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Italy doubles it's flat tax scheme from 100k to 200k EUR's a year

Martin Everson

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Jokers. I guess its a cash grab as desperate UK non-doms start considering Italy. I guess they would not increase if they feel non-doms would not pay. This is all UK government had to do (charge 200k) rather than abolish non-dom scheme...lol.

https://www.msn.com/en-gb/money/oth...ch-new-residents-despite-tax-hike/ar-AA1owhqd

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MILAN (Reuters) - Italy's doubling of a "flat" tax on the overseas income of wealthy new residents will curb its tax shelter appeal that risked becoming excessive, but the country's inheritance tax set-up will continue to draw the ultra-rich, tax advisers said.

Italy on Wednesday doubled the so-called flat tax it applies on the overseas income of wealthy individuals who transfer their tax residence to the country to 200,000 euros ($218,180) per year.

Footballers, including Cristiano Ronaldo, and many finance professionals who left London for Milan after Britain's departure from the European Union, have taken advantage of the flat tax regime, which was introduced in 2017.

Designed to help the economy by attracting big spenders, the scheme has been blamed for heating up housing demand in Italy's financial capital and increasing its social divide.

Italy's tax arrangements are also under the spotlight partly because of Britain's decision to end in April 2025 its centuries-old "non-dom" tax regime that exempted from taxation the overseas income of UK residents with a foreign domicile, including for inheritance purposes.

"Italy's government, whilst in favour of the (flat tax)regime, also needs to avoid that the arrival of many new high net worth individuals triggers a political discussion about its fairness," said Marco Cerrato, a partner at tax law firm Maisto e Associati.

"The 200,000 euro flat tax may reasonably contain the regime to an acceptable overall number of non doms," Cerrato said.

With inflation soaring, the previous 100,000 euro figure had "started to be perceived as cheap", he added.

Italy is expected to be the top 2024 European destination for globally mobile millionaires, British investment migration consultancy Henley & Partners said, ahead of Switzerland, Greece and Portugal.

Based on relocations up to June, Henley & Partners expected 2,200 individuals with at least $1 million in liquid investable wealth to move to Italy this year.

Italy's tax incentives had prompted 1,136 relocations at the end of 2022, and tax advisers estimate the total is currently close to 3,000.

INHERITANCE

Marco Palanca, a partner at international law firm Simmons&Simmons who heads its Italian tax department, said the changes could prompt some of their clients who work in the European fund management industry to reconsider Italy as a destination, given the fluctuating nature of their foreign earned income.

But Italy's move will have little impact on people with a net worth of at least 7 million euros, Vito Di Pede, a tax adviser at Milan's Studio Rock tax and law firm, said.

"Italy remains a very good option for such individuals," he said pointing to the importance of its inheritance tax provisions.

Britain's new Labour government has proposed scrapping temporary relief measures for non-doms including one that would allow them to set up trusts to shield their foreign assets from inheritance tax.

Outside the non-dom regime, Britain's inheritance tax rate is 40% above a 325,000 pound threshold.

By contrast, the Italian inheritance tax rate is between 4% and 8% applied above various thresholds, but the flat tax regime exempts foreign assets from inheritance tax.

The regime is for a 15-year period and can be extended to family members paying 25,000 euros per person.

Palanca said Italy was attracting new ultra-wealthy residents not just from the UK but also Switzerland, where a proposal has been put forward to impose a 50% inheritance tax on assets worth more than 50 million Swiss francs to fund the country's green transition.

Italy's flat tax regime also works well in combination with a wide number of bilateral agreements Rome has in place to avoid double taxation of income and capital, unlike the situation in a number of other countries, Di Pede said.

"It's obvious the changes may have caused some alarm, but all in all Italy still offers a very advantageous set-up," he added.


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Funnily enough, that's how a reasonable market force would act.
They introduced a product (flat tax, lump sum), they received a very good market fit, then they decided to double the price while giving existing customers with old offer. Either the demand will not change significantly (win) or fall less than 50% (still win, both economically and politically). If it falls too much - well, back to old price or something in the middle.

So yes, jokers, but as a fellow entrepreneur I don't see a big problem with this approach.
 
How much is this Italian flat tax % anyway?

Maybe I don't understand your question but its not a percentage. You used to pay 100k a year and then nothing more on your nominated offshore income. So someone moving to Italy and earning any amount i.e $1bn a year outside Italy only paid tax of 100k. It is a lump sum tax that is now 200k.
 
How much is this Italian flat tax % anyway?
It's a lump sum of 200,000EUR (use to be 100,000 EUR).

Incredibly good if you are earning 1.000.000EUR+ a year

Imagine a football player making 10.000.000EUR+

Or Cristiano Ronaldo, whose last figures say he makes almost 200M EUR a year.
Footballers, including Cristiano Ronaldo, and many finance professionals who left London for Milan after Britain's departure from the European Union, have taken advantage of the flat tax regime, which was introduced in 2017.
Of all cities, he chose Milan, one of the worst to live in.
 
It's valid only for foreign source income. For example, if you have BVI company or trade crypto, you will still pay income tax in Italy
If consider lump sum, then better Switzerland..., because in Swiss is all included

And now happened what I told in this forum many times. You should not trust these programs very much. They are amended , changed or canceled very often
 
And now happened what I told in this forum many times. You should not trust these programs very much. They are amended , changed or canceled very often
thank you for repeating it. We have seen it many times, latest here on the forum where people got upset last year or the year before over Dubais 9% corporate tax.
 
It's a lump sum of 200,000EUR (use to be 100,000 EUR).

