Italy: Economic Residency & Citizenship-By-Investment

In recent decades, there has been a substantial increase in the mobility of high-net-worth individuals (HNWIs) due to a range of factors including globalisation, the desire for political and economic safe havens, geopolitical risk avoidance, climate change, and a trend for geographic investment diversity.

Nowadays, many countries compete for human and financial capital through economic residency and citizenship-by-investment programmes, which allow people with liquid investment funds to acquire residency and/or citizenship rights in a country other than their usual domicile.

In return, these types of programmes provide a significant financial investment in the domestic economies of the administering countries.

The Italian Government encourages foreign investment through entry visas for high-net-worth individuals. So why is Italy an attractive option for globally mobile talent and capital?

Types Of Visas For HNWIs In Italy

Unlike EU citizens or nationals coming from countries within the Schengen area (who need not obtain any residence visa in order to immigrate to Italy), non-EU citizens are required to apply for an entry visa if their intention is to move to Italy and obtain a residence permit.

In this regard, the most common entry visas considered by HNWIs are the ‘elective residence visa’ and the ‘investor visa for Italy’.

These types of visas can be distinguished by the fact that they are not subject to annual entry limits (migration quotas) provided for by the Italian legislation.

The Elective Residence Visa

The elective residence visa allows entry for a long stay (more than 90 days) to non-EU citizens who intend to settle in Italy and can support themselves independently, without carrying out any work activity.

Non-EU citizens who intend to request the issuance of the elective residence visa should prove:

• The availability of a dwelling (not necessarily owned) to be elected as residence in Italy.
• And the possession of stable income that can be reasonably expected to be available also in the future. Such financial means may come from annuities (eg pensions), ownership of real estate properties or rights, business or sources other than employment.

The assessment of the requirements for the issuance of the elective residence visa is conducted by the Italian consular and diplomatic authorities of the applicant’s country of residence and, if it is positive, the visa is issued within 90 days from the application, provided that all the necessary documents are complete.

The elective residence visa (lasting one year) can be used by the applicant to move to Italy, and once arrived, to file a request for obtaining a residence permit with the competent police office. The residence permit (which lasts for a maximum of two years and is renewable) is issued by the competent local authorities in about three months.

The Investor Visa For Italy                 

The investor visa for Italy (which was introduced by the 2017 Italian Budget Law) is regulated by article 26-bis of the Consolidated Law on Immigration (Legislative Decree 25 July 1998, n. 286). It is a special entry visa for non-EU citizens who intend to make a significant investment in Italy.

In particular, the applicant is required to carry out either:

• An investment of at least EUR 2 million in government bonds issued by the Italian Republic.

• Or an investment of at least EUR 500,000 in stakes or shares of a (listed or unlisted) joint-stock company incorporated, resident and operating in Italy.

• Or an investment of at least EUR 250,000 in stakes or shares of an innovative start-up company included in the official list available on the website of the Italian Chambers of Commerce.

• Or a philanthropic donation of at least EUR 1 million in support of an Italian public-interest project in the fields of culture, education, immigration management, scientific research, preservation of cultural and natural heritage.

The process for the issuance of this type of visa is centralised with a single contact point between applicants and the Italian State, and it is carried out mainly online through a dedicated IT platform. The result is a significant reduction in migration processing time.

As a first step, a certificate of no impediment to the issuing of an investor visa should be submitted. At this stage, the applicant must select only one of the permitted types of investment to implement (also describing the main characteristics of the project) and, simultaneously, demonstrate the ownership of the amount to be allocated to the investment, the transferability and licit origin of the financial resources intended to be used for the investment, and the absence of final criminal convictions and pending charges. The consent from the recipients of the investment is also requested, unless the target company of the investment is listed on a regulated market.

If the result of the evaluation is positive, a certificate of no impediment to an investor visa is issued within 30 days of the application submission. Thus, the recipient of such certificate – who demonstrates to have sufficient resources to support themselves during their stay in Italy – may apply for an investor visa in the following six months at the competent Embassy or Consulate of their country of residence. The latter carries out all the necessary verification and issues a two-year investor visa.

Within this period, the investor visa holder shall enter Italy and request an investor residence permit. Within three months of entry into Italy, the investor visa holder must make the investment they have committed to, and maintain the original investment for the entire duration of the residence permit (which is valid for two years from the date of entry into Italy and renewable for further three-year periods), otherwise the permit will be revoked.

The ‘Flat Tax’ Regime Pursuant To Article 24-bis Of The Consolidated Act On Income Taxes (So-called ‘TUIR’ – Presidential Decree 917/1986)

The investor visa holders and the elective residence visa holders transferring their tax residence in Italy can apply a substitute flat tax equal to EUR 200,000 for each fiscal year in relation to non-Italian sourced income (thus benefitting from an exemption for non‐Italian sourced income from ordinary taxation), to the extent that they have not been resident in Italy for tax purposes for at least nine years of the ten years preceding the period of validity of the option. The flat tax regime – in contrast to other similar preferential regimes (eg UK, Malta, etc) – does not foresee any adverse fiscal burden in case of repatriation of foreign income into the Italian domestic jurisdiction, since the current legislation does not trigger income taxation on remittance for income sourced abroad if and when brought into Italy (no remittance mechanism).

The election for the application of the flat tax regime (which is granted for a maximum of 15 years) may apply to income earned in all foreign countries, or in selected countries based on a discretionary ‘cherry-picking’ approach managed by the relevant foreign taxpayer. The election also grants the exemption from reporting obligations in relation to foreign assets held abroad (so-called ‘monitoraggio fiscale), the exemption from the payment of Italian wealth taxes on real estate properties and financial assets held abroad (so-called ‘IVIE’ and ‘IVAFE’), and the exemption of rights and properties held abroad from Italian inheritance and gift tax in the years of application of the flat tax regime.

However, in an anti-abusive perspective of the regime in question, the flat tax does not cover capital gains on non‐Italian substantial participations (ie those exceeding 20 per cent of voting rights or 25 per cent of the net equity, reduced to two per cent and five per cent for listed equities) earned in the first five years of validity of the election, which will be subject to ordinary taxation in Italy. With a view to avoiding harmful tax competition within the European Union, this provision is aimed at preventing individuals who hold a non-Italian substantial participation – which is likely to produce a considerable capital gain – from transferring their tax residence to Italy for the sole purpose of enjoying the flat tax regime.

The flat tax regime can be extended to accompanying relatives by paying an additional EUR 25,000 substitute tax, provided that the same requirements applicable to the electing taxpayer are met.

In conclusion, Italy presents a compelling opportunity for globally mobile talent and capital through its various visa programs. The elective residence visa and the investor visa for Italy offer attractive options for high-net-worth individuals seeking to relocate and invest in the country. These visas not only facilitate entry and residency but also provide significant benefits, such as the flat tax regime, which offers substantial tax advantages for non-Italian sourced income. By encouraging foreign investment and providing a favourable environment for HNWIs, Italy continues to strengthen its position as a desirable destination for global talent and capital.