Tax
When residing in Italy full time, as a general rule, you are obligatedd to pay taxes on all your worldwide income and assets. Bilateral treaties avoid double taxation, and special tax schemes may make some types of income and assets tax free in Italy. It is therefore recommended to have a consultation with a tax accountant in Italy, to obtain a mock tax return and verify which taxes may need to be paid once you have moved to Italy.
You can contact us today to be connected to a tax accountant in Italy, familiar with expat issues. If you are resident in Italy, you might be eligible for some convenient tax schemes (see below) the Italian government has conceived to attract people from abroad.
7% flat tax for pensioners
The 7% flat tax scheme for pensioners has been conceived to attract people receiving a pension from abroad.
Benefits of this tax scheme are:
- Taxes are capped at 7% for ten years on all your income produced abroad.
- No disclosure of any property nor financial assets held abroad
Requirements to access this tax scheme are:
- Be receiving a pension from abroad;
- Having been resident outside of Italy in the five years before moving to Italy.
- Be moving to a town with a population of less than 20,000, either in a region of Southern Italy (Abruzzo, Molise, Puglia, Campania, Basilicata, Calabria, Sicilia and Sardegna), or in one of the towns affected by the 2009, 2016, or 2017 earthquakes.
- There must be a treaty of collaboration between Italy and the country paying the pension.
Please note: some pensions are only taxable in the paying country, therefore, if you receive such a pension, you may not enjoy the benefits of this scheme.
Additionally, if you claim the benefit without meeting all the necessary criteria and the Tax Authority finds out, you might be ordered to return all the money unduly saved and to pay a penalty from 90% up to 180% of the amount due. You could also run the risk of committing a criminal offence if your undue claim exceeds some limits.
Our assistance includes a preliminary assessment to verify you are eligible for this tax scheme, the draft of a mock tax return, assistance in annual tax returns and assistance in everything else linked to taxes in Italy. Do not hesitate to contact us to be connected to a commercialista familiar with expats’ issues.
This article has been created in collaboration with Andrea Bertazzoni, partner at Studio Bianco-Bertazzoni e Associati Tax Consultants in Rome
Inpatriate workers tax scheme
The Italian Government has introduced some important changes to the inpatriate workers tax scheme applicable from the 1st January 2024.
Let’s see the new requirements.
This tax scheme applies to workers who have been resident out of Italy for the previous three fiscal years before moving to Italy.
Benefits of this tax scheme are:
– Taxes are paid on 50% of income produced in Italy as employee or self-employed (no regime forfettario) for five years.
Requirements to access this tax scheme are:
– Working abroad three fiscal years before moving to Italy;
– Willing to reside (and work) in Italy for at least the next four years; if you will move out of Italy before four years, you will be required to pay taxes in full for the whole period, will be charged with interests and will also be fined;
– Moving to Italy because of a work contract in Italy or because you start a business as self-employed (no regime forfettario);
– The maximum income subject to this tax scheme is €600.000/y;
– Meeting high qualifications or skills requirements;
– If you move to Italy as an employee, you must have a new employer that cannot be linked in any way to your previous employer; if the employer is the same as abroad, intra-group transfer rules apply (see below)
– The work must be carried out on Italian soil;
Intra-group transfers
If the worker moves to Italy and keeps working for the same company/group of companies, for which they worked abroad, the worker must have been abroad
– the previous six tax years if the worker, before moving abroad, was not employed by the same group of companies;
– the previous seven tax years if the worker, before moving abroad, was employed in Italy by the same group of companies
Workers with children
For workers with minor children who move to Italy or in the event of birth or adoption of a minor while enjoying the tax scheme, taxes are paid on 40% of income. Please note that the child must reside in Italy with the worker.
Purchase of a property
In case a property is bought and used as a main residence in Italy by 31 December 2023, and in any case in the 12 months before the actual move, the duration of the tax scheme is extended by three further tax years.
You can still be eligible for the “old” tax scheme if you moved to Italy and registered at the local anagrafe by the 31st December 2023.
The taxable income under the “old” tax scheme is lower, and the benefits extend for a longer period of time.
As a reminder, benefits of the “old” inpatriate workers tax scheme are:
– Taxes are paid on 30% of income produced in Italy as employee, self-employed (no regime forfettario), individual company for five years;
– Taxes are paid on 10% of income produced in Italy if the residence is established in Southern Italy (Abruzzo, Molise, Puglia, Campania, Basilicata, Sicilia, Sardegna) for five years;
– The timescale is doubled to ten years and the taxable income is 50% (instead of 30%) if you have at least one dependent child or if you buy a property within five years after moving OR twelve months before moving. Taxes are still paid on 10% of income produced in Italy, if you have three dependent children.
Requirements to access the “old” tax scheme are:
– Working abroad two fiscal years before moving to Italy;
– Willing to reside (and work) in Italy for at least the next two years;
– Moving to Italy because of a work contract in Italy or because you start a business as self-employed or individual company in Italy;
– Only for students: you must hold a university degree and must have been a full-time student out of Italy in the 24months before moving.
Our assistance includes a preliminary assessment to verify you are eligible for this tax scheme, the draft of a mock tax return, assistance in annual tax returns and assistance in everything else linked to taxes in Italy. Do not hesitate to contact us to be connected to a commercialista familiar with expats’ issues.
This article has been created in collaboration with Andrea Bertazzoni, partner at Studio Bianco-Bertazzoni e Associati Tax Consultants in Rome