CBI St. Kitts + Taxes

[karishi]

The plan here is to f**k you in the long term: if you buy two‌ houses and then rent them, good luck proving in 5 or 10 years that you‍ are not tax resident in Italy.
You will be of course under scrutiny for a⁠ long time, so just be careful in the long run. Living in those parts of⁤ italy might be ok from april to november, but it's kind of suicide for the⁣ remaining period: if you make 200k a year, Dubai would be a much wiser choice⁢ IMHO, you have much more fun living in Dubai with the money rather than living︀ in Palermo. Also, a much safer life. In any case it's doable.

BTW the reason︁ it's not advertised it's the same reason for which your home country didn't officially advertise︂ the fact that Italian retiree could go live in portugal without paying any taxes on︃ their pension: it's against EU rules. They didn't advertise it officially but they did big︄ campaigns on the internet. The reason is obvious, in italy a freelancer pays around 60%︅ of it's revenue in taxes, if he plays by the rules, and seeing people make︆ 200k and pay little, well, it's not very popular.

 

[boy20hki]

Did you have direct experience with the Italy freelance visa program? Are you Italian?

Last time︆ I read about this was that it can be difficult to really get the visa,︇ the Italian gov have a yearly cap of approval visa, so its like one better︈ work in field that Italy lacks labor (like tech, engineer,...) and/or show that he/she can︉ get big and employee Italian staff and/or buy property in Italy. Seem quite some hoop︊ to get the visa! (Source:



https://www.reddit.com/r/ItalyExpat/comments/118cms6
)

The way I see it, the OP bought︋ houses there and if/when after 10 years of having favorable tax rate, he can apply︌ for Italian citizenship, and after the passport is done, sell off those houses and move︍ to some tax heaven to live and not have to worry about Italian tax. But︎ also In theory, if one non-EU person can take advantage of this program in the️ first 5 years and during that time find a local Italian there to marry, he/she‌ can apply for citizenship after 2 years of marriage. Seem like a shortest route to‍ get Italian citizenship & EU passport for some people, which is an advantage of choosing⁠ Italy over Dubai.

 

[karishi]

I am from Italy, I have︇ 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 which︉ has 4 houses in london has applied for it, came back to italy, had a︊ child, they are gouing to f**k him hard in 10 years, as soon as they︋ discover the houses in London.
What they want you to do is exactly what you︌ are suggesting: come here young and get married. After you are married with a girl︍ 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 resident️ 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 a︀ long time, you fall in love, you make friends, going away in 5 years is︁ not going to be easy, so you will end up with the choice of either︂ paing up 60% of your income in taxes or trying to find sneaky ways not︃ to pay them, and that will end up bad. And 200k a year puts you︄ 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.︆

 

[eRabbit]

Hi!
Yes! That's about right! This year I︇ think I'll be paying about €4000 of social security and some €3500+ of taxes! Didn't︈ 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 about︊ Georgia, but the quality of life you get in Sardinia, weather, food, etc., are absolutely︋ outstanding. I'm from another EU country, so in my case I think I can get︌ citizenship after 3 or 5 years max!

 

[boy20hki]

Interesting, thanks for providing️ 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, then︀ 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 having︂ kids. For spouse, ether convince him/her to move abroad as well OR need to file︃ for divorce successfully (need an amicable divorce here) to cut all possible familial tie to︄ Italy
+deregister/close down any company/business one owns that is registered in Italy
+move away from︅ Italy and never visit Italy for more than 183 days
+establish tax residency in the︆ new country legally

It looks like you really need to do things that are often︇ mandatory to renounce citizenship, just to avoid being regarded as tax resident in Italy. So︈ more nuanced details to be aware of! The 183 days rule Is often just one︉ factor, though most common one but in this case, Italy has more ways to do︊ this e.g. they consider owning property as a proof of "having residence in Italy", and︋ also having family tie (kid, spouse) who are still residing in Italy as evidence to︌ classify someone to be Italy tax resident.

If one is identified as being a tax︍ resident in Italy (by meeting ANY of these 3 criteria defined by PWC) then he/she︎ has to pay all foreign income & wealth income from foreign assets. I guess this️ 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.⁢

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 to︀ me

Here is detail for Gerogia: so 3% if exceeding ithat, but 2 years of exceeding means︋ losing status and has to pay 20% income tax as usual

+PIT for Individual Entrepreneur︌ (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 apply︎ (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.

