Christian Gulizzi is a cross-border tax advisor licensed in the United States as a CPA, in Germany as a Steuerberater, and in Italy as a Dottore Commercialista. He was born to an Italian and German parent, grew up navigating cross-border complexity, and built his entire academic and professional career around it. He currently lives and works from the Italian Riviera.

This episode covers:

• The biggest misconception Americans have about taxes when moving to Europe
• Why leaving money in US accounts does not protect it from European tax authorities
• The 183-day rule and why it does not mean what most people think
• How German residency can begin on day one simply by having a home there
• Why a US LLC provides no protection from the tax authority where you are physically working
• Italy's €300,000 foreign flat tax for high net worth individuals
• The 7% flat tax for retirees moving to southern Italian towns under 30,000 inhabitants
• The Impatriati regime: up to 90% income exemption for workers and researchers
• The Forfettario regime: 5% flat tax for self-employed people earning under €85,000
• Why German courts have blocked tax incentive regimes as unconstitutional
• Italy vs. Germany inheritance tax: €1 million exemption at 4% vs. €400,000 at 19-33%
• Christian's single most important piece of advice before any move to Europe
• Why pre-immigration planning is critical: fixing mistakes after residency is almost impossible

We discuss the specific misconceptions that create the most expensive problems for Americans moving abroad, the legal incentive regimes Italy offers that most people never find in time to use, and why the country you choose to move to is itself a financial decision.

Resources

• Connect with Christian on LinkedIn
• Subscribe to the Passport to Wealth newsletter: passporttowealth.com/contact
• Find a vetted cross-border advisor: passporttowealth.com/directory
• Are you a qualified professional serving US expats in Europe? Apply to passporttowealth.com/join

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Welcome back to Passport to Wealth, my name is Arielle Tucker and I'm your host.

Today we're going to be talking about moving abroad, which sounds really exciting until you realize your tech situation just got a lot more complicated.

Today's guest, Christian Gulizzi is a cross-border tax advisor, licensed in the United States, Germany and Italy.

He helps expats navigate exactly that life abroad.

If you're living abroad or thinking about it, this is what you need to know before it gets really expensive.

Christian, thank you so much for joining us today.

Hello Arielle, thanks for having me on your podcast. Thanks for an introduction.

Okay Christian, are you sitting in Italy today? Where in the world are you?

Yes, I'm in Italy. It's in a very small beach town along the Italian Riviera, very close to Monaco and Cote d'Azurio.

So it's been very nice lately here already feeling summery.

Yes, and that's where I'm currently based with my wife and with most of Italy.

I ask because you guys are always jet setting around the world.

So it's good to know that today here in Italy.

But I ask because you are licensed in so many places, you guys are always traveling.

So you're licensed in the US, you're licensed in Germany and Italy, which is really unique.

I don't know a lot of advisors who have that many designations.

And honestly, I think when I first met you, I found it so intimidating that you were able to master so much

because here I am like, oh my gosh, trying to navigate one or two countries.

How did you navigate all those different licenses?

Yeah, it hasn't been easy.

It's a process that it started a long time ago.

I would even go back to my childhood.

I was born and raised by the Italian and German parents.

So I've been always exposed since I was a child to the cross-border aspects of life,

not just the taxes and finances and stuff, but really just on a personal level.

And I recognized that fairly early when I was going to school,

et cetera, that I wanted to explore aspects in other countries.

I just didn't want to just accept how it is in one country.

I wanted to see, okay, how do things work in other countries and what are the challenges?

So I decided to make this my centerpiece of the professional and academic career.

So when I chose my university, I was looking for an international university

that would expose me to all the languages that I speak, Italian, German, English.

And so I decided to go to Bolzano, which is a town in the northeast part of Italy,

which is a bilingual region speaking Italian and German.

And I was doing my studies in all three languages.

So I was looking for an economics or business subject that would even enhance this aspect

of international and cross-border issues.

And I identified that taxes would be a good field where the challenge really lies

in the cross-border aspects of every life transactions.

So that's when I started to plan and say, okay, I want to be licensed.

At that time, it was Germany because I was finalizing my studies in Germany.

