Do you dream of living in picturesque Italy, enjoying the Mediterranean lifestyle and rich cultural heritage, but are concerned about the high tax burden in your home country? If you have a high income and are looking for ways to minimize your tax burden, there is a legal and attractive solution for you. By combining residence in Italy with a corporate structure in Malta, you can benefit from significant tax advantages while enjoying the comforts of Italian life. You can read more about this in this article.
Why choose Italy-Malta?
By incorporating your company in Malta and relocating to Italy, you can benefit from Malta’s advantageous corporate tax system while enjoying Italy’s special tax regime for foreigners. This unique combination allows you to reduce your overall tax rate on company profits to up to 5%.
Advantages of the Italy-Malta model summarized
- Significant tax reduction: Operate within the EU and drastically reduce your corporate taxes.
- Enjoy La Dolce Vita: experience the lifestyle, cuisine and culture that only Italy can offer.
- Peace of mind and security: Stay fully compliant with EU laws and regulations.
Who is this solution for?
If you are an entrepreneur, freelancer or wealthy individual looking for a legal way to optimize your taxes in Italy, then this solution is tailor-made for you.
Emigration to Italy
Italy attracts many emigrants year after year – and for good reason. The country not only offers impressive landscapes but also a high quality of life that is remarkable in many respects.
Mediterranean climate and scenic diversity
Italy enjoys a pleasant Mediterranean climate with warm summers and mild winters. From the snow-capped Alps in the north to the rolling hills of Tuscany and the beautiful beaches on the coast, Italy offers an impressive variety of landscapes that will delight any nature lover.
Rich cultural heritage
Italy’s cultural heritage is known worldwide. With historic cities such as Rome, Florence, and Venice, countless museums and art galleries, and an abundance of UNESCO World Heritage Sites, Italy offers a wealth of cultural treasures. Italian art, architecture and history can be felt in every corner of the country and make life here particularly enriching.
Culinary delights
Italian cuisine is world-famous and an important part of everyday life in Italy. Whether you enjoy pizza in Naples, pasta in Rome, or fresh fish on the coast – the culinary possibilities are almost endless. Italians attach great importance to high-quality, fresh ingredients and the preparation of food, which makes every meal a pleasure.
Lifestyle and community
Italians are known for their hospitality and joie de vivre. Community plays a central role in everyday life in Italy, and it is customary to spend time with family and friends, whether over a meal together or on festive occasions. This strong social bond contributes significantly to the high quality of life in Italy.
Healthcare and education
Italy has a well-developed healthcare system that ensures high-quality medical care. The education system is also well-developed, with many schools and universities offering a wide range of educational programs.
Location advantages in Europe
Italy is located in the heart of Europe and offers excellent connections to other European countries. This not only facilitates business travel, but also access to a larger market and a variety of cultural and economic opportunities.
Taxes in Italy: A challenge for the wealthy
While Italy offers many attractive aspects for emigrants, there is one significant disadvantage that deters many potential immigrants: the high tax burden. Italy is one of the countries with the highest tax rates in Europe, which can represent a considerable financial burden, particularly for wealthy individuals and entrepreneurs.
High income tax
Income tax in Italy is progressive and can be as high as 43% for top earners. These high tax rates can significantly restrict financial freedom and make effective tax planning essential.
Corporate taxation
Italian companies are also subject to high tax rates. Corporation tax is 24%, plus a regional corporate tax (IRAP) of around 3.9%. These burdens quickly add up and can have a significant impact on a company’s profitability.
Property and capital gains tax
In addition to income tax, wealthy individuals must also pay wealth tax and capital gains tax. Capital gains are taxed at up to 26% in Italy, which is particularly important for investors and entrepreneurs.
Social security contributions
In addition to taxes, employees and employers in Italy have to pay high social security contributions, which can also account for a significant proportion of income. These levies serve to finance the social security system and place an additional burden on net income.
The solution: Non Dom Status
What is the Non Dom status?
The term “non-dom” stands for “non-domiciled”, which means that a person is resident for tax purposes in a particular country but is not permanently domiciled there. Many countries, including Italy, offer special tax regulations for non-doms. These schemes aim to attract wealthy foreigners by offering them substantial tax breaks on income earned outside their country of residence.
Since a change in the Italian tax system in 2017, the country has offered a non-dom regime, similar to Malta, Ireland, and the UK. This enables well-off emigrants to significantly reduce their tax burden by paying a lump-sum tax of 100,000 euros per year for up to 15 years. This increases the flat-rate tax by 25,000 euros per family member. With the Italian flat-rate tax system, there is no tax on foreign income from business activities, rents, interest, and capital gains – even if these are transferred to Italy and spent there. In addition, Italian gift and inheritance tax no longer apply.
The Italy-Malta solution: a combination that packs a punch
Italy is not only known for its relaxed, southern mentality, good wine and rich cultural history, but also offers considerable advantages from a tax perspective. Despite these attractive opportunities, many people do not yet have Italy on their radar as a tax haven. However, this could soon change, as Italy is a real tax haven within the EU, especially for high-net-worth individuals.
The second component of the solution is to establish a corporate structure in Malta. Malta offers an extremely favorable corporation tax regime: although Maltese corporations are subject to corporation tax of 35%, foreign shareholders receive 80% of the tax paid back under a special tax regime. This results in an effective tax rate of only 5%.
Requirements for the Italy-Malta solution
For this dual solution to work, however, a number of conditions must be met:
- Operating company in Malta: The company in Malta must be an operating company with a proper permanent establishment – not a letterbox company.
- Residence in Italy: You must actually move your residence to Italy. A simple postal address is not sufficient.
Difference between the non-dom system in Italy and other countries
No tax is levied on foreign income in Italy. The Italian non-dom system is therefore particularly suitable for persons/entrepreneurs who generate foreign income. As the flat-rate tax is relatively high at EUR 100,000, this combination is particularly interesting for entrepreneurs if turnover exceeds EUR 2.5 million.
Who is Italy suitable for
As already described, the Italy-Malta solution makes sense for high-earning individuals and companies. It is also important that they are actually resident in Italy and that their company does not add value in your home country through physical stores, for example. Of course, Malta and Italy must appeal to you, and you should like the lifestyle of the southern countries.
Conclusion
For high-earning individuals who wish to live in Italy and minimize their tax burden, the combination of a residence in Italy with a corporate structure in Malta offers considerable advantages. This strategy enables an effective tax rate of up to 5% on corporate profits. Italy offers a high quality of life, and its non-dom status allows tax relief on foreign income. This makes the Italy-Malta solution particularly attractive for entrepreneurs, freelancers and wealthy individuals.
