In recent years, Italy has undertaken a series of tax reforms to attract foreign investment and encourage the settlement of highly skilled workers in our country. The “impatriate” tax regime is one of the main tools used to attract foreign investment and talent, thanks to its significant tax advantages during the first ten years of tax residence in Italy.
In addition, Italy has introduced the ‘flat tax’ for wealthy foreigners, which is another attractive option for foreigners wishing to move to Italy to work or invest. This tax regime provides a fixed taxation of EUR 100,000 annually on income produced abroad.
In this article, we will describe in detail the tax regimes for foreigners moving to Italy and why Italy is getting more and more appealing compared to other foreign fiscally attractive countries, such as Portugal and its “Golden Visa”.
Foreign persons intending to access the Italian tax regime for impatriates must comply with the following requirements:
Compliance with the listed requirements ensures that the eligible income contributes to the overall taxable income of 30%. The duration of the benefit is five years but can be extended by a further five years if the beneficiaries have at least one dependent minor child or purchase a real estate unit in Italy, bringing the benefit to 10 years. For the second five-year period, however, it is envisaged that taxable incomes contribute 50% to taxable income.
Moving to central and southern Italy
For all foreign citizens who find this facilitation attractive, it is strongly advisable to consider moving to one of the regions of central and southern Italy. These regions, which are notoriously iconic in terms of natural beauty but less economically developed than northern regions, are supported by the Italian government, which proposes additional facilitation to impatriates intending to move to these areas. For them, the benefit further lowers the taxable income for the first five years to an astonishing 10%. A competitive measure for a White List country!
Ronaldo tax benefit
In addition, Italy has introduced the ‘flat tax’ for wealthy foreigners, which is another attractive option for high-net-worth individuals (HNWI) wishing to move to Italy for work or to invest. This tax regime provides for a fixed taxation of EUR 100.000 per year on income produced abroad. The ‘flat tax’ for wealthy foreign citizens was introduced in 2017 to attract entrepreneurs, investors, and high-level professionals to Italy and make our country even more competitive internationally. It is also known as the “Ronaldo tax benefit,” according to the choice of the famous footballer who moved to Juventus under the appeal of this lower taxation. This particular regime is gaining more and more attention among sports professionals, bankers, actors, and models from the UK, North and South America, and Russia (before the start of the conflict against Ukraine). Statistics reveal that in 2020 around 550 foreigners moved to Italy intending to take advantage of the flat tax, while the number more than doubled in 2021 (1.339)
The impatriate tax regime and the ‘catch-the-rich’ flat tax are a response to what other countries have already done, such as Portugal, which has zeroed taxes for ten years for foreign pensioners who move there. Those who come to Italy have no obligation to start a business. They can come to enjoy life. Because with its sun, sea, art, and cuisine, our country remains a paradise. Even a fiscal one, for those who come from abroad.
