Italian Tax Advice for International Relocations:
your tax subject, our precise answers.

Why you need an Italian tax advisor when moving to Italy

Moving to Italy is a life-altering journey that is exciting and offers up new possibilities, but it also brings a tax complexity level that will matter for your financial future.

No matter if you are moving to Italy for employment, retirement or lifestyle – understanding the Italian tax system to ensure you obtain maximum benefits while avoiding costly missteps is essential. The complexity woven through stepping into the Italian tax system requires more than tax general knowledge for international professionals and expats.

Italy has provided very beneficial tax regimes for new arrivals, but the benefits can only be accessed when navigation is undertaken directly and accurately. The Italian tax system offers interesting opportunities and complications for foreign residents, with one constant: the frequent legislative changes mean we are looking at other unique circumstances.

In this article we will examine why it is necessary to seek qualified and professional guidance from an Italian tax advisor when moving to Italy, and how expert professional consultations can take care of tax problems and turn them into valuable outcomes for you.

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Understanding Italian tax rules for expat

Before looking at tax benefits themselves, it is imperative to know what makes an individual a tax resident in Italy, because this status determines all taxation that applies to you.

The concept of tax residency in Italy

The idea of Italian tax residency is a key aspect of taxation. As a tax resident, you will be taxed in Italy on your worldwide income, while it will just be tax on income derived entirely within Italian territory as a non-resident. As you can see, this distinction is very important for your future tax planning and commitments.

Tax residency in Italy occurs when specific connections to Italy are present, throughout the period of at least the majority of the tax-year (183 days, or 184 days in leap years). There have been changes to this certificate residency by legislative decree, taking effect from 1 January 2024 and therefore providing an new clarity and harmonisation internationally.

Criteria that determine residency starting from 2024

New Italian tax legislation lays down criteria for determining residency, that any foreigner wanting to migrate to Italy must be aware of. The new Article 2, paragraph 2 of the Italian Income Tax Code (TUIR), indicates that a person is a tax resident when, for the majority of the tax period, they:

• Have their habitual abode (residence) in Italy as per civil law
• Have their domicile in Italy, defined as “the place where personal and family relations primarily develop”
• Have physical presence in Italian territory, considering even fractions of days
• Have a residence registered in the Registry of the Resident Population (albeit this is now a rebuttal presumption)

These conditions are alternative, meaning that only one of them is sufficient to establish residence for tax purposes in Italy. The new “physical presence”, and the new definition of domicile regarding personal and family relations is a real shift in line with international standards to some extent.

“The rules on tax residency can be very complex,” explains the senior consultant of Moving2Italy, “Many clients think they know what their status is, but during our analysis we frequently identify minor details in their residency history, that could potentially jeopardize access to exploratory tax regimes, or even create surprising tax obligations.”

How tax residency affects your global taxation

When you qualify as a tax resident in Italy, you fall under the world-wide taxation principle and therefore, any income you earn anywhere in the world is subject to Italian taxation. This all-inclusive global approach results in you having to understand your residency status which significantly impacts your global tax obligations. 

Although Italy has many double tax treaties with other countries to protect against the same income being taxed twice there is an area of complexity when determining where primary taxing rights fall on various types of income. 

A qualified, Italian tax attorney or tax adviser in Italy is highly valuable in determining your residency status and can help you develop and implement strategies to optimize your tax position while complying with both Italian and international tax laws.

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Tax regimes for foreign professionals in Italy

Italy has various appealing tax benefits which intend to attract skilled professionals and wealthy individuals to reside in the country. Knowing how to take advantage of these policies is critical to ensure you’re making the most of your financial benefits when moving to Italy.   

The “impatriate” regime: benefits and eligibility

The Impatriate Regime is one of the biggest tax breaks a foreign professionals can enjoy in Italy. 

The most recent legislation (Article 5 of Legislative Decree No. 209/2023) gives eligible individuals only 50% of their employment / self-employment income is taxed, up to a maximum of €600,000 a year.   

