Fiscal benefits in Italy for foreign investors and workers

MGI Vannucci & Associati
January 22, 2021 - 17:19

The Italian government is encouraging foreigners to move to Italy through several legislative measures. Since 2015, different governments and different majorities have passed several laws in order to grant fiscal and administrative benefits for foreign investors and workers, who want to live, work, and do business in Italy.

 

In this article we will explain briefly the most important measures that are in force in order to attract new workers and investors in Italy.

 

1. Advantageous taxation for newly domiciled subjects (flat-rate tax on earnings generated abroad).

2. The so-called “Investor’s Visa”.

3. Fiscal benefits for “impatriate” workers.

4. Elective residence Visa.

5. Fiscal benefits for non-EU pensioners.

 

 

 

 

1 - Advantageous taxation for newly domiciled subjects

 

The 2017 Budgetary Law introduced an optional taxation regime that substitutes for the IRPEF (Tax on Earnings of Natural Persons). The new regime concerns natural persons (and at their request, their family members) with sizeable assets around the world. It is possible to apply for this fiscal benefit if the person has transferred the fiscal residency to Italy and meets the following requirements:

 

• Transfer their own fiscal and administrative residence to Italy.

• Have not been fiscally resident in Italy for at least 9 taxation periods over the past 10 years.

 

The subjects who meet these requirements can benefit from the following advantages:

 

• Substitute tax equal to € 100,000.00 per year for earnings from non-Italian sources. This fiscal regime can be extended to family members, and the substitute tax is € 25,000.00 for each family members.

• Exoneration from the obligation of declaring foreign financial investments and activities.

• Exemption from the obligation of paying the tax on foreign properties (IVIE) and the tax on foreign financial investments (IVAFE).

• Exemption from taxes on donation and succession on assets and properties held abroad.

 

The request for this fiscal regime is subject to the approval of the Italian tax agency (Agenzia delle Entrate). Moreover, the option lasts a maximum of 15 years and can be withdrawn by the applicant at any time.

 

 

2 - Investor Visa

 

This is one the most important laws passed by the Italian Parliament in order to attract new investors in Italy. It provides an easy procedure and less strict requirements for an Italian visa. This regulation provides the possibility for the entrance and stay in Italy for more than 3 months to foreigner investors who wish to carry out an investment of:

 

• € 2 million in Italian government bonds, which must be maintained for at least 2 years.

• € 500,000.00 in an Italian limited company which is created and operative, maintained for at least 2 years.

• € 250,000.00 in an Italian innovative start-up, maintained for at least 2 years.

• € 1 million in a philanthropic initiative in order to support a project of public interest in the sector of culture, instruction, immigration management, scientific research, and restoration of cultural heritage and landscapes.

 

The foreign investors, in order to apply for this type of visa, must meet the following requirements:

 

• Demonstrate that the investor is the effective beneficiary of the investments or donations.

• Carry out the investments or the donation within 3 months of the date of entry in Italy.

• Demonstrate to have sufficient resources to maintain itself and family’s members for the duration of the stay in Italy.

 

The visa lasts 2 years and it is possible to renew it for 3 more years if the original investment or donation is maintained. After 5 years (2 + 3), it is possible to apply for a long-term permit of stay, but they must register their fiscal residence and filed tax returns in Italy. After 10 years of permanent and legal stay in Italy, an individual is eligible to apply for the Italian citizenship.

 

 

 

 

3 - Fiscal benefits for “impatriated” workers

 

The regulations for attracting new workers to settle in Italy include a series of measures and laws. All of these legislative initiatives aim to attract human capital through special taxation regimes. This regulation provides for certain individuals to be able to relocate and live in Italy, while at the same time having significant savings on taxes owed. This aspect will be fundamental in the coming years, as remote working will be increasingly widespread and used.


The audience of beneficiaries and the incentives provided has been made even more advantageous and attractive by the latest regulations and according to the latest regulatory updates include former Italian workers who have moved abroad, but also foreign workers who are not Italian citizens. The possible beneficiaries are workers who:

 

• Have not been resident in Italy in the 2 years prior to the transfer.

• Establish a new fiscal residence in Italy, which must be maintained for at least 2 years.

• They carry out their work activity (salaried or self-employed work or business activity) prevalently in Italy.

 

EU citizens, or non-EU citizens, are also eligible, provided that they come from a country that has a treaty against double taxation or an agreement for the exchange of tax information with Italy. They must meet the following requirements:

 

• Have a university degree and have been continuously employed or self-employed or engaged in business activities outside of Italy for the past 2 years

• Have continuously carried out study activities outside Italy for at least 24 months, obtaining a degree or a postgraduate specialization.

 

The benefits for these subjects are constituted by a fiscal facilitation linked to the detaxation of taxable income. The IRPEF taxable income related to employee, self-employed or business is taxed at 30% for 5 years. Moreover, if the residence is taken in one of the regions of Southern Italy (Abruzzo, Molise, Campania, Puglia, Calabria, Basilicata, Sardinia, Sicily) is taxed at 10%.


The benefit is extended for a further 5 years, up to 10 years from the transfer of residence in Italy, if the worker alternatively:

 

• Has at least one dependent minor child

• Becomes the owner of at least one residential property unit in Italy.

 

The extension of a further 5 years allows for a 50% taxation of taxable income.

 

 

4 - Elective Residence Visa

 

The Italian elective residency visa allows entry to Italy for a long period without having an employment or other special visa. This is a long-term visa for foreigners who want to stay and travel in Italy more than 90 days per year. The individuals, who want to apply for this visa, must meet the following requirements:

 

• Purchase or rent a house in Italy.

• Have a total income of at least € 32,000.00.

• Have regular and stable financial resources which are likely to remain steady in the future.

 

This type of visa allows foreigners to enter and stay in Italy for an indefinite period of time. However, it important to take into account that these individuals have to pay taxes in Italy if they:

 

• Are registered at the City Hall (Comune).

• Live in Italy more than 183 days during the fiscal year.

• Have their habitual abode in the country.

 

Otherwise, the Italian tax agency (Agenzia delle Entrate) can ask them to declare their worldwide assets, properties and financial activities, and to pay the taxes on foreign properties and investments in Italy.

 

 

5 - Fiscal benefits for non-EU pensioners

 

This is an important fiscal measure for non-EU pensioners who want to stay and live in Italy. The total taxation of the foreign income is only 7 % for a maximum of 10 years, and not only on pensions, but also for other incomes as equity profits, real estate income, etc.

 

The pensioner that wants to apply for this benefit must meet the following requirements:

 

• Hold a pension paid by a foreign state.

• Have the last fiscal residence in a state which has a taxation agreement with Italy.

• Not have had a tax residence in Italy in the previous 5 years.

• Obtain an entry visa, as investors visa, elective residence visa, etc.

• Declare the fiscal residency to a municipality with a population of less than 20,000 in one of the southern regions (Abruzzo, Molise, Campania, Puglia, Calabria, Basilicata, Sardinia, Sicily).

• Reside in Italy more than 183 days per year.

 

 

What we can do for you

 

Thanks to our experience and professionalism, we can provide support and assistance in your decisions. We can help you to evaluate all aspects related to your financial and tax situation.

 

Our firm, MGI Vannucci & Associati, has many years and recognized experience in tax consulting in Italy for foreigners who want to move and stay in Italy.

 

If you want more details and get additional information, please contact us MGI Vannucci e Associati-contatti . We can advise you and establish the best tailor-made solution according to your needs. 

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