Flat Tax in Italy: a favorable tax regime for wealthy foreigners?

About the author

Ekaterina Elizarova, Director of Palazzo Estate representative office.

The issue of flat tax for wealthy foreigners

In 2017, the Italian authorities took a step towards wealthy citizens from abroad by simplifying the process of obtaining tax residency. The main principle of this tax regime is that everyone who has moved to Italy must pay a fixed tax on income earned outside the country. There is no need to disclose foreign assets.

Amount and terms of the tax

The amount of tax under the flat tax scheme is€100,000which covers all income earned abroad. Family members of the foreign taxpayer, including spouses, children and parents, can also benefit from this scheme. Each of them adds a fixed amount of€25,000per year to qualify as a tax resident.

Requirements for obtaining tax residency status

In order to obtain tax residency status, it was previously required to be in the country at least183 daysyear. However, the new rules have shortened this period to onlythree months. This option is open to foreigners who have not had tax residency in Italy during the lastnine out of ten years.

Advantages and conditions of the new tax regime

As far as terms and benefits are concerned:

• Capital gains from shares in Italian and foreign companies are not subject to taxation in the formerfive years.
• Ordinary taxes apply to income derived from Italian sources.
• Inheritance and gift tax rates have been reduced.

Exemptions for taxpayers

Taxpayers are exempt from:

• the need to declare their foreign assets in their Italian tax returns;
• foreign real estate tax payments (IVIE) ;
• foreign assets tax payments (IVAFE) .

Tax payment procedure

The tax program requires taxpayers to file an annual return with the Italian tax authorities. The tax payment must be completed by the end ofJuneof the current year.

Selection of taxation start time

In addition, taxpayers can choose when to begin their tax life in the new system, either immediately after moving or with theJanuary 1of the following year. It is important to apply to the tax office in advance(revenue agency). Residency status is automatically renewed every year, and enjoyment of this tax regime is possible for a period of15 years.

Attractiveness of the new tax proposal

This tax policy is very attractive, especially for investors with incomes outside of Italy more€500,000. The Italian preferential tax regime is similar to the British tax regimenon-domThis makes it particularly interesting for wealthy foreigners seeking to optimize their tax expenditures.

Introduction

In 2017, the UK significantly tightened the requirements for visa applicants, making Italy a very tempting destination for those intent on finding new horizons abroad.

Italian Tax Service

The Italian tax service, known asInternal Revenue ServiceItaly is actively starting to accept applications from citizens wishing to benefit from the new simplified tax regime. High-income individuals residing outside Italy can apply both through the official website and with the help of local lawyers and consultants.

However, the second method seems preferable as most of the documents to be filled out are currently only available in Italian.

Growing interest in real estate in Italy

The introduction of the new tax regime has already contributed to a marked increase in interest in the luxury real estate market in Italy. The surge in demand for buying and renting luxury homes is particularly evident inMilan, where there is a real breakthrough, as well as in the picturesque provinces and on the northern lakes, particularly Lake Como.

Properties located near international airports and English-speaking educational institutions attract the most attention.

Real estate offers

There are many unique premium properties available for purchase in Italy today:

• Villa 20 km fromRome: A spacious villa of 800 square meters, located in a secured complex, is offered for sale for 2.6 million euros. This luxurious structure features a private swimming pool and well-maintained grounds.
• Luxury villa on Lake Garda: This villa in Padenga with private beach and marina is priced at 6.75 million euros. It has an area of 750 square meters and is surrounded by a beautiful garden of 3000 square meters, offering a magnificent view of the bay.
• Apartments by Lake GardaThis apartment of 95 square meters can be purchased for 700,000 euros. They are located in the picturesque historic center of Desenzano and offer its occupants a communal swimming pool. The spacious living room is decorated with high taste and the kitchen is separate.
• Country house in Arezzo: A unique 18th century house, renovated in 2010, with an area of 590 square meters. This property includes double turrets and provides comfortable accommodation.
• Villa Sansovino: Located on the outskirts of Arezzo, this spacious villa of 1200 square meters has been completely renovated and offers its owners an atmosphere of Italian comfort.

Conclusion

Thus, Italy not only serves as an attractive alternative to the UK for wealthy citizens, but also offers a wide range of real estate for purchase or rent, as much as possible to meet the highest standards. It is expected that future changes in tax legislation and the development of the real estate market will make this country even more attractive to foreign investors.

This elegant complex includes not only the main house, but also a comfortable guest house with technical facilities. The total area of the plot reaches 1200 square meters, while the plot itself occupies an impressive 5.5 hectares, where there is a flourishing vineyard and olive grove. The villa is surrounded by a picturesque park with green coniferous trees, creating an atmosphere of privacy and tranquility. The nearest village is only one kilometer away from this amazing property.

