Financial Advice for Expats in Italy
Here are 5 financial advice tips to adapt, survive and thrive as an expat in Italy!
So you are moving to Italy, a fantastic location to enjoy life, with its stunning natural beauty, unique modern and ancient art and world-famous design and food culture. The scope of travel and lifestyle experiences in Italy are some of the best you will find in the world.
And what about moving ahead financially? The administration? How can you find your way around the myriad of financial and taxation laws and regulations in Italy and stay positive?
Here are 5 tips to help you quickly grasp what’s important to know, regarding financial advice for expats in Italy.
Tip number 1: Plan your move from a financial perspective before you leave. Ideally, the best financial advice for expats in Italy is to understand the tax and financial environment before you arrive. Knowing how Italy will treat your assets and income before you arrive, will help you to consider the financial impact of your move, and potentially help you and your advisers determine if there are appropriate ways in which you could change or restructure your financial situation (if required), before you arrive to live in Italy permanently. Usually you will need to contact an adviser who is based in Italy and knows the laws and the environment well.
Tip number 2: Take your move as an opportunity to review or create your financial goals. How long has it been since you assessed whether you are on track to meet your long term financial goals? Moving country and starting afresh is a great opportunity to ask yourself questions like, what are my longer term goals? or, how and when will I know or feel like I am financially secure? Have you considered whether you will have the funds to live comfortably the day you retire from work? If you have lived life as an expat in other countries you may have accumulated pension and personal savings in different countries and different currencies. Whilst you are planning your move and considering life as an expat in Italy, take the opportunity to review your overall savings and pension situation, and consider discussing your plans and longer term goals with an independent adviser you feel you can trust.
Tip Number 3: Understand your tax residency status in Italy. An individual is considered resident for tax purposes in Italy if for most of the calendar year (183 days) they are resident or domiciled in the country; or if you are simply registered with the Registry of the Resident Population (local Anagrafe office). In addition, the authorities will treat you as tax-resident in the event you have your ‘habitual abode’ or essentially your principal place of business and social and family interests in Italy. If you are unsure of your residency or the impacts on your overall financial situation it will pay to seek advice ideally before you arrive or in any case seek assistance from a tax or finance professional in Italy. If you are tax resident in Italy then essentially you are taxable in Italy on your worldwide income and assets, with few exceptions. However despite what may appear as strict or onerous regulations, there is an opportunity to review or implement tax planning strategies and ways of treating your assets and income, earned either in Italy or abroad.
Tip Number 4: Ensure your financial adviser is qualified, independent and respected, and has a license to operate in Italy. Now if you are dealing with the bank, then this should all be ok, right ? Well ….. Consider if your financial advice is linked to a specific bank or financial institution. If it is, then you should consider the range of products and solutions being offered are likely to be limited, and recommendations you receive will necessarily be tailored to solutions the bank offers, and often what the bank itself produces. A professional financial adviser will first seek to fully understand your current situation, plans and goals for the future; these should be documented and agreed, and a planning process fully explained to you. When you are not dealing with the bank for advice about planning and investments, ensure your adviser is registered in Italy and his/her company at least has a registered Italian branch presence in Italy – this provides some assurance that your adviser is subject to Italian reporting guidelines, and has satisfied Italian authorities of the company’s license to operate in Europe. Do you feel as though your adviser has your best interests at heart? Is your adviser a member of local organisations in the community, or did you perhaps just receive a phonecall or email from someone you barely know who is offering to save you tax, transfer your pension or make you money? Trust your instincts. Does your adviser have a professional network around them including a commercialista, lawyer and other finance professionals that can support your plans and provide assistance?
Tip number 5: Don’t fall for an investment scam or the promise of high returns! Expats moving to a new country can become unwitting targets of scammers and unregistered advisers, who lure in those looking for a quick or large return on their money. If someone is offering you a promise or guarantee of, for example, suggestions of 10% growth every year (or more), then this should be a red flag to you – and is likely a scheme that is worthy of a lot more investigation. It’s important to remember that high returns usually accompany high-risk! So be prepared to risk losing your investments in high-return schemes. Recent scams being promoted that have caught the attention of authorities include investing in diamonds, fine wines and carbon credits.
If you are relocating with your employer to Italy then they may provide some financial assistance (beyond simply setting up a bank account) or a referral to a local specialist who can help. However, the financial advice you seek should consider all the same elements of a good financial plan that you would find in your own country. That is, it ought to provide pension planning and investment advice, education-savings strategies if required, family insurances, and an ongoing financial review. Financial advice for expats in Italy may include advice about transferring your home pension abroad (where available), guidance about inheritance taxes, mortgages, foreign currency transfers, and even specialist advice for unique industries like the yachting community.