To be able to take advantage of this preferable regime there are a number of specific conditions that have to be met:   

• You have to accept to be a tax resident in Italy for a minimum of four years   
• You cannot have been a tax resident in Italy for the three tax years preceding your departure to Italy   
• You have to carry out your work activity principally in the territory of Italy   
• You have to have high qualification or specialization requirements set out by the relevant legislation   

Just a quick note: If you continue working for the same employer that you had back in your original country (or a company in the same group), the non-residency requirement goes to six or seven years, depending on specific non-residency condition.

“The impatriati regime is extraordinary when it comes to savings,” says a tax advisor at Moving2Italy, “but like so many other things, we hear of too many examples of professionals who tried to run the application by themselves and lost tens of thousands of euros in benefits because they made procedural errors or got confused about what was required”.

Enhanced benefits for families with children

The impatriati regime also has an additional benefit for the family with children. If you move to Italy and you bring a minor child with you when you relocate, or you give birth to or adopt a child during the time when you are benefiting from the regime, the taxable income is based on only 40% (instead of 50%).   

The enhanced benefit only comes into play when:  

• The residence is transferred to Italy with a minor child, or   
• A child is born or adopted during the time limit of you benefitting from the regime   
• If you wish to claim on behalf of a child, the child must also be resident in Italy during the time when you benefit from the regime.

Other special tax regimes for specific categories

Italy has several preferred tax regimes for specific categories of new residents:

For retirees the pensions regime offers a flat tax of 7% on all foreign income for the first 5 tax periods where the retiree transfers their tax residency to specific municipalities in southern Italy with populations below 20,000 residents. This option is available to pension recipients from countries that have administrative cooperation agreements with Italy and the retiree must not have been a tax resident in Italy for the prior 5 tax periods.

For high net worth individuals there is a substitutive tax regime with a flat tax rate of €200,000 on annual foreign income from any source no matter how much you make. This regime can be complex and requires assessment but will often be beneficial for individuals with high foreign income.

For those returning to Italy as a researcher or professor there may be exemptions available if the usual criteria are fulfilled.

Because the variety of regimes can be challenging to navigate, we recommend that you use a tax advisor in Italy who can assess your situation and recommend which they think is the fastest route to a tax regime that suits your needs.

Typical risks of self-managing your tax obligations in Italy

While there is significant potential for tax savings in Italy, there are also significant risks to trying to address the tax landscape without professional help, which can nullify the savings, or create costly liabilities.

Unpacking Italian tax rules and obligations

A common risk is misunderstanding the rules surrounding establishing, or shunning, tax residency in Italy. The recent shift in residency rules, particularly the newer emphasis on personal connection and physical presence, especially makes it more important than ever to have professional help to help you properly understand the rules.

“I’m not exaggerating when I say that we sometimes see clients who are economically tax residents of Italy, without even knowing it,” says one of our Moving2Italy advisors, “which directly leads,” he continues, “to anomalous tax obligations on a worldwide basis, and severed access to benefits they meant to have.”

Double taxation pitfalls

There are complex interactions when it involves international tax obligations with several different countries with their tax rules and return timelines. Without professional help you might find yourself subject to double taxation on the same passive income, or you may excuse yourself of the ability to claim foreign tax credits. 

Italy has a multitude of double tax treaties around the world with countries that have specific provisions which describe which country has primary taxing rights over specific categories income. Most individuals are not able to decipher these limitations without specialized knowledge in the area.

Errors in Documentation and Deadlines

Under the Italian tax system, there are strict documentation requirements and deadlines; whether it’s missing a deadline for filing, or failing to produce documentation that is required, it can result in the elimination of tax benefits for you, penalties, or interest.

For example, if you are to benefit from the impatriati regime, there are certain communications that must be made to your employer or the Agenzia delle Entrate within certain timeframes; if you miss these deadlines, you can lose a lot of tax benefits.

Errors in Calculation and their Financial Impact

The initial step to determining what income is to be taxed under certain special regimes and arriving at the right tax base will involve subjective evaluations and therefore errors can easily occur which can lead to underpayments (and penalties) or overpayments (potentially adding to unnecessarily reduced funds).