Luxury villa by Lake Garda

In addition, there is a magnificent villa for sale, located by the picturesque Lake Garda in Italy. The total area of this unique structure is 305 square meters, and its price tag - 1 300 000 euros. Erected in the early 90's, the building is located in one of the most respectable areas of Desenzano del Garda and offers stunning views of the lake. On the first floor are located:

• Spacious and bright living room combined with dining area;
• Exit to the terrace with a magnificent panorama;
• Separate kitchen;
• Comfortable bedrooms;
• Bathrooms.

Luxury estate in Greve in Chianti

Also offered is a magnificent estate located in Greve in Chianti, priced at 7,500,000 euros. This luxury villa with Tuscan charm occupies an impressive 1200 square meters and is surrounded by impressive vineyards. Historically this estate belonged to a noble family and is now used as a hotel business. Inside the complex you will find:

• Three separate apartments with private garden and parking;
• A cozy pool.

A farm in Arezzo

An interesting farmhouse in Arezzo, for sale for €2,900,000, is also waiting for its new owners. This stylish villa is located in Vardano, Tuscany, on a large plot of 87 hectares where vineyards can be found and breathtaking views can be enjoyed. The complex includes:

• The villa itself;
• Restaurant;
• A horse arena;
• Horse club;
• A farm with cows;
• Cheesery.

The total area of the interior spaces reaches 824 square meters.

Villa on the shores of Lake Como

Don't forget about the luxury on the shores of Lake Como, where a luxurious villa with an area of 707 square meters is for sale for 12,000,000 euros. The building's facade is finished with stone chips and can be designed in various styles.

Taunaus in Castiglione d'Orcia

In the charming and picturesque village of Castiglione d'Orcia, there is now an opportunity to purchase an amazing townhouse with an area of 207 square meters. This property was carefully restored in 2018 using high-quality materials and modern technologies, and its price is750,000 €.

House in Castiglione Fiorentino

In the neighboring Castiglione Fiorentino, located in Italy, a wonderful house with an area of 197 square meters is coming to the market for600,000 €It is located just a few minutes from this enchanting place, not far from Cortona, and offers stylish accommodation in its solid stone design with two levels.

Auxiliary rooms

On the first level, various auxiliary rooms are available, such as:

• separate storerooms
• wine cellars
• a laundry room with access to a magnificent porch of approximately 50 square meters

Elegant villa in Montepulciano

If you are looking for more spacious property, your dream will come true in Montepulciano, Italy, where for1,350,000 €You can purchase an elegant villa with a total area of 262 square meters, perfectly suited for a peaceful retreat. With unique panoramic views and located just a few minutes from the historic city center, this offer will be an excellent option for a tranquil lifestyle.

Functional zones of the villa

This magnificent villa has two functional areas:

• vestibule
• a cozy kitchen-dining room with French windows that provide access to the street
• other important areas, including the garage and utility rooms

Resort property in Sicily

In Sicily, near the sunny shores of Syracuse, there is luxurious resort real estate available at a price.3,100,000 €This exceptional complex has a total area of 2000 square meters, including the main villa and 35 separate cottages. Additionally, a wonderful park covering 2.2 hectares surrounds the property, providing unforgettable access to the beach and creating harmony with the surrounding nature.

Unique estate in Chianti

Additionally, in the picturesque region of Chianti, Tuscany, a unique estate has appeared on the market for...2,800,000 €This property is actively functioning in the hotel and tourism business. It is located just 20 kilometers from Florence and 40 kilometers from Siena, and includes two buildings with a total area of 1,000 square meters, set on extensive grounds covering 13 hectares.

Luxurious villa in Capannori

Another outstanding property is up for sale for3,900,000 €In the picturesque area of Capannori in the province of Lucca, this magnificent villa covers an area of 750 square meters and offers eight bedrooms and bathrooms, all set within a private park of 6 hectares, featuring stunning panoramic views of the surrounding landscapes.

Result

Sophistication and comfort permeate every aspect of this unique property, creating the perfect conditions for relaxation and solitude in the heart of picturesque Tuscany.

Description of the villa in Massa

The interior space of the main villa includes a spacious living room, kitchen, five bedrooms, and several bathrooms, as well as various additional features. This magnificent house, located in Massa, Italy, is for sale for6 million eurosand occupies an area2200 square metersIts unusual famous location is at the intersection of the picturesque regions of Tuscany, Liguria, and Emilia-Romagna.

Resort in Pontremoli

The luxurious resort in Pontremoli offers the perfect blend of comfort and natural beauty. This hotel features:

• 26 cozy rooms,
• two excellent restaurants,
• bar,
• spa center.

The total area of the course is 2200 square meters, which makes this place harmoniously blend into the stunning landscapes of olive groves and cypress trees. Guests are treated to magnificent panoramic views.

Villa in Olbia

A villa is for sale in Olbia, Italy, with a price of1,680,000 eurosThis property is located on over two hectares of picturesque parkland, not far from the magnificent beaches of Costa Smeralda. The residence, surrounded by untouched nature, has an area of200 square metersand two separate entrances, one from each floor. The interiors are quite bright and spacious, both in the common areas and in the living spaces.

