Are there tax benefits for relocating to Italy?
Have you always dreamt of moving to Italy and living la dolce vita? What if we told you that there are also fiscal benefits to it?
The Italian law offers significant tax advantages for professionals who transfer their residence to Italy. This applies both to foreign workers and Italian expatriates who decide to return.
Ok, you have my attention. What are the advantages?
All income earned in Italy by workers who have transferred their residence will be taxed at only 30% of their taxable income.
The percentage is even further reduced from 30% to 10% for individuals who move residence to southern Italy, specifically to: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia or Sicily.
You can find more details here.
What does this actually mean ?
Let’s take as an example Lucy, an international sales manager who relocates from Canada to Milan. Her salary is €50,000 per year and, since she’s relocating to Lombardy, the percentage of her tax bonus will be 30%.
Without the tax bonus
An employee with a gross salary of €50,000 is taxed approximately €14,000 a year
With the tax bonus
Tax deductions drop to about €1,000 per year
–> The net salary, therefore, increases by €13,000 per year
What are the requirements for these benefits?
- First of all, it is necessary to transfer one’s residence to Italy.
- This means either being registered for most of the year as a resident or having the domicile (the so-called centre of vital interests) in Italy
- The worker must not have resided in Italy for the two years preceding the transfer
- They must commit to reside in Italy for at least two years
- The work activity must be carried out prevalently on the Italian territory
Do the requirements change if I have a university degree?
For professionals with a university degree, the above requirements are slightly different.
The law requires having worked or studied abroad continuously for at least 24 months before arriving in Italy. This period of work or study does not necessarily have to correspond to the 2 years immediately preceding the relocation to Italy.
The commitment to work in Italy for at least two years is not required for workers with a university degree.
How to obtain this tax benefit?
There are two ways to obtain the benefit
Tax benefits for new residents can be obtained as a refund upon submitting an Italian tax return.
Employees can obtain the tax benefit directly as a salary benefit. They need to send the employer a letter stating that they meet all the requirements. Once ratified, the employer is required to reduce tax deductions, allowing the employee to benefit immediately.
IMPORTANT: The employer is not responsible for verifying the accuracy of the request. It is entirely the responsibility of the employee who signs the declaration. This is why we advise you to submit the declaration your accountant.
The tax benefit for new residents applies for 5 years, starting from the year of the transfer of residence. It may also be extended for 5 additional years if, within the first five years, the worker buys a property in Italy or has at least one minor child (natural or adopted).
If you’ve always thought about moving to Italy, this might just be another incentive to start packing your suitcase
For further information, please contact us:
Expat Regime Forfettario IVA / Expat Regime Forfettario IVA