Since 2017 the Italy has a special tax regime for foreigners, aiming to attract investments from people with high net worth. The program allows non-Italian residents to pay a flat €100.000 annual tax on foreign income, instead of the stifling progressive tax rates usual for Italians.
But what amount is needed to take advantage of this opportunity?
According to Michele Menato, senior partner at B&M Law LLP In London, it is difficult to determine an exact amount as it depends on individual tax planning and tax situation before moving to Italy. However, it is necessary to have an annual income above the tax threshold of €100.000 to be eligible.
The regime “non-dom” Italian is valid for up to 15 years and offers a reduction in tax declaration obligations, as well as other financial benefits, such as the possibility of including family members, whose assets are taxed with an additional annual rate of €25.000.
Although the tax relief scheme covers most sources of foreign income, there are restrictions such as the taxation of Italian-sourced income and capital gains, as well as profits made from the sale of qualifying holdings in the first five years after joining the fixed rate regime.
Italy offers an excellent quality of life for those seeking tax benefits
This opportunity has attracted more and more wealthy people to Italy, boosting the luxury real estate market in the country. According to data released by the The Guardian, the number of people who benefited from the flat rate scheme increased by 549 in 2020 for 1.339 next year.
Menato highlights that the program has been a success for Italy, with thousands of people requesting to join since its introduction. Furthermore, Brexit has meant that the scheme has attracted individuals “non-dom” from the United Kingdom, where they are exempt from paying tax on income or capital gains earned abroad.
Although other countries offer schemes similar to the “non-dom” Italian, Menato highlights that Italy offers a great quality of life, especially for those who do not need to work.
Furthermore, as it is part of the European Union, Italy offers freedom of travel for people outside the bloc. (Depositphotos)
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