicity of the scheme will be extremely enticing to high net worth individuals; the residency rules will have the capacity to generate income for Italy at every level.
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