He said, okay, I want to do the Stojabarata,

which is the certified licensed tax advisor in Germany.

And I started working for accounting firms there and looking to be placed

in international tax departments so that I could be exposed to this.

There was actually an even earlier moment I recognized international taxes

would be my field, which was within my family.

My dad was investing in a real estate project in France back in the days.

And he asked for my help because he realized, oh, I have an apartment in France,

which I'm renting out.

I may have to file taxes there.

Can you help me look at this?

And I didn't even know what taxes were back then.

And I started researching online and I helped him out.

I even ended up filing the return myself.

And those were the very early stages of me touching with the tax world.

And then I did also, already when I went to high school,

I did short internships and I was lucky to have someone in the family

who was also a tax consultant and would have given me the opportunity to do an internship there.

So that's when my decision fell, okay, I want to become an international tax advisor.

And I noticed the importance of being licensed.

It's not just, you know, hearing or being an expert or having read something.

I understood that being licensed is a highly valuable feature.

So I said, okay, if I want to be working in these countries,

Italy and Germany, I need to be licensed.

But then I added the US aspect to it as well.

You mentioned I'm also certified in the US as a CPA because as I said, I want to really.

Which is like a very hard exam.

I just have to interrupt you and say that is a challenging exam.

So to pass the CPA as a German Italian accountant,

I mean, that's just so massively impressive to me.

I just have to celebrate that a little bit.

Yeah, I mean, we're certainly going to talk about many differences between these tax systems today.

But even the tax licenses or the professional license that you need are very different.

But the US one is focusing on many aspects of accounting and corporate accounting

and financial statements and stuff like that.

The German tax advisor exam in Italian, they focus more on legal aspects.

So less practical aspects, but more legal.

They let you study the law.

And so everyone has its complexity to be fairly transparent and honest.

From my perspective, the US CPA was easier than the German just because of this aspect

that the Germans let you go really in the very exceptions of the law.

You will sit three days in a row and exam.

You have to write down each answer to a complex case and you need to cite relevant law,

regulations, no exceptions, make a calculations.

So in the US, it's more straightforward.

It doesn't mean it's more complex, but it's a different way of preparing yourself for an exam.

But all three of them have their complexities.

And I know with the US CPA, you have to maintain ongoing education requirements for that every year.

It's at the same in Italy and in Germany as well.

It's the very same, absolutely yes.

And that's what keeps me busy.

I would say one fourth of the year going to conferences and taking courses because the thing

that is a bit disadvantages that I think that regulators should take into account for cases

where you are certified in multiple jurisdictions is that they don't necessarily recognize

what you're doing in the other countries.

So if I go to a conference to the US, that will only count for my CPA.

If I go to a conference in Italy, that will only count for my Italian CPA.

So basically, you have to multiply times three, all of the minimum credits that I need to take.

So it takes a lot of time, but it's part of the job.

I mean, this job that I'm doing is really lifelong learning.

You know, things change so quickly, especially in Italy.

You get a new law every year and recently in the US, you've had two major tax laws.

So things change and I need to be really up to date.

So it's a challenge, but it's a challenge that I have signed up for, you know,

because as I said, it's something that I've been planning since the very beginning of my academic career.

Continue and make it grow at a professional personal level.

Yeah, wonderful.

I'm curious from your perspective, what is some of the bigger misconceptions that Americans have about taxes when they move to Europe?

Do you think they assume it will be easier?

It's harder, more complex.

Like what are the misconceptions that you see?

Well, you may laugh at this.

The most common misconception that I see when I hear when I talk to prospective clients and existing clients,

they really have sometimes this conception that if they leave all of their assets in the US

and they don't move the money across the Atlantic Ocean,

that maybe they just need to pay taxes in the US and they need to do nothing in Italy or Germany or in Europe, where they move.

So this, I think, is one of the funniest on the one side,

but also one of the most worrying ones because it shows that many people may come over unprepared for the reality

that moving to another country means paying and recording taxes to another country most of the time.

So I would say that that's the biggest misconception I see and I have in every conversation that once I tell clients

you need to pay taxes on this major IRA distribution, then they're going to say,

well, wait a second, but I've earned and accumulated this money while I was living in the US.

