Italy 7% Flat Tax Rules + Cheap Houses (With Italian Accountant) 

My pleasure!

Just remember to make sure you meet all the requirements! If so, it’s an amazing benefit. And you’re helping Italian communities that need an influx of people and money. Let me know how it goes!

So much of a benefit. Than Tommy for the reminder...hugs will keep you posted@@traveltirement

Thanks once again for the great tax information❤

Enjoyed this Video thanking you cheers 🇦🇺 😊

You should check with an accountant. I believe you must prove residency with the local police. The idea of the 7% flat rate is to have people living in these towns supporting the local economy. The Italian government has an army of revenuers.

It is pretty spectacular!

He's taught me a lot. He went to college in the US, so he also understands a lot of American details.

@@traveltirement yep, I was surprised with the knowledge he had of the US.

Glad it was helpful!

@@traveltirement have you ever thought of putting up a business of helping people especially from the US (since you're from the US) move to Italy or France? Especially now that Portugal has scrapped their 10% NHR tax. Partnering with a solid realtor, a renovation/construction company and tax guy would be awesome.

@@seinfeldcostanza9433 Working on some options as we speak!

A pension for the Italian tax authority is any tax-deferred account (401k, 403b, 457, IRA, SEP, Roth, etc) or an actual pension. If you have that, then all your other income gets thrown in for the 7% tax treatment. That’s my understanding.

Thanks so much!

Appreciate that. Thanks for watching!

Glad it was helpful!

Our pleasure! He is super knowledgable.

I appreciate that! Thanks for watching.

Yes I think that would work. As long as the house in the south was your primary residence. They take more into account than just 183 days.

Thank you! 😃 Growing up in the 70’s I’ve just seen too much of that green! But it’s really not that bad.

That’s great. It would save you money.

Me too, I would go crazy with colors and wall art.

Thanks so much for watching!

My pleasure!

Working on it. It will be part of a low-cost resource with answers to common questions and helpful videos.

Unfortunately, mortgages are quite difficult to get for foreigners. They don't use credit scores in Italy. If you must have a mortgage to buy, I'd recommend you rent for a year in Italy to establish yourself. That will make it much easier. Or, of course, save up the money to buy in cash.

Harry, yes there are some apartments with condo fees. But most of the ones in this video have none. I’m excited for your visit! Thanks for watching.

No property tax if it's your primary residence. If a rental, probably a few hundred euros per year. No annual inspections that I know of. Yes, you can Airbnb your place when not there. If you don't rent it over 30 days per tenant, you don't have to register as a business. But you do have to pay tax on any income that you make with it. And that income is not eligible for the 7% treatment.

I don't know that. I'm sure that's a nice spot too. But that giant patio is 🤩

Pretty spectacular!

Yes, a Roth or Traditional works as a “pension”. Roth gains are also taxed at 7%. You are correct your houses and assets around the world are not liable for wealth tax. Only income.

@@traveltirement thanks for the response, Tommy. For those who don’t completely understand, I think it’s accurate that you would be taxed for these things outside the 7% zones. And the income tax, in those non-7% zones, if I recall, starts at around 25% from dollar one. If I’m wrong, let me know. And then it goes up pretty quickly after that. And in these non-7% zones, you would be hit with a wealth tax. If you own a home in the United States, you would get tagged for that, but apparently the property tax is a set off so it is kind of a wash. But for IRAs and brokerage accounts, you would get hit for the wealth tax. In those non 7% zones. Again, this is something that people have to be sure about and if I have this wrong, please let me know.

@@traveltirement sorry to bug you. I assume they wouldn’t hit you on the gains from your IRAs or brokerage accounts. Only on the withdrawals. Is that correct?

@@stevenbrady440 Yes, These are small "little details" not too many people (who do these type of videos) mention while they tell people how great it is to move to Italy. BTW, THIS was an excellent video to help with this type information! I'd like to see this video as a standalone video and not co-mingled with the properties however. The wealth tax has really made me reconsider Italy as my new place (unless of course I would get into the 7% tax regime but I'm just not sure I want to live in a small(er) comune to qualify for it). As I understand, Spain and France also have wealth taxes but ONLY if you are above a threshold of several hundred thousand Euros. Not an expert, but this is my understanding as I delve into these details. Many people comment on these type of videos that they will just rent their house in the US but don't think (or they don't know) that just by owning it, you owe the wealth tax on it (IF you are not part of the 7% regime). Yes, when they sell it, no capital gains for Italian tax purposes but it's kind of a "pay as you go" thing. Same with stock sales (i.e. capital gains). Of course I truly think some (many?) people just don't claim it on the taxes (and how would Italy be aware that they own it? ) Some day the data sharing between countries will probably exist to prevent this but I don't think it does now. Of course, if you get caught the fines are quite steep. I wouldn't necessarily say that the property tax is 'a wash' as it really depends on how much the property is worth (I believe the wealth tax is based on this, the property value ...how do you value a US property for Italian tax purposes is my question? We don't have 'Cadastral' values in the US like in EU) and how much the US property taxes are. True, that the US property tax you pay can be deducted from you Italian taxes. I'm no expert...this is just what I have pieced together from videos like this. One should definitely consult and expert BEFORE making a decision. I just shake my head at all the comments in these type of videos when I read "we are moving in 3 months!" Yea! You probably have no idea about these 'small details' that await you.

