Author: Nicolò Bolla, Italian Tax and Immigration Specialist at Accounting Bolla
As recent shifts in immigration rules in other European countries have occurred, Italy has emerged as an increasingly attractive destination for individuals considering relocation outside the EU. But amidst the allure of Italy’s rich culture and history, questions arise: How easy is it to obtain a long-term residence permit in Italy? And what about the tax implications? Surprisingly, the answers may challenge common assumptions.
Italian Ancestry: A Gateway to Citizenship
Before delving into visa options, individuals with Italian ancestry should explore the possibility of claiming citizenship. Italy’s citizenship laws extend to descendants without limit on the number of generations, making it a valuable avenue for many seeking to establish roots in Italy. Applying for citizenship from within Italy can expedite the process, typically taking 90-180 days for approval.
Visa Options and Residency
There are multiple routes to obtain a long-term D-Type VISA to Italy, and the investor type is just one of the options.
An easy option to move to Italy is the Elective Residence VISA. If you retain at least 31,000€ of passive income sources from pension, capital gains, annuities, royalties, interests, and dividends (basically any income source excluding employment or self-employment income) you can apply for such a VISA. The income threshold is increased by 20% for your spouse, and 5% for each additional applicant.
This is a quick route to Italy and is preferred by pensioners; however, you must bear in mind that you can’t convert the Elective Residence in other residence permits, you can’t be employed or self-employed, and you have to contribute towards the Italian health care system. Alternatively, you can be covered by private healthcare insurance.
Alternatively, if you have a limited company abroad, you can set up a representative office in Italy, and request a self-employment VISA should have a minimum of € 8,500 in personal income in your home country. This VISA is very flexible as it can be converted into other types of residence permits, and you don’t have to contribute to Italy’s universal healthcare system.
Keep an eye on the digital nomads’ VISA too, since in March 2024 a further decree moves forward with the implementation of such a program.
All of the above routes are outside of the quota system, therefore there is no cap on immigration.
Note that there is no family VISA in Italy, therefore the main applicant must then apply for family reunification/cohesion for spouse and children.
Tax Benefits for New Residents
- New Residents’ Scheme: 50% tax exemption on employment or self-employment income.
- €100,000 Flat Tax: A flat-rate tax covering all foreign income.
- 7% Scheme for Pensioners: Applicable to pensioners relocating to qualifying municipalities in southern Italy, with a 7% tax rate on all foreign income sources.
Case Studies: Illustrating the Benefits
Ece is a Turkish citizen who wishes to move to Southern Europe and decided to move to Italy. She has a small UK limited company from which she freelances to her clients in the UK. Gina can set up a representative office in Italy of her UK company, and upon acquiring residency she can freelance from Italy benefitting from the New Resident’s scheme.
Tom has a UK limited company and after 30 years of work will receive his state pension on top of his private pension fund which is tax-free for 20%.Since he has enough passive income, he qualifies for the ERV and claims residency in a 7% qualifying municipality. Once in Italy, he moves his private pension fund to a Maltese QROPS, where he can draw all his income paying just 7%.
Robert is a US citizen who wants to fulfill his lifelong dream of living in Italy with his family. He decided to invest € 500,000 into a qualifying listed company to quickly obtain his residence in Italy. Finally, he can claim the 100k flat tax, to be credited against his US federal taxes, therefore not being worse off once in Italy.
Conclusion
Moving to Italy offers more than just a lifestyle change; it presents strategic advantages in tax planning and immigration. Whether leveraging ancestral ties for citizenship or exploring visa options and tax schemes, individuals can find viable pathways to realize their relocation goals. Italy’s blend of cultural richness and tax incentives makes it an appealing destination for a diverse range of aspiring residents.
