For those that are already living in Italy, we know how great life here can be but the last thing we want to see is people who had high hopes of their dream home in Italy quickly turn nasty because they inadequately prepared.

So we have interviewed a financial planner for people moving to Italy, Gareth Horsfall, who’s job everytday is to help you avoid all the mistakes, traps and nuances of Italian financial bureaucracy. He manages that on an ongoing basis for his clients and has one simple rule that he lives by: whether you are buying a holiday home or buying a property with a view to moving to Italy, plan everything!

Here are some of the top things he hear either because you have been given bad advice or you were not aware of your fiscal responsibilities.

1. Get residency in Italy when you buy your property (you can register within 18 months of purchase) because you pay less VAT (IVA) on the purchase (typically 2% as a resident rather than 9% as a non-resident) and you can buy a car.

This sounds like a good idea, why not save money on your property purchase and buy a car in Italy for your time in the country? However, the fiscal implications of this pearl of wisdom are often not fully explained.

If you are intending on moving to Italy to live permanently in your property then you WILL need to register as resident and should be able to benefit from the VAT discount if you buy as a ‘Prima Casa’. However, if you are buying your property with a view to spending your holidays or extended periods (no longer than 183 days p.a) in it then you should not be registering as a resident.

Once you register as a resident you are making a signed statement to say that you are going to be spending more than 183 days p.a in the country (regardless of whether you do or don’t) and so your fiscal residency will also move to Italy.
This means you will be required to declare your full financial affairs to the Italian tax authority each year (Agenzia delle Entrate ADE), and pay tax.

Up until the 1st Jan 2024, there were, and still are, many cases of people who have dual residency but are not making any fiscal declaration to the Italian tax authority. This was never correct but gaps in the law meant that it could be exploited and ‘fiscal’ residency in Italy could be avoided by maintaining your
tax affairs in another country.

From 2024, the definitions of residency have been modified and it provides an opening for the ADE to demand annual tax declarations from anyone registered as a resident in Italy, should they choose to do so.

Just follow the simple rule that if you are not intending on moving to live in your Italian dream home permanently, then plan to pay the extra VAT and have sweet Italian dreams!

2. “Why should I have to pay the Italians? I have paid tax on that in my home country already!“

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