Invest in Italy began as a way to communicate and promote Italy's incentives and tax benefits to foreign investors. Apart from all the known reasons to invest— world famous wine regions, breathtaking landscapes, and historic cities— there are many not commonly known reasons why buying a vacation home or an investment property makes a lot of financial sense too!
Recent decrees by the Italian government make investing in Italy attractive for people of all ages and economic statuses. View the tax incentives below and for further detail, head on over to our blog.
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HNWI of any nationality who decide to transfer their residency to Italy, can opt for a substitute flat-tax on foreign earned income. They're exempt from inheritance and gift tax on foreign assets and tax monitoring on foreign-held assets. Regardless of foreign earned income, new residents can opt to pay 100,000 euro flat each year (for a maximum of 15 years), plus 25,000 euro to any family member to whom they can extend the flat tax.
As of January 1st, 2019 retirees may benefit from a great tax incentive if they receive a pension from overseas and relocate to Southern Italy. For a period of 10 years, individuals who transfer their tax residency to certain municipalities pay a 7% flat tax on their foreign income, with no cap on the total amount. It applies to any foreign sourced income, including pension, capital gains, interests, dividends, property income, and miscellaneous sources of income. It does not, however, apply to eventual earnings made in Italy. The 7% flat tax also covers any wealth tax, and the taxpayer is not required to disclose any foreign held assets while living in Italy.
If you move to Italy, you can benefit from a 70% tax exemption on your personal income. For the first 5 years after transferring your residency your taxable basis is slashed by 70% so you’d be paying taxes only on the remaining 30% of your income. Basically you’d fall to a much lower tax bracket. Plus, if you decide to settle in the South of Italy or the islands, the tax exemption is 90%! So you’d be paying taxes only on 10% of your earnings. Click below to read more about the tax exemptions and extensions.
In Italy, self-employed individuals can write off up to 60% of their gross revenue for business expenses. These fortunate professionals pay just 15% taxes on the remaining 40% of their taxable basis, which effectively is only 6%. While you may ask if this good deal has an expiration date, the answer is no! As long as you are self-employed and your revenue does not exceed 65,000 euro, you qualify for the tax regimen.
Young people aged 35 and under can apply for the "Prima Casa" bonus, and benefit from certain exemptions on registration, mortgage, and land registry taxes, saving thousands of Euro on the costs of buying their first home. If you buy a residential property from a private individual, the registration tax (in Italian “imposta di registro”) which normally is 2% for residents, is completely waived. The mortgage and land registry taxes are also waived! You’ll only have to pay the agency fees and the notary public.
If you transfer your residency to Italy and spend the majority of the year there (at least 183 days), you don’t pay any property taxes on your primary residence! Luxury properties like castles, palaces, and villas are excluded, requiring 0.4% tax; still that’s less than half of what states like New York or Florida charge. Plus, unlike other European countries, there is no wealth tax in Italy.
When you sell an Italian property you personally owned for 5 years or longer, you pay ZERO € in taxes on your capital gain regardless of how much profit you make. The title must be under your name, if it’s under a company this total exemption does not apply, unless it’s a sole proprietorship (in Italian "partita IVA"), in that case you may offset capital gain taxes against any eventual losses you may have. Click to find out how to avoid paying taxes when selling a short term investment before the 5 years.
The Italian government has introduced new incentives for a multitude of home renovation projects. They're now granting tax breaks equal to 50% to 90% of home renovation costs and if your condo has a homeowners’ association the tax break is 110% for energy efficient works! The 50% Home Renovation bonus for kitchens, bathrooms, and extraordinary works is permanent while the others are temporary. Click to learn more about many exceptional bonuses and how to obtain the tax breaks.
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