Easier tax regime for retirees, the Italian novelty
Italy wants to attract retirees and is determined to compete with countries like Portugal and Spain. The government grants, starting from 2019, fiscal advantages for individuals establishing their residence in Italy, but exclusively in the South and in towns with less than 20,000 inhabitants. Indeed, these are the places which most need newcomers, since they suffered from a slow but constant migration of their residents in the last two decades.
Let’s see what the new retiree tax system is, who it is for and for how long.
The new subsidized scheme provides for a minimum rate of 7% on foreign source pension income and any other foreign source income. It is intended for people, Italians and foreigners, who have been abroad for at least 5 years before moving to Italy and who want to live in the southern regions of Italy: Abruzzo, Basilicata, Calabria, Campania, Molise, Apulia, Sardinia and Sicily. And in municipalities with fewer than 20,000 inhabitants. The new regime is scheduled for the 2019 tax period.
The new regime, provides also an exemption from reporting foreign asset and investment in annual income tax returns. It also exempts from annual property taxes on foreign property and foreign financial assets.
A five years duration limit
This convenient regime has a duration of only 5 years, starting from the moment when residence is transferred to Italy.
This new scheme represents an opportunity for all those who have not resided in Italy for at least 5 years and who are receiving retirement income and other foreign sources of revenues, such as financial income, rents, etc. I added that actual convenience must of course be assessed on a case-by-case basis, taking into account the heritage / income situation, the family context and the State of origin.
However for the measure to register certain results, it is important to reassure about the stability of the system and the adequate services. But not only. It is also essential to deploy specialized operators able to facilitate the transfer of residence and the treatment of different bureaucratic requirements.