I haven't touched this money. This money is sitting in my brokerage account in the US.

I'm only taking out some money and I'm not using it in Italy.

I'm using it to cover the expenses of my home that I still have in America.

So these are the major misconceptions without even needing to grow more in depth into than the legal specifics.

That's just really a high level demonstration or example.

I'm glad you brought that one up because we see that all the time, right?

I have this is another common one. You would give a great example with assets.

So your taxable brokerage account, your retirement accounts, all of those US assets in the US,

but if you establish residency in Europe, oftentimes that's getting picked up unless you're under some special tax regime

or provision, which you have planned out and are very aware of going into it, right?

The other thing that I see people coming into Europe with, they say,

Oh, well, I have a US LLC and I'm billing through my US LLC and all my clients are in the US and my LLC is in the US.

So therefore I have no income in this foreign country and it's like, no, that's not how it works.

Where you sit every day, right?

Where you're resident, that's what is really the most important thing to consider when filing your taxes

in most European countries, at least as far as I'm aware of, they are picking up worldwide income, worldwide assets.

They don't care which currency or where your account is or who's paying you where you're sitting is what actually matters.

That is absolutely correct.

And then it's not even just about residency.

You know, what you're talking about with worldwide taxation is usually triggered once you satisfy the residency concept

in any specific country, be it Italy or Germany, which is famously written like as the 183 days rule.

But many US citizens may still face taxation in a country where they're staying three or four months,

just because they may have income sourced to that country.

I mean, let's take a young digital nomads who comes to Italy for four months and is self-employed.

There is still a risk and an analysis needed because from day one, the income he made to be generating while on Italian soil,

may be considered Italian source income and requiring the filing and paying of taxes.

I mean, it's not going to be on the worldwide income, but still, it's not just about residency.

Any American who decides to not, you know, move permanently to a place but just spent half of the years,

just make it barely under 183 days, may still be exposed to certain taxes on income that is deemed to be sourced in Italy

just because they're physically in Italy, regardless of the number of days they stay.

I'm so glad you're bringing that point up because I have this like debate with people.

There is this thing in people's mind.

If I'm in this country less than 183 days, I can do whatever I want.

It doesn't matter because I do wasn't there for 183 days.

And it's like, no, no, that's not, that's not the rule.

There's, and it's the same thing that we have in the US as well, right?

It really depends on the facts and circumstances of each case.

And even I know with Germany, they have a similar like test, right?

Like not only how many days, but do you have a place of a boat?

Like do you have a family living there?

I mean, there's so many different tests.

And once you kind of get caught up and they catch you, that is like a very unpleasant process.

It's a little bit different I find comparing Germany and Italy to say the US, the IRS,

it's like you have to file a tax return.

Everyone knows that.

And you know, 1% or less of tax returns are audited in Europe, right?

They may not audit you as hard, but if they catch you, they are way more aggressive.

I find, especially if you have your high income earner, you have a lot of assets,

they get very, very aggressive.

And once they find you and sink their teeth into you, getting out of that mess is very,

very difficult.

I'd love your thoughts on that actually.

Yeah.

I mean, the tax authorities are very aggressive, especially

this is an Italian feature somehow.

It's not a nice feature, but the Italian tax authorities become extremely aggressive once they see that there is someone that is not an Italian coming to Italy and maybe having lots of income.

So they're already somehow labeled as, OK, we want to look at this person more in detail because they may bring in taxable or they may be in Italy to just save taxes or to avoid taxes somewhere else.

So we want to look at their case more precisely.

So there is more.

Yeah, there is a certain or there are certain circumstances beyond the 183 days rule that's increased the attention that the tax authorities have on you just for the fact that you are receiving for an income or becoming a new resident in the country and also around the residency concept.

You mentioned Germany looking barely at whether you have a home or not.

So you become taxable on day one of having a home that is considered your primary home in German.

So you become taxable there regardless of the 183 days rules.

I am really curious and I want to talk to you a little bit about.

So I know that Italy has a number of tax incentives, the tax regimes to try to attract wealthy people or retired people or individuals who are returning to Italy.

