Retiring to Italy – Your Tax Questions Answered
Putting it mildly, Italian tax laws can be an absolute minefield to navigate. We are lucky to work with two Italian tax specialists, Nico and Alessandro, founders of Retire 2 Italy, who are not only experts in Italian tax laws for anyone wishing to move or retire to Italy, but are also experts on international tax rules and regulations. We put your questions to them.
Thank you for talking to us today. Retire 2 Italy offers assistance to people who want to move to Italy, how did the idea come about?
We met on LinkedIn through a mutual connection. Me and Alessandro share a foreign living experience and the love for Italy and we thought that a service encompassing real estate, taxes, immigration, and relocation would be welcomed by the expat community.
Many of our readers have asked where to find accurate information on the legal process of buying a house in Italy, where should this expert help come from, in your opinion?
Purchasing real estate in a foreign country can be complicated. A buyer should seek the guidance of a trusted geometra in regards to the immovable property status, estimating also the potential renovation and work with a trusted team of builders, architects and engineers. Unlike other countries, lawyers don’t play a major role in the conveyance deed which has to be dealt by a registered notary. Due to the introduction of house renovation tax breaks, it is also advisable to hire an accountant to make the most of out of the Superbonus.
Ecobonus and other incentives for retirees
There are a number of incentives now for people who want to buy and restore homes in Italy, such as the ecobonus. Are these schemes genuine, or are they only available to Italian residents?
The schemes are also available to non residents, and they are a true opportunity. Those bonuses can be offset against income tax liabilities in subsequent tax periods (either over five or ten years), however it also possible to trade it back to the contractor or to banks and financial institutions; non residents must trade the credit in thus receiving cash back. These bonuses can be a great opportunity to assist with renovations, but you should not think that you can renovate your home with no money. You are required, at least, to advance the renovation costs.
Italy is notorious for its high taxes, but there are specific schemes aimed at attracting retirees aren’t there?
Since 2015 Italy has introduced new schemes to attract foreign residents. Firstly, the government introduced a 50% exemption on earnings of employed and self employed individuals – at this moment the exemption can reach 90%. Secondly, there is a new 7% flat taxation addressed to pensioners moving to Southern regions (including certain municipalities in Umbria, Le Marche, and Lazio), and finally the €100,000 flat tax aimed to benefit HNWI.
Italian Tax Rules For Retirees
I found the Italian tax system very complex, very different from the UK where we submit our tax returns online. How important is it to have an accountant in Italy?
It is crucial. Foreigners tend to have foreign assets to declare and their income source may be taxable in Italy depending on the double tax treaty in place; the EU and OECD countries are exchanging tax and financial information on a daily basis, therefore it is imperative to keep your tax affairs in order and compliant to the Italian laws. An accountant with a thorough understanding of international tax is an irreplaceable asset.
Is there a lot of criteria for Non Europeans to meet in order to move to Italy or to stay there for more than 90 days at once?
Italy and the EU offer multiple immigration schemes beyond the tourist VISA. If you make more than € 31,000 p.a. in passive income, you can opt for the Elective Residence VISA, Italian language studies are viable option to obtain a VISA quickly. Finally, interesting opportunities apply to business owners and freelancers who can opt for a business VISA.
Italian Healthcare for retirees
Retire 2 Italy assists clients to buy homes at auction. Have you noticed a trend in people buying property at auctions?More people have shown interest to real estate auctions in Italy as a way to acquire properties at discount. Having said so, it is a complicated way to purchase property and it requires particular care and experience to avoid pitfalls.
Which regions seem to be the most popular places for foreigners to move to at the moment?The beauty of Marche is that it’s pretty unknown to the outside world, so it’s never over run with tourists and remains unspoilt.
This varies depending on the nationality of the buyer, definitely the hotspots are Lake Como, Tuscany, and Sicily. However, Marche, Abruzzo, and Puglia have experienced a recent interest in the international community.
How easy is it for someone who moves to Italy to access state healthcare? Are there requirements for foreigners?
Active members (employed or self-employed) can register for our universal healthcare free of charge, while non active members have to pay a contribution to register. The contribution is a percentage of your income and it own’t exceed €2780 per annum. Once you are registered for five years, you will not be required to pay the annual contribution any longer.
Thank you both for talking to us today and for answering our client’s questions.
Nico and Alessandro are the founders of Retire 2 Italy and will be guest speakers at our Move to Italy events next year.
READ MORE: BUYING PROPERTY IN ITALY