Italy Flat Tax – New Tax Haven in Europe 2019

The right-wing populist Lega with his leader Matteo Salvini won the election by far on 26 May 2019. There is no doubt: the Lega will be the strongest political force in Italy. The new leaders are convinced that the new Italy Flat Tax Regime will help the Italian economy and create a new tax haven.

Lega Nord is a strong promoter of the new Italy Flat Tax Regime, while the coalition partner “5 Stelle” torpedoed the application of the Italy Flat Tax Regime until the last elections. Today, wealthy new residents from all over the world are lured to move to Italy in a new tax haven with an incredible tax gift.

In one shot, the Italy Flat Tax Regime will abolish the taxation of all the income and wealth generated outside Italy against a flat tax of 100’000 EUR only; despite the amount of income. There are no reporting obligations for offshore bank accounts. There is no duty to file a tax declaration for offshore assets. The new Italy Flat Tax Regime will automatically legalize undisclosed offshore assets in Italy (by virtue of law).

In this article, you will discover the tremendous tax benefits making Italy the new tax haven for Non-European Citizen. Simple tax comparisons with USA, China, South Africa, Jordan, Russia and Brazil will show how substantial such Tax Saving can be.

Saving tax has never been so easy. Combine the Italian lifestyle with a low tax bill by moving in a new Tax Haven located in the center of Europe.

1. Definition Golden Visa & Italy Flat Tax Regime – in simple terms

A “Golden Visa” is the right of taking a permanent residence for wealthy people against:

  • a substantial flat tax payment or
  • an investment in real estate in under-developed areas or
  • a donation of a specific amount of money to the government.

Foreigners from 168 countries who move their main residence to the new tax haven will receive an “EU Golden Visa”, a permanent residence permit if they simultaneously apply for the Flat Tax Regime with a lump-sum taxation of 100,000 EUR per year.

Explained in simple terms
International entrepreneurs, sports stars and wealthy individuals (High Net-Worth Individuals, better known as HNWI) from all over the world will be entitled to benefit from a privileged Flat Tax Regime in Italy. In exchange of 100,000 EUR Flat Tax per year, they can move to Italy and receive a permanent residence permit.

This means that you will pay exactly 100,000 EUR in taxes to the Italian State every year and your income and wealth generated outside Italy will be tax-free, regardless of how much you earn. The flat tax remains invariable despite the amount of income.

The football superstar Cristiano Ronaldo moved to Italy with the new Italy Flat Tax Regime. With this tax-saving model, he’s total income generated outside Italy remains untaxed.

The best part is that all types of income and assets generated outside of Italy are automatically and legally taxed (by virtue of the law), regardless of the level of income and wealth.

Professionals and retiring businesspeople accessed to the attractive tax-saving model since 2018, coupled with a so-called “EU Golden Visa” which is a visa-free travel permit to the Schengen Countries. The visa-free access to the Schengen Countries makes the Italy Flat Tax Regime even more attractive for Non-EU Citizens.

In particular, economically desperate EU countries are now attracting wealthy taxpayers with permanent residence permits combined with tremendous tax benefits (Golden Visa) to reanimate the Italian economy. As the Lega leaders have reached the absolute majority in Italy on 26 May 2019, they ensured a fast handling with VIP Fast Track Service for our clients. We received privileged access to a dedicated representative inside the Italian Tax Agency (Agenzia delle Entrate). Lega will help and defend the Italy Flat Tax Regime against all future enemies, including some high-level politicians from the EU.

Unlike other Golden Visa Programs such as in Portugal, Spain, Greece, Malta, Cyprus, where only husband, wife and children are eligible, in Italy, the extended family circle can move to Italy with the Italy Flat Tax Regime. This privilege can very attractive to big families and clans. With an additional lump-sum tax of 25,000 EUR per extended family member (grandfather, brother, uncle) the entire clan can move to Italy. Such a benefit can be found in Italy only – the new Tax Haven.

