Italy has positioned itself as the best country to choose as a base for doing business across Europe. Two schemes - the Budget Law - Article 24-bis of Italy's Tax Code (TUIR) launched in March 2017 and the Investor Visa; one scheme providing an extraordinarily favourable tax rate on income worldwide, and the other providing access across Europe to non-EU citizens.
Often known as the flat-rate tax was introduced in 2017 and is aimed at high net worth foreigners offering the highly competitive flat-rate tax of €100,000 per annum for an individual's entire global income (other than income generated in Italy). Furthermore, family members can also be included in the scheme with their whole worldwide assets taxed at the rate of €25,000 per annum. It is envisaged that the income of individuals interested in accessing this highly attractive proposition is likely to be around €15 million per annum. However, there is no income limitation and is accessible to anyone who can maintain a tax payment of €100,000 per annum. Should an individual wish to withdraw from the scheme this can be done at any time without penalty. In the event of failure to pay the amount of €100,000 when the tax falls due, this will result in removal from the scheme.
The Investor Visa allows an individual to travel around Europe and also staircase towards Italian citizenship in a series of steps. The initial application is uncomplicated and speedy and allows successful applicants the following:
- unhindered travel across the Schengen Area for 90 days out of 180 days.
- Following five years of residence in Italy, an application can be made for an EU long-term residence permit
- After ten years of residence in Italy, an application can be made for Italian citizenship.
It would not be an unreasonable conclusion to assume that a number of individuals considering taking advantage of the favourable tax rate and/or the Investor Visa are also active entrepreneurs with business interests across Europe. The combination of both these propositions creates a particularly advantageous European platform for European business; situated in the middle of Europe with the optimum benefit of the best tax rate.
Vincenzo Senatore, a partner based in the London office, commented "very few individuals will be immune to the economic fallout of the coronavirus pandemic, even high net worth individuals (HNWI) will feel the effects. It makes commercial sense to off-set the negative financial consequences experienced as a result of the current situation by all possible means." He further remarked "there are a number of well-known so-called tax havens positioned around the world. The advantage of the Italian proposition is that you can live in an extremely attractive part of the world with an extremely attractive tax rate."
The criteria that must be fulfilled to be able to take advantage of the favourable tax rate:
The qualifying criteria:
- An individual must be able to show that they have not resided in Italy for nine of the previous ten years - you must be new to Italy.
- There is a residency requirement for the individual of at least 183 days per year (six months).
- Income earned in Italy is not included in an individual's worldwide wealth and must be taxed separately.
- The favourable tax scheme lasts for up to 15 years on annual renewal.
- Family members can join the scheme paying at the rate of €25,000 for all their worldwide income, with the exception of that earned in Italy.
- Exemption from donations and inheritance tax in connection with assets and real estate abroad.
- Exemption from wealth tax related to foreign-owned real estate
- Exemption from remittances tax.
The Investor Visa, as the name suggests requires the applicant to make an investment in Italy in at least one of the following ways:
- The purchase of €2 million Italian ten-year government bonds.
- An investment of €1 million in an Italian limited company (srl).
- An investment of €500,000, a reduced amount if the business is an innovative start-up Italian limited company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.