Which Italian tax incentive is right for you?

Italy has introduced 3 major tax-incentive schemes over the last few years, encouraging new residents to come and stay in the ‘Bel paese’.

Income tax cuts or tax incentives can clearly be attractive when you are considering moving to a new country. They can make a big difference to your income and so potentially make the transition to this beautiful country of Italy easier, but which Italian tax incentive is right for you?

What are the 3 principal tax incentives for new tax residents ?

They are :

  • The Impatriated Workers scheme (employment income is exempt from income taxes by up to 90% for 5 years, and more in certain situations);
  • The 7% tax concession retirement scheme for pension-holders, and;
  • The New Tax Resident flat tax option for high income earners. 

I write in more detail about these tax regimes in another post; Tax incentives for moving to Italy

Since that article was written a recent ruling has clarified that for the Impatriated Workers tax benefits, a new resident can arrive in Italy while continuing to work for the same foreign employer, and still take advantage of this tax incentive scheme.

But just knowing the schemes or their general conditions is not enough. You will need to know how they apply to your particular situation, and when they start to apply, and when you will actually become tax resident in Italy (it’s not simply based upon the date you arrive).

You also need to take great care to understand :

*How will your residency visa or permit to stay (for non-Italians) be arranged to align with your move plans so that you can actually benefit from these tax-incentive schemes in Italy ?

You see, the tax incentive schemes do not come with a residency permit.

And if you are planning to work in Italy ;

*Who will employ you? (a local or foreign company, or yourself ?) How does that affect your taxes ?

*Will your employer agree with your Italy move plans? and;

*Do you know the impact of social security costs in Italy for either employees or employers?

So in deciding which Italian tax incentive is right for you, The answers to critical questions like these above, will be just as important, if you plan to move to Italy or successfully transition to a successful retirement here.

To discuss your specific situation and understand your options contact Daniel Shillito

#tax #movingToItaly #retireToItaly


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All thoughts are my own. The information contained here is not personal financial advice tailored to individual needs.