Extremely Appealing Italian Tax Schemes that encourage Retirement to and Residence in Italy
Extremely Appealing Italian Tax Schemes that encourage retirement to and residence in Italy
Italy, in line with a number of other European countries, loses a significant number of young adults every year who go overseas to widen their experience by working abroad and ultimately improve their career prospects. The small villages suffer the most significant impact, leaving small businesses struggling to survive when having to rely on a reduced number of residents; this population migration has caused the property market in rural areas to decline dramatically.
Italy has provided a number of innovative solutions in an attempt to improve the situation and breathe life into the villages and other areas that have seen a marked decline in population over the past few years. The schemes and incentives to attract foreigners to relocate to Italy have been sensibly thought out, aiming to appeal to particular sections of society that are the most likely to be financially stable and have the capacity to bolster the local economy with their spending power. Also, certain regions have been selected to offer these benefits to foreigners who buy property intending to live in Italy. The retired generation of “young-old” are ideally placed to take advantage of the new tax regime in Italy that was introduced in January 2019 to encourage new people to relocate to Italy and re-populate the areas that have been losing residents. Retired immigrants who are not already resident in Italy and who are in receipt of a pension paid by a foreign government could be eligible for a 7% flat-rate tax on all their foreign income for the first six years of residence in Italy.
The criteria for the new tax regime is as follows:
A person must not have been resident in Italy in the previous five years
Their pension must be paid by a foreign government
The country that is paying the pension must have an administrative cooperation agreement with Italy
The person must relocate to a town or village with a maximum of 20,000 residents with the following regions:
The flat rate 7% tax rate applies to all foreign earnings
Medical insurance is required
The objective is to encourage individuals who are completely self-supporting who will never be able to lean on Italy financially in any way and will add their economic weight to a region in Italy that requires assistance.
There are other highly attractive tax schemes, dependant on the individual’s level of wealth and whether they have lived in Italy prior to their decision to relocate to Italy. The objective being to bring in new money to flow through depressed regions. For individuals who have significant wealth, there is a flat-rate tax scheme encompassing all foreign earnings of €100,000 per annum. Family members can be added to the scheme at a flat rate of €25,000 per annum. This scheme is only extended if the individual has not lived in Italy for at least nine of the past ten years.
Both tax schemes are attractive to individuals planning to relocate and live in Italy.
To find out more about the benefits of the Italian tax schemes please click here