I am from Italy, I have a few italian friends who used it, never knew there was a cap. I repeat, the plan is to f**k you in the long term, a friend of mine which has 4 houses in london has applied for it, came back to italy, had a child, they are gouing to f**k him hard in 10 years, as soon as they discover the houses in London.
What they want you to do is exactly what you are suggesting: come here young and get married. After you are married with a girl from one of those regions, good luck in telling her you want go live abroad, and for the italian state, if you have a wife in Italy, you are resident in italy, no matter what. Same if you have children,
And I really can't understand why a portuguese would want an Italian passport, really can't understand. If you want to avoid paying taxes, stay away from welfare states, their goal is to make you pay as much as they can, in the long term. Go to Dubai, or to places like Thailand where things are more relaxed as the state gives you nothing.
To be clear, if you play things by the rules, you can f**k the italian tax agency by staying in italy 5 years and then going away, but 5 years are a long time, you fall in love, you make friends, going away in 5 years is not going to be easy, so you will end up with the choice of either paing up 60% of your income in taxes or trying to find sneaky ways not to pay them, and that will end up bad. And 200k a year puts you in the top 0.5% of wealthiest persons in italy, among those who declare full income.
From an Italian, please stay away from Italy, you will regret it in the end.
Interesting, thanks for providing us some broader context and case study. More nuanced details are uncovered here that I overlooked but now I have bigger picture
I put the PWC definitions below this post so we have clear definition of Italian tax residency
My understanding is that if one wants to leave Italy to a tax heaven AFTER a period of time working in Italy under this special freelance visa (a minimum of 2 years is required, to avoid penalties) and want to prevent the risk of having to pay tax to Italy, he/she must do all of these:
+avoid buying Italian properties. if one has bought properties, then need to sell off all them (only rent out does not help)
+avoid marrying & having kids with local Italian. if one has married local, then need to avoid having kids. For spouse, ether convince him/her to move abroad as well OR need to file for divorce successfully (need an amicable divorce here) to cut all possible familial tie to Italy
+deregister/close down any company/business one owns that is registered in Italy
+move away from Italy and never visit Italy for more than 183 days
+establish tax residency in the new country legally
It looks like you really need to do things that are often mandatory to renounce citizenship, just to avoid being regarded as tax resident in Italy. So more nuanced details to be aware of! The 183 days rule Is often just one factor, though most common one but in this case, Italy has more ways to do this e.g. they consider owning property as a proof of "having residence in Italy", and also having family tie (kid, spouse) who are still residing in Italy as evidence to classify someone to be Italy tax resident.
If one is identified as being a tax resident in Italy (by meeting ANY of these 3 criteria defined by PWC) then he/she has to pay all foreign income & wealth income from foreign assets. I guess this is the reason you mentioned that you Italian friend who came back to Italy and has a child there/got married there probably has to pay wealth tax on his 4 London-based houses (foreign assets). So he met the 3rd criteria by having centre of social like (family: kid, spouse) still in Italy and therefore is classified as tax resident in Italy, even when/if he does not live in Italy at all. Probably he needs to move his kids & wide abroad as well, in this case, to avoid Italy tax.
According to Article 2 of the Italian Tax Code, an individual is considered an Italian resident for tax purposes if, for the greater part of the fiscal year (i.e. for more than 183 days):
- the individual is registered in the Records of the Italian Resident Population (Anagrafe)
- the individual has a ‘residence’ in Italy (habitual abode), or
- the individual has a ‘domicile’ in Italy (principal centre of business, economic and social interests, e.g. the family).
If one of the above conditions is met the individual qualifies as tax resident for Italian tax purposes.
Therefore, in general, in order to recognise an individual’s tax residence, the basic criteria is the registration in the records of the Italian resident population. Failing said registration, the alternative principles of the presence of the principal centre of economic and social interests (i.e. family), or the permanent abode in Italian country are applicable.
https://taxsummaries.pwc.com/italy/individual/residence
Hi!
Yes! That's about right! This year I think I'll be paying about €4000 of social security and some €3500+ of taxes! Didn't know about Georgia being 1% up to $165K – what happens after you exceed $165K? And is there a time limit for that tax benefit? Also, I don't know about Georgia, but the quality of life you get in Sardinia, weather, food, etc., are absolutely outstanding. I'm from another EU country, so in my case I think I can get citizenship after 3 or 5 years max!
Nice thank for confirming this! Things seem to work out for you..
I wonder do you any formalization/accountant service to apply for the visa and set tax matters up? Saw someone mentioned Accounting Bolla, Nicolò Bolla on reddit. I guess everything is in Italian not in English so it could be hard.
And the social security tax is confusing to me, I see many sources citing different number. Did you pay the social security tax amount with recommendation from Italian accountant? Below is someone reply in this forum, mentioning SS tax of 30k for 1M revenue...This is confusing to me
I cited many sources in my post above, including the cap on social security. Social security is calculated as a percentage of the maximum amount, but it's capped at 113,520 EUR.
In other words, for 1M revenue, social security would be 22%-26% of 113,520, which is 30K, more or less.
Income tax would be paid apart from SS, and would be calculated on 100,000 EUR.
Hi!
Yes! That's about right! This year I think I'll be paying about €4000 of social security and some €3500+ of taxes! Didn't know about Georgia being 1% up to $165K – what happens after you exceed $165K? And is there a time limit for that tax benefit? Also, I don't know about Georgia, but the quality of life you get in Sardinia, weather, food, etc., are absolutely outstanding. I'm from another EU country, so in my case I think I can get citizenship after 3 or 5 years max!
Here is detail for Gerogia: so 3% if exceeding ithat, but 2 years of exceeding means losing status and has to pay 20% income tax as usual
+PIT for Individual Entrepreneur (Sole Proprietor, Solopreneur) with Small Business Status: If you don’t apply to get this status, you have to pay 20% income tax on your gross income. But when you apply (as a tax resident of Georgia and actively operate a foreign company remotely from Georgia) and get this status at the Revenue Service, you pay 1% tax rate on turnover less than 500,000 GEL (about $165,000 USD) (when exceeding 500k GEL then it is 3% tax over the excess amount - but revoke the Small Business status if exceeding in 2 consecutive years). IE status does not protect your personal assets in case the business is sued for files for bankruptcy.
