The lure of southern Italy has just got that much greater for those people thinking of retiring to somewhere in the sun. Italy has introduced an extremely advantageous tax regime to encourage individuals to retire to Italy providing that they are in receipt of a pension from abroad. The retiring immigrants will then be eligible for a flat-rate tax of 7% on all their foreign income, provided to satisfy the conditions laid down in the 2019 budget. The criteria set out are as follows:
- The individual must not have been resident in Italy for the past five years
- Their pension must be paid by a foreign entity
- The country from which their pension is paid by must have 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
- The designated regions are: Sicily, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia.
Furthermore, within this tax regime, there is an additional exemption from wealth taxes on foreign assets. After five years the foreign pensioners will revert to the standard Italian income tax which is variable dependent on the amount of overall income the individual receives.
The Italian government's objective is to bring fresh money into regions that urgently require money to flow into their areas without any money having to flow in the opposite direction in the shape of salaries. Self-sufficient pensioners are the perfect choice, they will not be a burden to the Italian authorities, their house purchases will assist the depressed real estate market and have money in their pockets to spend.
This new measure is not the only enticing tax regime that Italy on offer, a new flat-rate tax, unveiled in Italy's 2017 budget, announced an extraordinary rate of €100,000 per annum as a flat-rate applying 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 for their worldwide income. The Italian government will receive a financial advantage only if those participating in the scheme 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.
Italy is trying hard to attract individuals to its shores that will provide a benefit to the country. The difficult times that the country is going through can only be overcome by a concerted and diligent attempt to make Italy the country of choice when people with the advantage of wealth are considering how to conserve it.
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