Pretty sure it’s for the entire country. FYI it’s not taxed in Italy, but is still taxable in the US. Thanks for watching!

Yes. I’m going to release that with a bunch of other resources. I’m building it out now. Probably in the next month I’ll make it available.

@@traveltirement Thanks!

It's a real thing. It's called Jure Sanguinis or "right of blood". Here's everything you need to know: italiancitizenshipassistance.com/jure-sanguinis/

@@traveltirement I'll never be able to thank you enough for providing the link. You've saved me months of work. I'll contact you prior to my arrival.

@@MDiStefano10 LOL...this entire process took me over 3 years...and I felt lucky it was that fast. Buona Fortuna (in boca al lupo) 🤣

Thanks for this added info. I’ve not been, but it looked so unique I had to share! Thanks for watching.

I asked this if the accountant. Still haven’t heard yet.

I have heard this from many people. France outsources their US visa processing and it's very efficient (from what I've heard). I wish Italy would do the same...

There’s no tax in Italy when selling a primary residence either. So it depends on if your US house was still your primary.

@@traveltirement Thank you!

To be a tax resident of Italy you’re supposed to live there at least 183 days. But that’s not the only thing they look at. The 7% tax benefit doesn’t take any time. You first have to apply for a visa to stay in Italy long-term. Then your first tax season, you just elect the 7% tax treatment. Of course you have to provide documentation.

@@traveltirement thx. 183 days. Hmm that could be a problem. Guess I need to contact a layer or tax consultant in Italy how deal with that. Thx for a great channel

The visa you would apply for is the Elective Residency Visa. The minimum income is €31/32k (I've seen both) for a single person and €38k per year for a couple. Just know that each Italian consulate in the US has discretion with this number. And, no, you cannot show money in a bank account to meet this requirement. You must have at least one "pension". (could be an IRA, Roth, 401, etc. or Social Security).

If it’s a replacement for income it will be taxable I believe. If it’s reparations for an accident it’s not taxable.

Only if lower tax rates were your goal. I would never move somewhere just for a tax rate.

​@traveltirement Agree, but once I have my Italian citizenship, I can stay in Italy some of the year, sell my US home, and take that money and buy a different place in another great location like Portugal. Then I could spend time in each and still benefit from the lower taxes.

@@schowtyme That sounds like a great plan!

I’m not sure. Sorry.

All Roth gains are taxes at ordinary income rates unless you elect for the 7% flat tax. Then only 7%. No tax on contributions.

Thanks for the question!

@@traveltirement That's disappointing but appreciate the info. Thanks again!

Earthquakes should not be a worry. Since 1990 (34 yrs) just over 700 people have died in Italy from earthquakes. Just in 2022, over 3,100 died in Italy from car accidents. I’ll take the earthquakes. Yes, mortgages are difficult to get. There are no credit scores. To get a mortgage, rent in Italy for a year or two to establish yourself. I hope that helps!

Looks like they've changed it or are doing an upgrade. Maybe try back in a few days!

The 7% is only on taxable income. Interest, dividends, capital gains, ordinary income, etc. Normally Italy also has a wealth tax on foreign real estate and financial assets. But in the 7% tax regime that is avoided.

@@traveltirement great

Possibly. If you can show a consistent "passive income" from them. Like if you live off just the dividends, that you can probably convince them of. Just know that each consulate in Canada (where you apply for a visa) has a lot of discretion over what they approve. It's not just a check-the-box process.

@@traveltirement Oh. Ok. Great! It's nice to know. I travelled to Rome, Florence, Cinque Terre, Naples and the Amalfi Coast back in 2022 for 2 weeks and I was enchanted with the country. I have been thinking about slow travelling again and possibly moving to Italy making it my base for other travels across Europe. Setting up residency in Italy would be a great way to accomplish that without having to do the Schengen shuffle every 90 days. Thanks! Please keep making these videos. It's like I am mind-travelling to Italy everytime I watch your videos.

I appreciate the comment. I'm just learning and sharing as I go!

Not exactly. You pay tax in Italy, then when you file in the US, you get a tax credit for what you paid in Italy. You would only pay the difference if there is any.

Yes you can. You can have your SS sent directly to a foreign bank or to a US bank, then transferred to a foreign bank.

Would probably cost more to set up all the trusts than the tax you would pay. But you can do what you want.

@@traveltirement Not really. Lots of people I know do that for larger properties etc. - and the difference between 40% and 0% tax gives you a lot of money for those costs.

By "place" do you mean property? I don't research anything in Rome. Sorry.

​@@traveltirement how about a property near Rome?

I don’t do any searches in Rome. But you can search on Gate-away.com.

I just looked him up and they do look similar!

I could donate them to the local comune, so they wouldn't go to waste!

@@traveltirement - As long as they too realize they have serious value this would b a GREAT idea !

I don’t understand?!?

@@traveltirement I heard while Italy is trying to attract investors and businesses, we all know the mafia doesn’t miss out either. Especially in the vacant small towns where these cheap properties are.

I've not heard a single story about the mafia from any expat in Italy. Not saying they aren't still there, but I think your perception of it is not accurate. If you have some statistics or data on it, I'd love to see.

@@traveltirement I’ve heard from a few xpats that when you set up a business or renovate a property the mafia (primarily in the south) will find out. Nobody will share how much they “take” for safety and I’m sure there is no set rate. LOL.

Delicious to eat, not for bathroom fixtures! 😂