On May 1, 2019, the Law Decree no. 34/2019 (so called "Growth Decree") entered into force, providing a number of measures aimed at strengthening Italy's economic situation and administrative efficiency. Among those measures is a further improvement to the special tax regime introduced in 2015 for taxpayers wishing to transfer their tax residence to Italy.
The tax regime introduced in 2015 was developed for the "Returning Brains from Abroad" only, since extended to non-EU citizens highly skilled, including entrepreneurs and working investors, who have decided to move to Italy.
Taxpayers that will transfer their tax residence to Italy as from 2020 will be entitled to a 70% reduction of taxable income in respect of employment and self-employment income, as well as of the income deriving from the opening and running of a company in Italy.
The entitlement to the above benefit is subject to the condition that the concerned taxpayers have not been Italian residents during the two fiscal years preceding entry (or reentry) to Italy.
Furthermore, those who benefit from this entitlement must predominately carry out working activity within the Italian territory (defined as at least 183 days per year) for two years following the tax residence transfer to Italy, and also cannot transfer their tax residence elsewhere for at least two years following the transfer. The taxpayer also must hold at least a Bachelor's Degree and must have been an employee, a self-employed individual or an entrepreneur over the 24 months preceding his/her transfer to Italy. In addition, the taxpayer must come from a country that has in place a "no double taxation deal" or an "exchange of tax information deal" with Italy.
This advantageous tax incentive will be available for the tax year in which the individual transfers his/her tax residence to Italy and the following four years. It will be possible to extend such a tax benefit for another five fiscal years, provided that the concerned taxpayer has at least one minor or dependent child (including pre-adoptive foster care) and is the owner of at least one residential property in Italy. Note that the property may be purchased directly by the taxpayer or by his/her spouse, cohabitant or children, including in joint ownership.
Under the above circumstances, however, the reduction of taxable income for the years exceeding the initial five will be equal to 50% instead of 70%, unless the taxpayer has three minor or dependent children (also in pre-adoptive foster care). In this case, indeed, only 10% of the taxable income will be subject to taxes.
The special tax regime provides for a further benefit for those who decide to have their residence to the South (i.e. to the following Regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardegna and Sicilia). In this case, for the five years following the expiry of the initial five years' term of tax benefit, individuals will benefit from a 90% reduction of taxable income.
All non-EU individuals intending to move their fiscal residence to Italy must obtain entry visas as employed or self-employed individuals. Indeed, individuals with elective residency or a business permit only are not eligible for the above tax regime.
Considering the different kinds of working visas available in Italy, the visa for Investors – available from January 2018 – is, generally speaking, the more appropriate for the non-EU entrepreneur who will move to Italy as an investor or working partner of an existing company, or to acquire the full share pack of it becoming its CEO.
Indeed, this kind of visa benefit from a special-priority issuance procedure, that normally lead to the issuance of the visa within 30-40 days following application.
It should be noted that the investment required of the applicant for this kind of visa is equal to an amount at or exceeding EUR 500,000. Visas for investors is out of the yearly fixed number of applications.
The Italian Government has declared that the choice to grant such a favorable tax and immigration regime is part of a bigger strategic plan which involves the investment attraction policy started two years ago with the introduction of the visa for investors connected to the flat tax benefit for the new residents' income from abroad.