Billionaires Move to Italy for Tax Relief.

The program, which was developed with the intention of luring residents from other countries to invest, has fostered the growth of the country’s luxury real estate market.

Each and every week, Mansion Global goes to real estate tax attorneys and asks them a question about taxes. Take a look at the question for this week.

In order to take advantage of Italy’s tax relief program for new residents, what is the minimum amount of income that I need to earn, and how does the program operate?

Italy has a special tax status for foreign nationals, also known as non-Italian tax residents, which was introduced in 2017. The purpose of this tax status is to encourage high-net-worth individuals to invest in Italy.

As an alternative to the standard progressive tax rates, the regime permits non-domiciled Italian residents to pay a flat tax of €100,000 (US$107,000) per year on their income from foreign sources. It does not matter how much income was generated during the tax year; this is the case regardless. The scheme allows for the participation of family members, and the assets of those family members are subject to an additional annual fee of €25,000.

It is difficult to say because it is dependent on the tax planning of the individual as well as the taxation of the individual prior to their relocation to Italy at the time. According to Michele Menato, an Italian and English solicitor who is a senior partner at B & M Law LLP in London, “In order for them to make it worthwhile for them to do so, they would need to be paying more than the tax threshold, which is one hundred thousand euros annually.”

For a period of up to fifteen years beginning with the first year of tax residence, the Italian “non-dom” regime is applicable to any individual, regardless of their nationality, according to the rules. The family member allowance, which provides tax savings, is one of the additional financial benefits that it offers in addition to reducing the obligations associated with filing taxes. Investors who had been dissuaded from investing in Italy due to the country’s high tax rates have been enticed by the relief.

There are some restrictions on the tax break, which include Italian-sourced income and capital gains obtained from foreign investments and derived from the sale of qualified shareholdings in the first five years after opting into the flat-rate regime. However, the tax break is applicable to the majority of non-Italian sources of income. Under the standard tax rates, they are subject to taxation.

As a result of the flat-tax scheme, an increasing number of wealthy individuals are moving to Italy in order to take advantage of its financial benefits, which in turn is stimulating the luxury property market in the country. According to data that was reported by The Guardian, the number of individuals who have taken advantage of the flat-tax scheme has increased from 549 in the year 2020 to 1,339 the following year.

“It is a tax break that has been successful for Italy. The program has received thousands of applications since it was first made available. According to Menato, these are not insignificant numbers because this group consists of people who have substantial wealth.

A number of non-domiciled individuals, also known as “non-doms” in the United Kingdom, have found themselves drawn to the program as a result of Brexit. Non-domiciled individuals are individuals who have a permanent home outside of the country in which they reside. Non-doms are exempt from paying tax on income or capital gains earned overseas.

Although there are other countries that provide a system that is comparable to Italy’s “non-dom” regime, Italy provides a wonderful way of life; if you are not required to work, you can live a comfortable life there. Because it is a member of the European Union, it grants individuals who are from countries that are not members of the EU the freedom to travel. According to Menato, the tax break is the piece of the puzzle that is already missing.

Billionaires Move to Italy for Tax Relief.

By knl9j

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