As countries across Europe reel from the consequences of the devastating economic setbacks that coronavirus has delivered, the countries already struggling to attract investment are developing new strategies to encourage both high net worth individuals and businesses of all sizes to invest. Italy has developed a number of highly attractive approaches at all levels. The National Office of Statistics reports that 64,000 UK citizens are now living in Italy comprising of a mix of entrepreneurs, the retired and employees of Italian or international organisations.
One sector of society, the retired, is increasingly taking advantage of Italy's highly attractive 7% tax rate, introduced in its 2019 Legge di Bilancio (Budget Law); known as the retired flat tax. The tax is aimed at overseas retirees with and income or pension that originates from a foreign government or other legitimate source. In order to take advantage of the low rate of tax there is, as part of the scheme, an obligation to reside in southern Italy in areas with low populations. A paralegal in the real estate team, commented “the scheme offers benefits to all parties; the British pensioners will bring their buying power to the Italian regions and will not be a financial burden to the Italian authorities. The self-sufficient retirees will also bring a welcome boost to the real estate market. In turn, the British pensioners will enjoy a calm pace of life in their retirement years surrounded by the Italian culture, cuisine and climate”
The localities selected are amongst the most attractive parts of Italy: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia; they must have no more than 20,000 inhabitants for the scheme to apply. As may be expected there are criteria that must be fulfilled which are governed by art. 2, co. 2 of the DPR. 917/1986 (TUIR) The following conditions must be met:
- The individual must not have been resident in Italy for the previous five years
- Their pension or income must be paid by a foreign entity with an administrative cooperation agreement with Italy
- The individual must choose to be resident in a town within the designated regions with a maximum of 20,000 existing residents
- Comprehensive health insurance is essential
- They must not have been found guilty of a serious criminal offence
The scheme not exclusively available to pensioners, it is open to others who wish to simply live in Italy, for example, an Italian who in previous years had left Italy and now wishes to return, provided they had a foreign income or pension, they could also take advantage of the scheme.
The scheme extends for nine years, having been extended by Bilancio e Finanze committees of the Camera dei Deputati, on the provision that the individuals file their tax returns regularly and in a timely manner from the time that they first relocate to an approved region. Giambrone's international property team can assist with all aspects of your application and ensure that all the appropriate documentation and other information is present and correct to prevent an avoidable rejection. All aspects of retirement to Italy can be managed through Giambrone's Italian and London offices.
Originally published by Giambrone Law, October 2020
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