The measures exempt foreign income from Italian tax in exchange for the payment of €100,000 (£90,892, $117,022) a year. This charge can also be extended to family members, at a cost of €25,000 per person.
They give foreigners a special status exempting them from paying Italian tax on any offshore income and gains for up to 15 years.
One of the conditions is that the individual must reveal their tax residency location to the Italian authorities and would have had to have resided abroad for nine of the last 10 years.
Also, to participate, candidates will be expected to buy a property and live in Italy for half the year.
Hundreds of people, including Italians returning home from abroad, are expected to take up the offer.
But can sunny Italy compete with similar regimes offered elsewhere in Europe?
IA spoke to Karen Clark, tax partner in charge of the London private client team at international audit, tax and consultancy firm RSM, to find out.
Is the new Italian tax regime made up of well-designed measures?
From what we’ve seen, yes. We will have clear proof when expats have been through the Italian system for a couple of years, but I think it’s impressive that the measures have only been introduced earlier this year and we already have one approval and many others are in the pipeline.
For a new regime it’s to be commended that they’ve already started approving people. There are very attractive points in it, and the appeal is also enhanced by having relatively few reporting requirements concerning overseas income.
Who is it aimed at, who can benefit from this regime?
Potentially, it will be very attractive to Italians who have lived outside of Italy for more that 10 years, who have amassed a lot of income or assets outside of Italy and want to go back but were worried about paying high rates of taxes as Italian residents. In my view, it will be more attractive to them than to people from other countries.
Having said that, there are a handful of very wealthy individuals that are much more internationally mobile, have businesses set up in multiple countries and can live anywhere. Those are the sort of people that will be looking for a suitable jurisdiction, such as Italy, where they can move to.
Up until now, a lot of those people had to look outside of Europe to find jurisdictions where they wouldn’t have to pay much tax, such as Dubai or Singapore or Hong Kong, but they can stay in Europe now if they so wish, and they might be looking at Italy.
Hsa RSM been approached by clients considering moving to Italy?
We have been approached by existing clients thinking of leaving the UK, who asked us: ‘Where should I go?’ We run through the options, one of which is Italy.
We are presently working with a client that is potentially moving to Italy and has expressed a strong interest. Equally, we’re also being asked about the regimes that have been introduced in other countries in Europe, such as Portugal and Malta. RSM in Ireland are advocating people move there.
However, we certainly haven’t got large numbers. Overall, the number of people who have expressed an interest in moving to Italy is small compared to the number of non-doms that are here in the UK, for example, but I can confirm that Italy is one of the countries people are interested in.
With these measures, does Italy become more convenient than other popular European destinations for UK expats?
Spain introduced the rule that if you’re overseas you can come to the country for up to five years, and as long as you’re working there you’ll just be taxed on your Spanish-sourced income and not on your non-Spanish sourced income. Spain still has that rule, but it’s very limited.
The attraction of the Italian one compared to some of the other countries is that it does seem very wide and very flexible. France, for example, has no similar regime: if you’re resident there you’re taxable on your worldwide income. Portugal again has a limited programme.
Ireland is very similar to the UK prior to the changes that have come into effect in April 2017 reforms, with its remittance basis that has been in place for a long time, and that will be attractive because there is a long case history to fall back to.
But the Italian system is attractive because, if you agree to it by paying the €100,000 flat tax, you’re not taxed on the income generated outside of the country, and you also don’t have to declare any of your assets.
That’s a very big difference from the UK or the Irish systems, you’re not taxed on your non-UK income unless you remit it to the UK, but the Italian system seems to say that it doesn’t matter if you remit it: you could take all the money generated outside of Italy in the country, and they’re not going to tax it.
You can still use it in Italy to fund your living expenses. And you can choose which of your foreign income you include in this regime.