“The financial implications of an error in calculation can be substantial,” according to a tax specialist from Moving2Italy. “We have seen a simple misinterpretation result in tens of thousands of euros of unexpected tax liabilities for the tax payer or a loss of savings opportunity.”

Potential Audits and Penalties by Tax Authorities

The Agenzia delle Entrate has become increasingly sophisticated in their monitoring of compliance with the tax system and has developed improved methods to monitor compliance with tax regulation, especially as it relates to special regimes and international taxation, which can involve complex use of different tax status and or benefits. Non-compliance with the details of applying tax benefits can lead to their review of matters, and subsequent audits, which can lead to the application of liabilities with penalties and interest.

Working with a professional Italian tax attorney or tax accountant in Italy can help you to manage risks of non-compliance through timely and effective compliance strategies and documentation that are in line with the regulatory framework, while also optimizing the range of tax benefits available to you in Italy.

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What to expect from quality Italian tax advice

A quality tax consultation focused on international movers will follow a structured process that allows the consultant to examine your specific circumstances and plan solutions to optimize your tax circumstances in Italy.

Initial consultation process

A professional tax consultation will typically begin with an initial meeting to examine your situation and goals. Moving2Italy offers initial meetings through video with various time slots (30 or 60 mins) based on the complexity of each case.

In this initial meeting, the focus will be on gathering information and laying a foundation upon which we can build a basis of understanding on whether and how you could take advantage of preferential tax treatments. This is informal and practical discussion that is meant to develop a good understanding of your circumstances.

Personalized analysis from a tax consultant in Italy

After the gathering of the initial information, we will analyze your situation in relation to the special tax regimes and the potential benefits. This analysis will consider many different variables which include: 

• Your country of origin and whether there is an international tax treaty in place
• Your profession and the type of work
• Your residency status and intended residency
• The structure of your income and/or assets

Each professional profile will have their own requirements. For example, whether you are a multinational senior executive, university researcher, or digital freelancer, your analysis will be unique to your circumstances.

Advice on compliance and documentation

In an overall professional tax consultation, the most impactful advice comes in the form of clear guidance about the documentation and processes which need to be undertaken in your specific case. This can include:

• the preparation of the necessary forms and/ or statutory declarations
• advice and assistance on how to communicate with employers or the Italian Revenue Agency in relation to your unique scenario;
• assistance in preparation and filing of a tax return;
• creating a compliance calendar.

For employees, this may simply mean preparing a letter to your employer; for self-employed individuals this may mean preparing a self-certification to the Italian Revenue Agency. You will have clear information in terms of what model to use, and if there are critical deadlines; and you won’t miss out on opportunities to gain income tax benefits where eligibility exists for you.

Tax planning strategies- the long-term view

Beyond simply compliance, a qualified tax advisor in Italy will guide you through considerations in developing long-term strategies which will take into account your eligibility to retain tax advantages as your circumstances change:

• sustaining ongoing eligibility requirements;
• planning for when the periods of preferential tax regimes ends;
• the tax impacts of substantial life events (marriage, children, purchase of property);
• international investments and sources of income.

“A good consultation doesn’t just resolve immediate issues” says a member of the Moving2Italy team, “it helps to create a plan that will keep your income tax efficient for your time in Italy, and for future plans.”

How Moving2Italy provides the tax services that Italy requires

Not all tax consultants are capable of addressing the challenges associated with international relocations. Moving2Italy has acquired the capability to offer services specifically designed for the needs of international professionals who are relocating to Italy.

Our knowledge and expertise in international taxation

The team at Moving2Italy has specific knowledge of tax regulations in Italy and foreign regulations. Our consultants have familiarity with international double taxation agreements, residency rules and AIRE compliance.

Many tax consultants have acknowledged the relevance of theory, but Alessandro, the founder of Moving2Italy, noted: “You must have experience in real cases, you must have seen how the Italian Revenue Agency interprets the regulations in practice and on a daily basis before you can truly speak about an effective consultation.”

This expertise allows Moving2Italy to find the best solution for each client, even when things get complicated. Every country has its own wire, and our knowledge of bilateral treaties enables us to provide service that is genuinely personal to you, and to your country of origin.