Can you talk about any of those programs and how you maybe work with your clients on some of the pre planning the pre immigration planning to ensure that they understand what their their tax obligations and optimization opportunities are in Italy?

Yeah.

Yeah, before talking about the regimes, I always tell like why and look, Italy is a high tax country like Germany is, but Italy is also the country of exceptions.

This can be said in any field.

There's always an exception or a solution to a problem.

So and the same happens with taxes.

So while there is a very punitive high tax ordinary tax regimes, there is a lot of other exceptional or exceptions in terms of tax regimes.

The most famous one, maybe being the foreign flat tax for high net worth individuals that move to Italy, there is a flat amount of taxes, which is now been increased to 300,000 euros.

So you pay a 300,000 euros flat tax, regardless of whether you're making two 50 or 100 million euro and foreign income, you just paid a tax or you may be someone retiring in Italy receiving pension income.

And if you're willing to move to certain areas in the south of Italy with less than 30,000 inhabitants, you may be able to use a flat tax system on all of your foreign income at 7%.

Meaning all foreign income pension was investment income that you were receiving from outside of Italy while you reside in Italy as a pensioner, that would be subject to 7% flat tax.

And then you have many more systems or regimes for people who move to Italy to work, families and like getting discounts on their tax base.

So they say, okay, if you're a researcher coming into Italy after having been abroad for at least two years, you get an exemption of 90% of your income.

So if you make 100,000, only 10,000 euro of your income gets a lens on your tax return.

So that's a huge relief compared to the 45, 46% taxes you would be paying if you would be subject to the regular system.

Then there's many things for self-employed people as well.

If you come here as a small entrepreneur, you're starting a new business.

There's this regime of our failure, which is basically saying, okay, I'd less if you make less than 85,000 euro a year, I'll give you a 5% tax rate, flat tax rate on your income.

And I'll also give you a very generous, large standard deduction for your expenses, which brings the effective tax rate down really to 2% or 3% of the income tax.

Of course, you still have to talk about social security contributions that you may owe.

This is something that is true for Germany and for Italy.

That's officially not a tax, even if economically people look at it as a tax.

So I think that's a good option.

Those are great programs that Italy offers.

And I always find it's always interesting for me to think about Italy versus Germany.

Italy has lots of these types of programs and incentives.

Germany, on the other hand, not so much.

Am I missing something?

But in Germany, it's like welcome to Germany for the tax.

You're absolutely right.

You're absolutely right.

And this shows how different from a legal point of view this tax system can be even even within the European Union.

So let me say two things on that.

The reason why Germany doesn't have these kind of regimes despite having discussed these kind of regimes previous governments suggested to do something similar to the impatliate regime.

But they basically said that the courts would reject it.

So even if they did a law about discounting income for certain categories of people,

they say because of the equality requirement and all people need to be treated equal before the law, including tax law, they would say, no, we cannot do these kind of exceptions.

Everyone needs to be taxed the same according to what they produce and what they make in income.

And someone making 50,000 and having someone sitting next to him making the same 50,000 but paying just on 10% of that income is considered very unfair.

It's even considered unconstitutional for Germany.

So these are the different levels of sensitivity that the courts have in Germany compared to Italy.

People have tried in Italy to say that there's constitutional issues with this.

But so far, they have never won in any single instance.

So for the Italian law, it is allowed to make these sorts of discriminations because they have

their considered exceptions for certain economic reasons that benefit Italy overall.

Yeah. And I always find this so interesting if you look at, like people say, I want to move to Europe.

I'm like, okay, it's a big, you know, it's a continent and there's a lot of different countries.

And if you want to shop and shop tax deals or incentives, southern Europe, right?

Italy, Malta, Spain, Portugal, right?

Those programs, it's almost like a whack-a-mole.

They come up, they change, but they're kind of always like always on sale in a little way.

But when you look at like Northern Europe, you don't see that same opportunity a lot of times.

Switzerland is a unique place because sometimes they also try to attract high net worth

individuals with similar tax deals, like play a certain amount of tax.

