Question Refusal of 70-90% Income Exclusive in Italy, What Netx?

[A1988]

Just wanted to bring to everyones notice that my request has been refused for 70-90% exemption in Italy stating "I did not move to italy with the intention to take the 70-90% exemption of income". I was involved in Research and Development activity and finished the R&D in 2023 and moved to italy in 2019. Again, I did not make any income in this period in Italy and now when the time came for commercialization of the product I am stuck with this huge blow. I have my R & D in Italy and a business partner based in Italy, hence I moved.
My present situation is that,

1. I would like to move out of italy without creating any problems or trigerring any issue with the tax authorities.
2.I would like to move to either UK, Ireland, Malta (less preferred0 and take advantage of non dom program also I have 2 kids who would start their preschooling.
3. I would like to know if anyone knows if a structure where I pay 0-5% in corporate tax?
4. I have my business partner and R and D in Italy so daily flights would be a plus, ideally within 2hrs and not more.
5. I am expecting capital gains in the next 3-4 years.

Any suggestion or experience of the situation would be very welcome, I would want to stay in the country permanently and want my children to build their life and network in it, I am not really interested in Middle eastern countries as I have lived there and I feel its not best for my children to be exposed to that lifestyle and specially having daughters. I turn 35 in may this year.

sorry for excessive information, just wanted everyone to know that the regime can come up with any kind of excuses to refuse of accept what suits them or their objectives.

 

[EliasIT]

Can you see what is happening to Europe? Or are you suffering from the boiling frog syndrome?

You may want to explain it for all of us to understand it? few examples for why you all want to get out of Europe could help for a better understanding.

 

[JohnnyDoe]

You may want to explain it for all of us to understand it? few examples for why you all want to get out of Europe could help for a better understanding.

The surveillance of culture.
The culture of surveillance.
Socialism.

Recent manifestation of the deep rooted problems: France.

 

[A1988]

@Marzio What are your thoughts on beckham law? Do you have any optimisation strategies to utilise beckham law? You think cyprus holding company with beckham law would go well or gibralter holding since I am considering marbella or malaga? Do you have any other optimisation strategy in europe?

 

[Marzio]

Do I understand it correctly that you will be mainly earn from capital gain and dividends?

 

[A1988]

Do I understand it correctly that you will be mainly earn from capital gain and dividends?

Yes, capital gain from sale of intellectual property (patents) and dividends. I can structure it the way i want to optimise tax liability the legal way. Im not sure which structure can be most optimal.

 

[Marzio]

Im not sure which structure can be most optimal.

Look i understand why you want to settle in Marbella but i have to tell you that you are literally less than 1 hour drive from being tax free because...Capital gains are not subject to tax in Gibraltar.

Gibraltar - Corporate - Income determination

Detailed description of income determination for corporate income tax purposes in Gibraltar

taxsummaries.pwc.com

Since you said you will be earning something like 5M in the next years is it really worth it to pay 1M to Spain?

You could wake up in your Gibraltar apartment and still go everyday to your favorite places in Marbella.

Do you have any other optimisation strategy in europe?

What about that one?

 

[A1988]

Look i understand why you want to settle in Marbella but i have to tell you that you are literally less than 1 hour drive from being tax free because...Capital gains are not subject to tax in Gibraltar.

Gibraltar - Corporate - Income determination

Detailed description of income determination for corporate income tax purposes in Gibraltar

taxsummaries.pwc.com

Since you said you will be earning something like 5M in the next years is it really worth it to pay 1M to Spain?

You could wake up in your Gibraltar apartment and still go everyday to your favorite places in Marbella.



What about that one?

Why would I pay 1M to spain if I am under beckham law and the patents are held in a holding company in cyprus and im neither a director or administrator, just a shareholder? Isnt beckham law supposed to avoid everything earned outside spain?

 

[Marzio]

Isnt beckham law supposed to avoid everything earned outside spain?

Apologies, i rememebered only the 24% taxation part and forgot that no Spanish taxes apply to the income or assets of foreign employees if they are produced outside of Spain.

Having said that, Beckham Law can be used up to 6 years so you'll need to move again in few years to save on taxes.

Instead with the Gibraltar setup you could move once now and be set for the long term.

 

[A1988]

Apologies, i rememebered only the 24% taxation part and forgot that no Spanish taxes apply to the income or assets of foreign employees if they are produced outside of Spain.

Having said that, Beckham Law can be used up to 6 years so you'll need to move again in few years to save on taxes.

Instead with the Gibraltar setup you could move once now and be set for the long term.

6 years is more than enough to realise all the gains and maybe use the gains and enjoy life in spain after that or live somewhere else. When I can live in spain legally tax free why should I even consider gibralter? Money and gains realised can be brought inside spain too without triggering taxes unlike non dom regime, its a win win. What do you think?

Maybe having a holding company in gibralter makes more sense, also with the tax treaty I can take out 60k euros a year from my gibralter company tax free and live in spain plus beckham law allows zero capital gains with gibralter or cyprus holding with personal tax residency in spain?

 

[Marzio]

What do you think?

If 6 years is enough to realise all gains then go ahead with Spain

Maybe having a holding company in gibralter makes more sense

I would go for Gibraltar as well because of proximity to your residence, not being part of EU (so no idiotic directives apply to Gibraltar) and territorial taxation.

 

[JustAnotherNomad]

Just as an alternative, what about Portugal with its NHR system?

Can Gibraltar or the Beckham Law be used for operative businesses as well or only for capital gains?

 

[Marzio]

Just as an alternative, what about Portugal with its NHR system?