 

[karishi]

So getting out of Italy once︀ you are in and declaring 200k euro a Year requires exactly what you have detailed.︁ What I am trying to say is that lifes gets in the way of your︂ fiscal priorities, and depending what path you want your life to take and what age︃ you are, you should reflect on the various possibilities, also depending on how much money︄ you make. I n general Italy is the worst of the worst, because if you︅ end up having to play by the rules, you pay an insane amount of taxes︆ and get nothing back, only schooling is decent in some parts of italy.
In any︇ case I think that if you are young and want to have fun, Dubai is︈ the best choice: you exit your country, take residency in Dubai, then you can travel︉ where you wish. Stay 4 months in Italy and 4 months in Ibiza and 4︊ months in Dubai and you have no problems. You put away lots of money for︋ a few years and then decide what to do.
If you want to take a︌ EU passport, I would rather go to Greece than Italy.
In any case the message︍ is "plan aheaed": if the offer is too good to be true, it's because they︎ will f**k you at some point, especially in italy. Goingo to a welfare state and️ declaring 200k of income puts yourself under a lot of scrutiny: much better to have‌ a dubai set up and then just receive money from dubai to Italy. It's a‍ more expensive setup, but you only show italy some money and fly under the radar.⁠

 

[European]

@eRabbit
How do you manage to pay €4K of social︀ security on income of €200K?
From what I read here (official INPS site):
Dettaglio di︁ Circolari, Messaggi e Normativa
and here:
https://taxsummaries.pwc.com/italy/...y contributions for,105,014 for the year 2022
the charge︂ for social security for a freelance should be around 25% of income with a cap︃ of €113,520. So around €28K for a €200K income
Is that info not accurate or︄ not applicable to your case?

 

[boy20hki]

Sorry to say but honestly your post is not really⁢ that useful to most people here who are not familiar with this visa program

Could you really just cite the text area in the source and paste it here? The︀ webpages you cited have a lot of different categories and tax types, how can anyone︁ easily know where to look at? One site is non English actually.

Also as I︂ already wrote in my previous post in the other thread, your calculation is not clearly︃ explained. Can you write down how you calculate the number (28k) so all of us︄ could understand? "25% of income of 200k" means 40k?

In previous thread you wrote with︅ someone about 30k social security contribution with 1M revenue. Here you said 28k for 200k︆ revenue. Just does not make sense with same SS contribution fee for 200k and 1M︇ revenue. So your whole number and calculation does not look reliable.

As I said, the︈ one with direct experience is more worthwhile to see than just a random number pulled︉ from website.

 

[boy20hki]

Basically it says there is a flat 15%︋ (for taxable income up to 65k, this is on the taxable income after the 70%/90%︌ deduction, not the total income) + 26% inps aka 41% on the taxable amount (10%︍ or 30% of total income). So if one moves to the South, the effective rate︎ is only 4.1% of total income, roughly the near the same as the 3.9% rate️ I calculated above.

This case below is about someone who has 80k total income, and‌ with 90% deduction the taxable income is only 10% of that (8k) which is less‍ than 65k, hence 4.1% rate
With eRabbit case who has 180-190k total come, and with⁠ 90% deduction the taxable income is only 10% of that (18-19k) which is still less⁤ than 65k, hence 4.1% rate

In that same Reddit thread someone else mentioned also that⁣ he/she paid 300€/mo for social security payment, so this sounds like in line with the⁢ amount eRabbit pays (3k, 4k per year)

Overall this seems to works like I expect...The︀ real social security contribution amount is in practice calculated based on the deducted/reduced income, not︁ the original total income.

 

[European]

1. It's not a visa program; it's a special tax regime. If you're︅ not already allowed to live/work in Italy legally, getting a visa is a different procedure.︆
2. Just spend 2 mins reading the English link; it says it clearly. The︇ very first section is on Social Security contributions. For self-employed, the minimum rates on gross︈ income are 24%-26%. It also states very clearly that the gross income for the calculation︉ is CAPPED, as I mentioned previously, at €113,520. So if you make €200K:
25%*€113,520
if you make €1M gross income:
25%*€113,520
3. The link in Italian provides the same info︊ in paragraphs 4 and 7. INPS is the government agency in charge of social security︋ so hardly random numbers.

4. My question was addressed to @eRabbit, who will understand︌ all this and will be able to explain whether this is not applicable in their︍ case

 

[karishi]

There is a new special taxation regime for people who⁢ were not resident in italy. You basically pay 0 taxes for 5 years. There is︀ another regime which caps your taxes at 100k for the super wealthy

I think you are right on INPS, because only IRPEF is affected by the︋ tax regime

 

[European]

Thanks. I was⁠ asking in particular about the €4K in social security contributions, not the income tax.

Yes, that is what I've read pretty much everywhere too.⁣ But I have not seen what the actual law says

 

[European]

It looks like the "regime forfettario" (what gives you that flat 15%) is not compatible with︅ the lavoratori impatriati regime, as confimed by the tax office:
Fisco agevolato per gli impatriati︆ e regime forfetario sono
In any case, I have spoken to a couple of Italian︇ tax advisors and they all said that the INPS contributions should theoretically be calculated on︈ all your income (capped at €113K) and not only on 10%. However, they also said︉ that the law is ambiguous.
Online I have also found both versions, with a few︊ sites stating that the INPS has not published clear guidance on this.
So I wonder︋ what the right answer is. Perhaps, given the lack of clear guidance, some people are︌ paying on the 10% and the INPS has not complained (or not noticed) yet?

@eRabbit are you around to help clarify?