2. Advantages of the new Tax Haven in Italy

All types of taxation relating to all types of income and assets outside Italy are covered by the flat-rate tax of EUR 100,000 per annum:

  • No additional tax on income as a self-employed person or employee outside of Italy
  • You are allowed to work and do business. The Business generated outside Italy, for example, in Lugano, Switzerland, is tax-free.
  • Income from dividends, copyrights, royalties, intellectual property and interest, including rental income from real estate is tax-free.
  • No inheritance and gift taxes
  • You are allowed to work abroad, for example in Switzerland, to set-up companies and generate income. Income generated outside Italy is tax-exempted
  • No minimum wealth required
  • No obligation to invest in real estate
  • The Italy Flat Tax Regime may be claimed for a period of 15 years
  • Citizens from 168 nations are welcome
  • Undisclosed and secret offshore money can be legalized thanks to the Italian flat rate tax from the date of registration of the new residence in the municipality
  • The status under the Italy Flat Tax Regime in the new tax haven does not impose the reporting obligations for offshore bank accounts, for example, an offshore bank account in Switzerland.
  • No tax return with disclosing obligations for income and assets outside Italy. There is no duty for filing a tax declaration for the Flat Tax Regime. You will receive the first tax invoice 6 months after the end of the tax relevant period.
  • Second homes and holiday homes all over the world are allowed
  • Visa-free travel access to all Schengen Countries is very attractive for Non-EU Citizens

Campione with View to Lugano

Income earned in Italy is subject to ordinary taxation (no tax haven). Income and capital gains from qualifying holdings participations are subject to Flat Tax Regime only after 5 years. You can therefore not move quickly to Italy, sell your business tax-free and move away from Italy. Only 5 years after the establishment of your residence, you are legally allowed to sell your business tax-free.

However, anyone who settles in the Italian border region with Switzerland may work in Switzerland, for example with Swiss companies or self-employed, and generate income that is covered by the Italy Flat Tax Regime. The lump sum taxation scheme in Switzerland is intended for retirees. The spirit of the Swiss law is tailor-made to the needs of retirees. Therefore, professional business activities are prohibited in Switzerland – not so in Italy. The spirit of the law of the Italian Flat Tax Regime makes Italy a new tax haven similar to the UK Resident Non-Dom Status.

The Lump-sum Taxation Regime in Switzerland requires assets of at least CHF 10 million to be disclosed to the Swiss tax authorities. The Italian Flat Tax combined with the Golden Visa in Italy works regardless of the number of assets and does not require investment in real estate, as imposed by almost all other Golden Visa countries.

The privileged status offered by the new Italian Tax Haven is valid for 15 years. After 10 years you can apply for the Italian passport.

All 168 nationalities are welcome if they have not lived in Italy for the last 10 years.

Visa-free access to all Schengen countries (EU countries, incl. Switzerland)

The new tax haven in Italy offers Italian lifestyle combined with a high living standard.

3. The Big Tax Comparison

3.1 Italian Flat Tax Regime vs. Tax Impact in China & USA

Flat Tax Regime in Italy Taxation in China Taxation in USA
Taxable Income 1.000.000 1.000.000 1.000.000
Income Tax Rate 0% 45% 37%
Income Tax 100.000 450.000 370.000
Tax Savings with Italy Flat Tax -350.000 -270.000

3.2 Italian Flat Tax Regime vs. Tax Impact in Russia & South Africa

Flat Tax Regime in Italy Taxation in Russia Taxation in South Africa
Taxable Income 1.000.000 1.000.000 1.000.000
Income Tax Rate 0% 13% 45%
Income Tax 100.000 130.000 450.000
Tax Savings with Italy Flat Tax – 30.000 -350.000

3.3 Italian Flat Tax Regime vs. Tax Impact in Jordan & Brazil

Flat Tax Regime in Italy Taxation in Jordan Taxation in Brazil
Taxable Income 1.000.000 1.000.000 1.000.000
Income Tax rate 0% 43% 55%
Income Tax 100.000 430.000 550.000
Tax Savings with Italy Flat Tax -330.000 -450.000

3.4 Swiss Lump-sum Taxation Regime vs. Italy Flat Tax Regime

Even with the Swiss Lump-sum Taxation Regime in Switzerland Italy can take up the race thanks to the privileged status as a new Tax Haven.

The Lump-sum Taxation in Switzerland requires minimum assets of CHF 10,000,000 and professional activities are prohibited. Italy has no rules in this regard.

Those who settle in the frontier prayer can live in Italy and do tax-optimized business in Switzerland. The money earned in Switzerland is also covered by the Italian Flat Rate Regime and therefore taxable at 0%.

Italy Flat Tax Lump-sum Taxation in Switzerland (Canton Zug)
Taxable Income 4.000.000 *1.000.000
Income Tax Rate 0% 22,86%
Income Tax 100.000 228.600
Movable Property 5.000.000 5.000.000
Movable Property Tax Rate 0% 0,40%
Movable Property Tax 0 20.000
How much you will pay 100.000 248.600
Tax Savings with Italy Flat Tax -148.600

*The Swiss Lump-sum Taxation reduces the taxable Income from 4.000.000 down to fictive 1.000.000 only!