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Italy doubles flat tax for super-rich foreign residents

Italy's government said on Wednesday it would double a flat tax on foreign income for high earners newly moved from abroad from €100,000 ($110,000) to €200,000 a year.

Published: 7 August 2024 17:47 CEST

Italy doubles flat tax for super-rich foreign residents

Photo by MARCO BERTORELLO / AFP

The original rate, levied for a maximum of 15 years in lieu of other taxes, was introduced in 2017 in a bid to lure wealthy people from overseas, including Italians who had been tax residents elsewhere for many years.

Prime Minister Giorgia Meloni’s government approved “a regulation that has made a lot of noise – the doubling of the so-called flat tax for billionaires”, Economy Minister Giancarlo Giorgetti said after a cabinet meeting.

He said 1,186 super-rich individuals had transferred their residency for tax purposes to Italy since 2017, but said it was “very difficult to evaluate” how much they had invested in Italy.

READ ALSO: What we know about Italy’s move to double flat tax for wealthy foreigners

Giorgetti said the new rate – which a ministry spokesperson confirmed would only apply to new arrivals – was still attractive but said it was important that countries did not seek to compete to offer the lowest rates for high-worth individuals and companies.

“We are against starting a competition because countries like Italy, which have very limited fiscal space, are destined to lose,” he told a press conference.

Giorgetti recalled ongoing global discussions about how to make the super-rich pay more taxes, a topic which dominated a meeting of G20 finance ministers in Rio de Janeiro last month.

The ministers agreed to work together on the issue but stopped short of a more substantial deal following opposition, especially from the United States.

Member comments

Anonymous - 8 August 2024 at 10:41 CEST

this is unclear. A flat tax is a certain rate. What is the rate?

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How much should you pay your Italian accountant to do your taxes?

If you ask someone in Italy who a commercialista is, you may get several different answers: accountant, consultant, financial advisor or administrator.

In fact, they can be all of these at once as, along with the patronati, they’re residents’ first port of call when dealing with the complex bureaucratic processes surrounding almost anything official in the country.

Commercialisti are also the people who can file and submit your yearly tax returns for you.

If you live in Italy or generate income in the country, you’ll likely need to file your taxes once a year during the so-called dichiarazione dei redditi (‘income declaration’).

Unlike in other European countries, where it’s fairly easy for taxpayers to file tax returns independently, doing this can be very tricky in Italy, not least because of the complicated language being used.

And mistakes can cost you dearly as the Italian taxman could charge you hundreds or even thousands of euros if you submit late, forget some details or enter the wrong information.

That’s why many around Italy choose to hire a commercialista. But how much should you pay for their services?

Overview

Commercialista fees can vary greatly depending on the type of services you need and the complexity of your financial situation.

If you’re an employee with a single source of income and are seeking help with filing taxes, or claiming tax deductions or incentives, fees will be on the low end of the spectrum.

But if you have multiple sources of income, or have foreign income or assets and are subject to taxation in multiple countries, the commercialista will need expertise in international tax law, which may significantly raise costs.

READ ALSO: The Italian tax calendar for 2024: Which taxes are due when?

If you are a freelancer or the owner of a small business, you may need monthly consulting and regular services such as bookkeeping and VAT reporting. In this case, services may be bundled in an annual package.

Finally, if you own a large business or corporation, you may need to hire more than one commercialista to deal with payroll management, VAT declarations, and corporate tax filings.

Please note that the cost of a commercialista can also vary by region as prices tend to be higher in large metropolitan areas such as Milan or Rome, while you may find particularly advantageous rates in small towns and less populated areas around the country.

Annual tax returns

According to financial advice platform Fiscozen, income tax filing services generally start at €120 but can rise to over €700 depending on your personal situation.

Generally speaking, tax filing fees are higher if you’re a VAT number holder (or partita Iva) as this entails more work on the part of the commercialista (think of all the invoices issued and claimable VAT detractions) compared to an employed individual or pensioner.

Paying taxes

Most types of taxes in Italy (from income to property taxes to waste collection charges) must be paid by completing and submitting form F24 (modello F24) with Italy’s tax office.

A commercialista can do this for you, with services costing between €15 and €30 per form, according to online investment advisor Moneyfarm.

Registering a new business

Freelancers and business owners in Italy are required to register with Italy’s tax office by getting a VAT number (known as partita Iva).

If you’re starting out as a freelancer, hiring a commercialista to get your personal VAT number and set up an electronic invoicing system on your behalf will cost you €150 on average, according to Fiscozen.

Fees will be higher if you’re starting a new business as this generally involves more paperwork and compliance with a number of tax requirements.

In this case, a commercialista’s services may cost anything between €300 and €500, though you’ll also have to factor in the payment of a number of taxes (including up to €200 for the Certified Start of Business Report, or SCIA).

‘Year-long administration’

As mentioned earlier, if you are a freelancer or a business owner, you may need monthly consulting services, as well as regular bookkeeping, VAT reporting and – if you have employees – payroll management.

In this case, commercialista services may be bundled in a gestione annuale (‘year-long administration’) package.

According to Fiscozen, a 12-month package for freelancers operating under Italy’s flat tax scheme costs €60 a month on average (€720 a year).

But costs can be much higher for freelancers working under the so-called regime ordinario (‘ordinary regime’) and business owners.

In this case, you may pay anything from €2,000 to €4,000 a year depending on: number of clients, business size and number of employees (if applicable).

How can I find a commercialista?

All commercialisti in Italy must be registered with national association CNCDEC (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili).

The association’s website gives you the option to look for registered professionals in your area (see an example via the screen grab below).

A screen grab of the search tool on Italy’s national ‘commercialisti’ association’s website. Source: Consiglio Nazionale dei Commercialisti

As with most things in Italy however, word of mouth is key, so make sure to ask friends and family for recommendations if you can.

Alternatively, online forums and message boards for foreign nationals in Italy often share names of professionals that are particularly experienced in international tax law.

Finally, you can also find a list of commercialisti working in your area in Italy’s pagine gialle (Yellow Pages).

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