Historical real estate in Vicenza

Historical property in Vicenza, Italy, is offered for3,300,000 eurosIt is located close to the center of Bassano del Grappa and stands out for its strategically advantageous position, providing quick access to key areas of the region. This villa was built inin the 1700sand is located on a well-maintained area of2.5 hectarescompletely enclosed to ensure privacy. The main entrance is through a magnificent porch located next to the villa itself.

Programs for investors

There are also other attractive offers for investors, including the latest options and simplified procedures for obtaining residency. Participants in the fixed-rate tax program have the opportunity to quickly obtain an investor visa for two years.

• After this period, the visa can be extended for another three years.
• After which it is possible to submit documents for permanent residency.
• After ten years of actual residence in Italy, investors can apply for Italian citizenship.

This program was implemented by the budget law.2017 yearwhich highlighted the features of the fixed tax rate compatible with this type of visa. The visa application process actually started inMarch 2018.

Other options for obtaining a residence permit

In addition to changing tax residency to Italy and paying a fixed tax, foreign investors can also consider other options for obtaining residency. The minimum investment amount to participate in the program is500 thousand euros.

Investment programs in Italy

In Italy, there are unique programs aimed at attracting foreign investments, which open up wide opportunities for foreigners. According to current regulations, investors have the right to choose various areas for their investments. The minimum threshold for investments is set at1 million eurosfor startups registered in the local registry, and2 million eurosfor companies operating in the country. One option is also to invest funds in government bonds with a minimum amount of1 million euros.

In addition, donations are allowed in the amount of1 million eurosfor supporting charitable projects related to:

• cultural development
• educational initiatives
• scientific research in the field of migration
• preserving cultural heritage and ecology

Investment conditions

All investments must go through the investment process withinthree monthsfrom the moment of receiving the immigration visa for the investor and must remain in effect for at leasttwo yearsThis is an important point, as similar immigration programs are available in other countries, but Italy has its undeniable advantages. For example:

• The local climate is much milder than in the UK;
• The natural landscapes of Italy are more diverse than those in Switzerland.
• The standard of living here is lower than in Monaco.
• The transportation infrastructure surpasses that of Cyprus.

All of these factors create an attractive image of Italy among wealthy individuals seeking to improve their lives.

Favorable conditions for investment

It is also worth emphasizing that Italy has a favorable environment for both investment and obtaining permanent residency. The real estate market has undergone changes since the 1980s and is currently showing steady growth.

The main reason why foreign buyers are eager to invest in real estate is the better climate and high standards of living. By the mid-1990s, the market had entered a phase of active growth again.

Real estate market dynamics

Since the deadline until 2004, the volume of real estate transactions has increased on average by60%in various regions of the country. However, as the financial crisis in the US emerged and the subsequent euro crisis unfolded, the volume of transactions began to decline, and by 2012, the market had reached levels comparable to those of the 1980s.

Nevertheless, the subsequent period has shown a recovery in the real estate market, and the number of transactions continues to gradually increase, creating more stable conditions at the moment. It is forecasted that in the next five years, the real estate market will show growth again, partly due to changes in legislation, such as the introduction of visas for investors and tax benefits for wealthy non-residents.

Trends among wealthy people

Modern trends show a sharp increase in the number of financially secure individuals worldwide, especially in regions such as Asia, South America, and Eastern Europe. Many of them are planning to move to Europe for permanent residence, as the standard of living in their home countries may not reach European standards for quite some time.30 years.

Italian regions, such asLombardy,Tuscany,LiguriaandLazioare the best areas for investment, where potential investors can find numerous options for successfully placing their funds.

Conclusion

As a result, the introduction of the flat tax regime in Italy has become a significant step towards attracting wealthy foreigners who wish to change their tax residency. This regime not only simplifies taxation but also creates attractive conditions for those looking to invest in high-quality real estate in the country, enjoying their children's education in international schools and the comforts of Italian life. It is worth noting that the possibility of paying a fixed tax on foreign income at the level...100 thousand eurosIt brings Italy to the forefront among countries with favorable tax associations.

Migration to Italy for the purpose of obtaining tax privileges opens up new horizons for wealthy citizens, both in terms of financial optimization and in terms of life stability and culture. The attractiveness of resident status is increasing, as the requirement for the minimum duration of residence has been simplified — justthree monthsthat makes the process more accessible and convenient.

Thus, I am convinced that this tax regime will not only attract new taxpayers to Italy but will also revitalize the real estate market, which will undoubtedly indicate future economic growth for the country. It is clear that if you are looking for a comfortable place to live with tax advantages, Italy becomes an exceptionally interesting option, and it is worth considering your possibilities today.

• Advantages of the new flat tax regime:
• Fixed tax on foreign income —€100,000
• Reduction of the residency period for obtaining resident status tothree months
• Lack of reporting on foreign assets
• Benefits for family members — additional€25,000for each

Don't miss the chance to be part of this change. Come to Italy — a majestic country with a rich history, culture, and endless opportunities for new beginnings.