19 Jun Low Taxation on Income in Italy: 10-30% Tax Scheme
A TAX HOLIDAY ON 70 – 90% OF INCOME:
LOW TAXATION IN ITALY FOR NEW RESIDENTS
Several EU countries are becoming extremely competitive with the aim of pulling in the highest number of new residents they can, especially high-income earners. After all, these fresh inhabitants bring substantial positive economic impact to the communities they will soon call home.
More Tax Incentives in Italy
In Italy the latest option seeking to attract capital from alternative sources allows for preferential treatment, whether on the tax bill or as a fast track residency, for non-EU citizens. The 10-30% law is the newest incentive launched by the Italian government (May 1st) but already the 2nd option of the year 2019 after the 7% substitute tax regime.
Contrary to the 7% and the € 100,000 substitute tax regimes, which absorbs all foreign income, the 10-30% scheme applies only to income generated in Italy whether by employment or business activity. It will profit those individuals with low or no foreign income (which would otherwise be taxed at the progressive tax rate).
Who Benefits From the New Tax Law in Italy
The benefit targets business owners, entrepreneurs, senior managers or employees moving to Italy for the first time or moving back after having spent at least 2 years abroad. It’s applicable to those moving their tax residency to Italy starting from January 1st, 2020.
In practice, the applicant receives 70-90% of the income produced in Italy tax free. The regular progressive tax system only applies to 10-30% of it, depending on the applicant profile.
So, for instance, with an income earned of € 100,000 for the year 2020, the taxable portion is limited to € 10,000 or € 30,000 resulting in an approximate tax of € 4,300 or € 12,900 respectively for each fiscal year!
This scheme will be particularly attractive to those companies employing foreign managers, executives and workers in general moving to Italy. Self-employed individuals will save more on personal income in Italy. Non-EU investors opting for the Investor Visa or a Start-Up Visa are able to choose the most suitable tax regime applicable for their personal and business interests.
It’s also a win for Football players and Coaches Moving to Series A.
A € 5.5m take home pay in 2019 (€ 10m gross salary) will become € 7 – 9m in 2020. Italian teams will be able to lure top international players guaranteeing them greater bargaining power with better net salaries on the table compared to other EU football leagues.
Criteria for 10% – 30% Tax Incentive in Italy
Criteria to determine the appropriate % applicable are:
- Number of Children
- Residency location in Italy: North or South
- Purchase of a property (no restrictions on size, location, minimum amount, can be purchased before or after the relocation)
To Learn More about Low Taxation in Italy, Click here
Italy’s Investor Visa Program has 4 options to choose from, starting at 500,000 Euro. Full Access to the EU. The Flat Tax Program of 100,000 Euro per year regardless of income abroad is an option worth considering, a good contender with Monaco.
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