Move to Italy, pay virtually no income tax... Am I missing something?

errlloyd

https://accountingbolla.com/new-residents-tax-regime/#:~:text=After%20the%20enormous%20success%20of,tax%20break%20on%20your%20income!

Italy has a new resident tax scheme that allows professionals who move to the South of Italy only get taxed on 10% (30% in the North of Italy) of their income for the first five years they live there.

I can't find any catch. You don't need to live in some weird mountain village or work in a certain industry or anything.

So I think if an Irish software Dev on 100k per year moved to Sicily and lived there (183 days of the year etc) they'd end up paying about 3k in annual income taxes instead of 38k.

Am I missing something here?

Taxes

You may or may not obtain a job in Sicily as a software developer that pays €100k per annum. If you plan on working in Italy for a non-resident company then this can cause issues.

For example, if your employer is not established in Italy but you undertake your employment duties there, then your employer will likely have to register for payroll taxes in Italy and operate these taxes on your remuneration package.

There is also a chance that a permanent establishment in Italy is created which means your employer may have to pay tax on some of its profits in Italy.

There is also a chance that a fixed establishment is created in Italy, for VAT purposes. This means your employer may have to register for VAT in Italy and charge and reclaim vat there on supplies which are deemed to be rendered/received there.

For you, double taxation should not be an issue as Ireland and Italy have a DTA which covers income and capital. However, acquiring different residencies/citizenships/nationalities can cause taxation issues. For example, say you stay in Italy for 5 years and acquire citizenship. Let’s assume you are left a high-value property in France by a relative resident in Ireland and you, the beneficiary resident in Italy. France will look to apply inheritance tax on the value of the property as the property is located within its borders. Ireland will look apply inheritance as the disposer was resident in Ireland, Italy will look to apply inheritance tax as you are resident there.

In this case taxation is applied by three separate jurisdictions and the double taxation agreements in place cover income and capital taxes but not inheritance/estate and gift taxes.

Chris_5339762

https://www.boards.ie/discussion/comment/119641338#Comment_119641338

I don't know what systems are in place in other countries but Ireland and the UK do have an inheritance tax double taxation agreement. So it does exist.

Taxes

Yes. Ireland have a bilateral tax treaty, which covers inheritance and gift tax with the UK and the USA, but no other country.

errlloyd

I believe the whole purpose of this visa is that you transfer over with an existing job, not get a job in Italy. I am not a software developer, but I work in a tech firm and I think they're happy to pay staff who live anywhere in Europe. On the Italian end you just need a letter from them that acknowledges you're in Italy.

I think the place they seem to get you is social insurance. There is a 23% employer contribution to social insurance in Italy (pension, unemployment, etc). I think the highest level of employer PRSI in Ireland is only 11%. So I guess if my salary was 100k (it isn't but for argument's sake) my employer currently pays 111k with the employer's PRSI, this would go up to 123k if I moved to Italy? Is that right?

Dodge

KPMG have a good note on it. Up to you on whether living in Italy is seen as ‘catch’ but talk to your HR department to see if it’s viable.

https://kdocs.kpmg.it/Marketing_Studio/090519_A_more_attractive_tax_break_for_workers_who_move_to_Italy.pdf