Experience with the “impatriati” regime

Over the years, Moving2Italy has managed hundreds of international relocations to Italy. The experience associated with managing the countless elevations of the impatriati exemption is valuable and provides us with the ability to foresee problems and offer solutions that have been proven to work.

“I remember when the interpretations of residency requirements changed in 2023. A lot of professionals were shocked, but we had been there before,” offers a senior consultant. “We had seen the problem before and knew how to work through it.”

Having experience with the interpretations of the Italian Revenue Agency is a valuable asset to your case, particularly in borderline situations where the regulation is not always clear-cut.

Personalized tax consultation

At Moving2Italy, we know that each client has different needs depending on their professional background, family situation, and country of origin. Our consultations are based on whether it requires a 30 or 60 minute consultation, as we have found that the complexity of the situation determines the amount of time required for the consultation.

For example, an engineer returning from Germany has different needs to a doctor returning from the United States. Standardized approaches don’t work when dealing with international tax, and for that reason we are happy to adapt our consultations to the specifics of your circumstance. 

“Last month,” recalls a member of our technical team, “we had a client who presented with a very unusual employment contract. It was a borderline case that required us to completely adapt our analysis. We were able to be flexible and THAT made the difference; we were able to get him access to the regime when others told him it was not possible.“

Transparent and clear Italian tax advice

A distinguishing feature of Moving2Italy consultations is clarity. Right from the very first contact, we specify our fees, expectations, timelines and ultimately the results you can expect. We hold meetings by video conference at your discretion, and we conduct all our meetings without any travel.

During the meeting we thoroughly consider your situation and, if requested will put together a conclusive report which summarises what has been discussed. Our consultants develop an accessible language and avoid using unnecessarily technical terms that might hinder your understanding.

To the extent that we tell our clients: “A good consultation is not one that dazzles with technical terms but one that helps you understand your exact situation and what you need to do.”

The comprehensive support provided by Moving2Italy

In addition to initial consultation – Moving2Italy provides complete support services which are to help clients through every step to optimise their tax position in Italy and the maintenance of that optimal position.

Initial assessment and eligibility check

The initial step to our service is to complete a thorough assessment of eligibility for the special regimes and tax benefits. We conduct the following:

• Check residency position and history
• Review professional status and work engagements
• Consider family situations that will affect tax benefits 
• Thorough review of sources of income and their categorization

The assessment forms a detailed analysis which also identifies barriers and opportunities only by looking into some of the factors affecting eligibility.

Administration preparation and submissions

For clients who prefer to engage our complete services we provide tangible support (and advice) on administration including:

• Preparation of contracts of employment or self-employment documentation 
• Opening a VAT number where self-employed 
• Obtaining certificates of professional qualification 
• Preparation of written request to employers 

“The most stressful part about the move was the idea of Italian bureaucracy”, a recent client from London told us, ” with your help I was able to focus on my work, while you handled all of the documentation”.

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Ongoing compliance management

In Italy, it is important to stay compliant with the tax regimes and compliance requires ongoing management because situations will change and obligations may arise. Our subscription service includes:

• Regular reviews of ongoing eligibility for special regimes 
• Updates on government changes to legislation 
• Guidance on required documentation 
• Advice on necessary communications to government 

This ongoing service assists our clients in avoiding the situation where due to neglect or simply misunderstanding ongoing requirements a professional loses their eligibility for tax benefits

Tax return preparation and filing

Proper tax return preparation and filing are very important in maintaining tax benefits and minimizing penalties. We provide the following services:

• Preparation and filing of Italian tax returns
• Filling out RW forms for reporting foreign assets
• Calculating eligible income under special regimes
• Documenting the supporting evidence of tax benefits claimed

The main benefits of professional tax advice Italy

When you invest in professional tax advice when moving to Italy, you will benefit for long after your initial meeting.

Risk reduction and legal compliance

By hiring a tax advisor in Italy, you will reduce your exposure to compliance risks. You will become very confident that you are properly accessing preferential regimes, and you will not have to worry about potentially being challenged by tax authorities in the future.

