Moving to Italy could be a seriously smart move for workers, retirees and high net worth individuals (HNWIs) looking to make their money stretch further. According to the Italian Chamber of Commerce and Industry for the UK, there are three special tax regimes that are serving to attract a diverse range of individuals from different backgrounds to Italy.

Aiming to attract highly skilled employees and entrepreneurial self-employed individuals, the “impatriate” tax regime applies to taxpayers who commit to move their tax residency to Italy for at least two years. They have to work mainly from Italy, with business trips abroad not exceeding 183 days per year. The reward for those who take up the offer is a 70% income tax exemption. For individuals who move their residence to one of the Southern Italian regions (Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia and Sicily), that exemption bumps up to 90%.

The impatriate tax regime runs for five years, with the possibility to extend it for a further five years at a reduced 50% income tax exemption rate. The extension is an option for those who have a child under the age of 18 or who purchase a residential property in Italy at any time during the year before they become tax resident there or the five years after.

That said, it’s important that potential immigrants stay up to date with the latest financial incentives. At present, the Italian government is reviewing and reforming its taxation system, including the impatriate tax regime. Alessandro Belluzzo, President, Italian Chamber of Commerce and Industry for the UK, has warned that the percentage of tax benefit currently offered may reduce and that the conditions necessary to access it may alter, though nothing has been approved so far.

“Draft taxation reforms that have been published in Italy indicate that the impatriate tax regime may be changing in the near future. Yet there is no indication that the scheme will end. As such, anyone considering making a move to Italy needs to keep up with the latest legislation and factor that into their plans.”

Alessandro Belluzzo, President, Italian Chamber of Commerce and Industry for the UK

The Moving to Italy Show taking place in London on 28^th November 2023 is the ideal place to access the latest information. Expert speakers will be delivering presentations and seminars, while exhibitors will be on hand with information on the latest financial and legal aspects of moving to Italy. Free to attend, the event will take place at the Royal Automobile Club, Pall Mall, with tickets bookable online in advance.

Tax incentives for pensioners and HNWIs moving to Italy are unlikely to be affected by the current taxation reforms, according to Belluzzo, who points out that there has been nothing to indicate these two schemes will be impacted. 

The crux of the pensioners’ tax regime is a 7% flat rate tax on foreign-sourced pension income, as well as on all other foreign-sourced income and gains. Italian-sourced income and gains are subject to ordinary income tax under the scheme, which applies for a maximum of 10 years from the tax year of the transfer. However, it doesn’t apply to the entire country – the scheme is aimed at those moving to certain areas of southern Italy, namely any municipality in Abruzzo, Basilicata, Calabria, Molise, Puglia, Sardinia or Sicily that has a population of fewer than 20,000 residents.

For HNWIs, the “new tax residents” (NTRs) regime aims to make a move to tax residence in Italy financially rewarding. Under the scheme, HNWIs can pay an annual lump sum tax of €100,000 for up to 15 years on any foreign-source income, as well as capital gains realised on foreign investments and other foreign asset disposals. No Italian wealth taxes will apply to those assets and there is no requirement to report assets held abroad in the tax return (the “Fiscal Monitoring”) nor to disclose them in any way to the Italian tax authorities. Italian-sourced income and capital gains continue to be subject to ordinary Italian tax rules.

There are further benefits for HNWIs in relation to inheritance and gift taxation. NTRs are subject to Italian inheritance and/or gift tax only on assets and rights existing in Italy upon the date of their succession/gift. No Italian inheritance or gift tax will apply on assets outside of Italy.

The NTR regime can extend to one or more qualifying family members, as well, with a very broad definition of what constitutes family. Each family member on the scheme pays an annual flat tax of €25,000.

“For all tax incentives, there are of course fine details to be explored and understood. This is why access to specialist legal and financial expert is an essential part of exploring the benefits of relocating.”

Alessandro Belluzzo, President, Italian Chamber of Commerce and Industry for the UK

For more information, please contact the Italian Chamber of Commerce and Industry for the UK: www.italchamind.org.uk, email csanfratello@italchamind.org.uk or telephone 0207 495 8191.