Incredibly good if you are earning 1.000.000EUR+ a year

Imagine a football player making 10.000.000EUR+

Or Cristiano Ronaldo, whose last figures say he makes almost 200M EUR a year.

Of all cities, he chose Milan, one of the worst to live in.

If you live amongst the local elites, Milan isn't so bad. Anywhere else though you're going to be miserable anyhow. The location of the city is what attracts a lot of these people, more than the city itself.
 
It's valid only for foreign source income. For example, if you have BVI company or trade crypto, you will still pay income tax in Italy
If consider lump sum, then better Switzerland..., because in Swiss is all included

And now happened what I told in this forum many times. You should not trust these programs very much. They are amended , changed or canceled very often
Crypto is also covered under the flat tax program.

It's valid only for foreign source income. For example, if you have BVI company or trade crypto, you will still pay income tax in Italy
If consider lump sum, then better Switzerland..., because in Swiss is all included

And now happened what I told in this forum many times. You should not trust these programs very much. They are amended , changed or canceled very often
I beleive the BVI company would also be covered under the flat tax:

CFC rules:
The CFC rules do not apply to payers of the flattax. This is because CFC rules apply when income is produced in countries with apreferential tax regime, while the new flat-tax regime does not make any distinction between foreign states, based on levels of taxation.

Deemed residence:

Under ordinary rules and under certain circumstances, a foreign company may bedeemed to be resident in Italy. However, if you are the sole director of a foreign company and you change your residence and become a new flat taxpayer of Italy, this will not redefine your company as Italian. It will be redefined as Italian only if there is a board of directors, the majority of whom are resident in Italy without opting for the flat-tax regime.

Shell companies:

If your holdings include a shell company, theincome from it is normally attributable to thebeneficial owner. However, if you opt for the flattax regime the income produced by the shellcompany will be taxed in Italy only if it is deemedto be Italian income; otherwise, it will be coveredby the flat tax.

https://assets.kpmg.com/content/dam...t_tax_for_High_Net_Worth_Individuals_2024.pdf
 
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Crypto is also covered under the flat tax program.


I beleive the BVI company would also be covered under the flat tax:

CFC rules:
The CFC rules do not apply to payers of the flattax. This is because CFC rules apply when income is produced in countries with apreferential tax regime, while the new flat-tax regime does not make any distinction between foreign states, based on levels of taxation.

Deemed residence:

Under ordinary rules and under certain circumstances, a foreign company may bedeemed to be resident in Italy. However, if you are the sole director of a foreign company and you change your residence and become a new flat taxpayer of Italy, this will not redefine your company as Italian. It will be redefined as Italian only if there is a board of directors, the majority of whom are resident in Italy without opting for the flat-tax regime.

Shell companies:

If your holdings include a shell company, theincome from it is normally attributable to thebeneficial owner. However, if you opt for the flattax regime the income produced by the shellcompany will be taxed in Italy only if it is deemedto be Italian income; otherwise, it will be coveredby the flat tax.

https://assets.kpmg.com/content/dam...t_tax_for_High_Net_Worth_Individuals_2024.pdf
how it's not Italy income if you are resident in Italy ?

For example, you trade cryptos being Italian resident is this still not considered to be Italian source?

With BVI the same. Since you control BVI out of Italy being Italian resident, they can still tax the BVI company as Italian company?
 
For example, you trade cryptos being Italian resident is this still not considered to be Italian source?

The Agenzia delle Entrate has clarified this: If using a foreign crypto exchanger, no (it's covered under the flat-tax). If using a DEX, it would be considered Italian income, unless you trade the cryptos while outside of Italy.

With BVI the same. Since you control BVI out of Italy being Italian resident, they can still tax the BVI company as Italian company?

I don't know. My understanding is that, if you're the sole shareholder and director (while being under the flat-tax regime), it would still be a BVI company for tax purposes, but check with a lawyer if you're considering to make the move.
 
The Agenzia delle Entrate has clarified this: If using a foreign crypto exchanger, no (it's covered under the flat-tax). If using a DEX, it would be considered Italian income, unless you trade the cryptos while outside of Italy.



I don't know. My understanding is that, if you're the sole shareholder and director (while being under the flat-tax regime), it would still be a BVI company for tax purposes, but check with a lawyer if you're considering to make the move.
Okey it seems not bad, but now as is 200k year for most of people is very expensive
It's similar amount as in Switzerland
 
Okey it seems not bad, but now as is 200k year for most of people is very expensive
It's similar amount as in Switzerland
am I the only one getting increasingly tired of all these bs govs doing constantly bait and switch? One day its this but the next day its completely something else, they either 10x or whatnot the required amounts or just cancel substantial promises just like that.
 
am I the only one getting increasingly tired of all these bs govs doing constantly bait and switch? One day its this but the next day its completely something else, they either 10x or whatnot the required amounts or just cancel substantial promises just like that.
They have been doing this for the last 5000 years. Although Uruk was fairer than the EUSSR.
 
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Are you talking about personal income tax? :oops:
Dubai already has de facto personal income tax, because 9% business tax is also applicable to individuals. For example, in theory US LLC without substance should be taxable as your personal income


Going back to Italy program. How you can trust this program. Rules are not clear. Italy tax authority can one day come and interpret something as local income. Unless it's very clear for example dividends coming from factory working outside Italy... But if it's crypto , forex trading,BVI or something like that. There is always risk you will be taxed, not only corporate income tax, personal taxes, social taxes, VAT whatever...

Also Guardia di Finanza can come and say your money is illegal and confiscate everything from you?

When is 0 is 0. Like in Andorra for example, passive residents spending less than 180 days not need to declare or pay tax
 
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