As part of our video consultations, Moving2Italy looks at all the requirements and does detailed simulations of the benefits in a case by case analysis. We will also explain how to maintain requirements over time, something that many people overlook, but that is extremely important if you are intent on maintaining tax relief moving forward.

Maximum tax savings through optimization

The best italy tax advice services don’t just look at how to access preferential regimes, but also how to maximize all the tax benefits available to you. In any case, we will give consideration to:

• The interaction between tax regimes
• Timing of relocations and transactions
• Optimizing structures of income to maximize qualifying portions
• Planning for the period subsequent to preferential regimes ending

The tax savings through a planned and systematic approach and advice could be considerably larger than the tax savings that you obtain from basic compliance.

Time savings and peace of mind

Italian tax rules, either to prepare documentation or ongoing compliance, can take quite a while. Having professional help lets you use that time to get on working in your professional capacity and to enjoy your new life in Italy, while others handle your tax situation. 

Access to updated knowledge on tax law changes

Access to current knowledge on changes in the laws on tax Italian tax legislation changes regularly, especially when new interpretations and guidelines are published by tax authorities. In certain cases, these changes can also affect special regimes. Professional tax consultants maintain current knowledge and can adjust plans accordingly.

A recent example of this is the changes to the impatriati regime in 2023 and the update made to the residency factor effective 2024. To stay on top of these changes and fully understand their implications, requires continual focus which most people simply cannot provide.

How to get started with Moving2Italy

Getting started with Moving2Italy is simple and made to meet international clients’ needs.

Consultation options and process

You can book an initial consultation in either a 30 or 60-minute time slot, depending on how complicated your situation is. We will let you schedule your consultation directly online as an extra level of service so you can choose a time that is convenient for you.

After your initial consultation, you will know if you can elect tax regimes and what benefits may apply to you. If you would like to choose a package with our comprehensive services, the subscription service will include:

• Management of all procedures
• Lodgement of tax returns
• Three additional consultations free in twelve-month period
• VAT number opening and management on behalf of self-employed professionals
  

Remote service availability

All our services are offered remotely meaning that you can receive expert advice from an Italian tax adviser wherever you currently are. You will not need to travel anywhere, and you can begin to optimise your tax position before you have even arrived in Italy. Video consultations do help overcome the iceberg of travelling to Italy in order to get the financial advice you require.

Knowing you can receive remote advice is helpful for your planning. If you wish, you can decide if, when and how to travel to Italy and we will work with you to help any transition you wish to make in a way that protects your position from a tax perspective first.

What to bring to your first consultation

To ensure you and your consultant get the maximum benefit out of your first consultation, it would be beneficial to have the following information available:

• Your citizenship and where you currently reside
• Your work and educational backgrounds
• What you plan to do when you are in Italy
• When you plan to relocate to Italy
• Information about your family, especially minor children
• Existing ties to Italy (property, family, etc.)

Not all of this information may end up being relevant to your situation, but having it available will best prepare your consultant to focus their expertise on your situation.

Long-term support packages

Moving2Italy offers a range of ongoing support packages to encourage an ongoing level of support while you are in Italy. The following services are included in the ongoing packages;

• Current tax situation reviews
• Updates of any relevant legislative and regulatory changes
• Reasonable help in preparing your annual tax returns
• Assistance to ensure you comply with special regime requirements.

Italy is a great place to relocate to with an exciting new life to be lived and possible tax savings to be had, but the intricacies of the Italian tax system can be daunting even for business veterans. The benefits of having possible special tax regimes are great, but the pitfalls of getting it wrong can be significant. 

With a specialized Italian tax adviser, your relocation to Italy changes from a life style decision to a life style and business opportunity, when you are guaranteed to take full advantage of all the tax benefits to which you are entitled. The easy online booking and flexible scheduling options allows you to access the specialized expertise in the way that is most convenient to you, and gives you clarity unique to your context, enabling you to make decisions you are comfortable with are the most beneficial for you in your new future in Italy.

The Moving2Italy tax team will guide you through every step of your relocation process in Italy, maximizing your benefits whilst ensuring that you are fully compliant with Italian tax obligations. Contact us today to get started on optimizing your tax position in Italy!

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