Italy looks to Portugal to attract expats
From 1 January 2019 the Italian government introduced a tax break for certain retirees that entitles them to a 7% flat-rate tax for five years as well as exemption from the more stringent foreign asset reporting requirements. The scheme is available to new and recent expat retirees in Italy who decide to reside in a town with less than 20,000 inhabitants situated in one of the following regions:
- Abruzzo
- Basilicata
- Campania
- Molise
- Puglia
- Sardinia
- Sicily
All income from foreign assets for people in such circumstances will be subject to the flat rate tax, and without the normal reporting requirements on foreign assets a further tax liability is reduced.
Restrictions
To be eligible for the regime, you must not have been an Italian tax resident for five tax years and must have pension income that stems from a non-Italian source – for example, a SIPPs or QROPS. The special tax regime means expat retirees in Spain will be exempt from income tax, local taxes and wealth tax
Once the 7% flat rate tax period expires the standard rates will apply.
Inspired by Portugal
The move comes as a response to a similar Portuguese scheme which has been successful in attracting up to 100,000 new resident expats to the country over the last ten years, adding several billion Euros to the Portuguese economy in the process.
The Italian scheme is designed to attract expat retirees as well as high-net-worth Italians who might otherwise emigrate to more favourable jurisdictions, including Portugal. However, in Portugal the tax-break regime lasts for 10 years and all other income is subject to a flat-rate of 20% during the qualifying period.
With this in mind, if you are thinking of relocating to Italy to benefit from the new scheme, it is advisable to first receive a review of your wealth and financial circumstances to establish whether this particular route would be financially beneficial.
Blacktower – expat financial advisers in Italy
Blacktower Financial Management provides expat financial advice across Europe. We can help you understand how to best structure, grow and protect your investments and pensions while also helping you plan your expat tax liability.
For more information contact us today.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
What should you do if you are an expat and are considering a retirement transfer? Mindful of Brexit’s impending reality, do you make an expat retirement transfer as soon as possible or, fearful of restricting yourself and missing out on any possible opportunity, do you hang on to see what the future holds and wait until after March 31 2019.