You can kind of get in. But we don't see it in the same way. And I think it's important,

you know, depending on your financial situation that you really think about this,

if you're like, I want to move to Europe. Okay. We'll think about which country and the impact

it's going to have financially. I'm also curious, does Italy have an inheritance tax?

Yes. Italy has an inheritance tax. But when you go to conferences, I hear very often,

Italy is a tax paradise for inheritance taxes because they have very, very high

exemption amounts compared to other European countries. So someone, if a son of a US citizen

living in Italy receives an inheritance from his parents, they have an exemption amount up to one

million euro and any wealth received above that one million euros just subject to a 4% inheritance tax.

Germany as a comparison has 400,000 exemption. And you start paying taxes at a rate of 19 to 33%

on amounts above that threshold. So you can see crazy differences between Italian and German

inheritance taxes in everyday examples. And that's why in an overall European comparison,

Italy is much better from an inheritance tax perspective and an estate planning than Germany.

No, I really appreciate you kind of comparing the two countries, because this is another

surprise that I see with some of our clients, right? They become residents in a foreign country.

But we start thinking about, well, what happens when we have this generational wealth transfer?

Your parents who are US citizens who've spent their entire life, all of their wealth has been

accumulated in the United States. But you're sitting in Germany or Italy are going to have to report

that. That's an inheritance tax. And so it's a completely different calculation than we have in

the US where we have a state tax, right? That the tax is on the estate. In Europe, we have the

inheritance tax. So that's a really important thing. Again, it's not like an instinct to think about

what's going to happen to the money that I inherited once I established residence in a European

country. But that has to be a question that you think about when you're doing your analysis of

where do I want to live? So don't think, okay, this has been such a wonderful conversation.

I'm really, I want to go to our last question today. If you could give a piece of advice

to a US expat as they start to navigate taxes in Europe, what would your first piece of advice be?

Well, it would be the same advice that I would probably give family and friends, you know,

before they head out for a vacation or around the world trip, I would tell them go and see a doctor

and have yourself screened and see if you have all the vaccines that you need. So I tell them,

you know, you should see a tax doctor that makes a diagnosis of your financial and wealth situation

and how that fits to the country of destination that you have decided to move to into Europe.

Because I see that many, many times and I know, Arielle, you have addressed this in many of your

podcasts already, but it's so important that people plan ahead. I have so many clients that they call

me and they say, here I am in Italy. Can you tell me what's going to happen to all of this? And I

tell them, well, for something too late, you will, for example, in Italy, you'll have to pay 43% on

your ETFs and just 26% on your stock. So you should have probably moved many more of your

investments into stock and out of non-European, directly friendly mutual funds investments,

then you would have saved a lot of taxes. So that's what I tell them, go out there, seek professional

advice and also look for Americans that share your same objectives. There are so many communities

out there that give you resources, both before heading to that country and after arriving in

that country, stay in touch with your American fellow citizens that share the same experiences,

ask them which tax professionals they use and what challenges they had. So that would be my

biggest advice. Yeah, absolutely. And especially for Americans abroad, right? We have to deal with

our new resident country filing obligations, immigration considerations, right? We're

third country immigrants, we're done really not coming in as European with European rights

to immigrate that freedom of travel. We don't have that in the same way. And then, of course,

we have the US tax obligations. And what you just said, we could do a whole episode on it,

right? Individual stock holdings versus ETFs. Again, it's going to depend what country you're in

and what the tax obligations are. And you have to think about all that ahead of time,

because once you've established residence, it's really hard. It's really almost impossible to go,

I didn't mean to do that. Let's back this out and do the planning and come back. You just can't

do that very well very easily without a lot of hassle. So that was a great tip. Christian,

thank you so much for joining me today on Passport to Wealth. It was a really pleasure to open

beyond your podcast fans for inviting me. Thank you. The content shared in this podcast is intended

for informational and entertainment purposes only and should not be considered financial tax

or legal advice. We encourage you to consult with a qualified financial advisor,

tax professional or other licensed expert before making any decisions based on the topics discussed.

Everyone's financial situation is unique and personalized guidance from a trusted professional

is the best way to ensure your choices aligned with your individual goals and circumstances.