Yes, PT could be used as well but he prefers Marbella.

Can Gibraltar or the Beckham Law be used for operative businesses as well or only for capital gains?

With an operative business you'll end up paying 12.5% CIT in Gibraltar.

 

[A1988]

Yes, PT could be used as well but he prefers Marbella.



With an operative business you'll end up paying 12.5% CIT in Gibraltar.

Is there any difference between NHR and beckham law? If portugal offers better incentive than beckham law I can consider but NHR is way too nuanced and beckham law is very clear, NO modello 720 which basically means no declaration of foreign earned income or assets, you are basically treated as a non resident for tax purposes.

 

[Marzio]

Is there any difference between NHR and beckham law?

Beckham's law is a special tax scheme that compensates foreign employees living in Spain while under NHR you are not an employee but a simple shareholder that receives passive income.

The difference is that under Bekcham's law you could work in Spain while under NHR you can't work in Portugal (at least on paper).

If portugal offers better incentive than beckham law I can consider but NHR is way too nuanced

While it's true that NHR can be nuanced in your case it's very straight forward.

Under NHR you would get 10 years exemption on foreign sourced income vs 6 years in Spain.

 

[A1988]

Beckham's law is a special tax scheme that compensates foreign employees living in Spain while under NHR you are not an employee but a simple shareholder that receives passive income.

The difference is that under Bekcham's law you could work in Spain while under NHR you can't work in Portugal (at least on paper).



While it's true that NHR can be nuanced in your case it's very straight forward.

Under NHR you would get 10 years exemption on foreign sourced income vs 6 years in Spain.

Well, so on paper and on the ground I wouldnt qualify for NHR since it will not be completely passive or trading income, worst case after 6 years I can consider moving to gibralter or portugal if there is anything decent or if I like spain I would just make a lifestyle choice rather than only looking at taxes. Beckham law suits me more than non dom regime, i just need to optimise my foreign interests and maybe move it to gibralter instead of cyprus or maybe use both of them together

 

[JustAnotherNomad]

The difference is that under Bekcham's law you could work in Spain

I always found the rules rather complex. Weren't there some restrictions that it can't be your own company or something like that? And you need substance abroad? And there is still some tax to be paid in Spain?

Well, so on paper and on the ground I wouldnt qualify for NHR since it will not be completely passive or trading income

Yes, but still, thousands of people are fine with such setups, not paying taxes. There's a big difference between the rules on paper and how it's being handled in practice at the moment.

 

[A1988]

I always found the rules rather complex. Weren't there some restrictions that it can't be your own company or something like that? And you need substance abroad? And there is still some tax to be paid in Spain?



Yes, but still, thousands of people are fine with such setups, not paying taxes. There's a big difference between the rules on paper and how it's being handled in practice at the moment.

Yes beckham law is a bit complex, you need to show a job offer and you cannot own more than 25% of the company, income generated in spain is taxed at 24% upto 600k euros a year for 6 years but you are treated as a non resident for tax purposes and no need to file modello 720 which is basically declaration of foreign income and assets. Unless your money is made outside of spain and there is no PE of that company in spain you are good another icing on the cake is that you can bring your foreign earned income or dividend or asset into spain tax free which makes it even better than non dom regime.

Coming to the second part, i cannot risk anything here since its 6 figures, I only work with legal certainty and dont mind taking my time and spending more on a good lawyer and having everything on paper and going by the book. I know some people who have got into trouble due to lax practises initially and then getting trapped by the law and then left with no legal remedy but paying lawyers and accountants because they all were in it from the get go.

 

[JustAnotherNomad]

Yes beckham law is a bit complex, you need to show a job offer and you cannot own more than 25% of the company, income generated in spain is taxed at 24% upto 600k euros a year for 6 years but you are treated as a non resident for tax purposes and no need to file modello 720 which is basically declaration of foreign income and assets.

So how would you solve that? Do you have a job offer? You don't own more than 25% of the company? 24% is quite high, is income earned while traveling (nomadic lifestyle) exempt from Spanish tax?

Coming to the second part, i cannot risk anything here since its 6 figures, I only work with legal certainty and dont mind taking my time and spending more on a good lawyer and having everything on paper and going by the book. I know some people who have got into trouble due to lax laws initially and then getting trapped by the system.

There's definitely some risk with Portugal, it's why I didn't go for it. All it would take is for them to change the application of the law, they wouldn't even have to change the law itself.
Then again, I could imagine that you could obtain an advance ruling from the tax authority in Portugal, but it would probably take a lot of time.

 

[A1988]

Tax attorney will form a company and will employ me, not a problem or I know people in marbella who can hire me in their company. My IP holding company in gibralter or cyprus will have a manager or director with substance, hence the company will be resident in that jurisdiction, capital gains and income realised will be tax free since spain wouldnt care what I do outside spain. I can get an advance rulling for beckham law too with job offer and im sorted. Portugal NHR is not as attractive as beckham law, i am a non resident in spain but i live in spain.

 

[JustAnotherNomad]

So you will get a job on paper with a low salary, on which you will pay 24% tax and you will have some director for your company outside of Spain?
But if you do work from Spain, how can you be sure they won't say that your company has a PE in Spain?

The Portugal NHR setups work in just the same way, but you don't need a local job. You just have your company outside of Portugal with some substance and capital gains/dividends are exempt from tax in Portugal.

The risk seems quite comparable to me? The biggest difference of course being that, if you don't have to declare anything, it might raise fewer questions in Spain than in Portugal, where I think you have to declare capital gains, but they are not taxed.