If you are thinking about leaving the UK and moving to Italy, the tax opportunity can be substantial. But the complexity is just as significant. Get the planning wrong, and you could find yourself liable to tax in both countries at the same time.
In Episode 23 of the Tax Compass Podcast, Simon Roue is joined by Fabrizio Battaglia, partner at Studio Tributario Associato - Battaglia Cesari Zangrillo in Rome, for a detailed conversation about what Italy actually offers internationally mobile individuals, what the residency rules genuinely require, and why the advice always has to come before the move.
What they cover:
Italy has become one of the most attractive destinations for high-net-worth individuals and entrepreneurs leaving the UK. That sits within a competitive landscape that also includes Portugal, Cyprus and the Middle East, and the Italian government is aware it needs to keep its offer compelling.
There are three main personal tax regimes available in Italy today. The flat tax of €300,000 applies to all overseas income, with a restriction on the sale of qualifying shareholdings in the first five years. The 7% pensioner regime is available to those relocating to southern Italian municipalities with fewer than 20,000 inhabitants, and covers pensions, dividends and capital gains at a single flat rate. The expatriate regime for employees and self-employed workers provides an exemption of up to 60% of income, but is capped at €600,000, runs for five years only, and has had no renewal option since 2024.
Italian tax residency rules changed at the start of 2024. The primary driver is now domicile, defined as your centre of personal interest rather than your economic centre. Physical presence of at least 183 days and habitual abode are also relevant factors, and registration with your local municipality, while useful, is no longer a binding requirement.
The double tax treaty between Italy and the UK adds a further layer that Italian domestic rules alone do not resolve. The treaty refers to both economic and family centres when determining domicile, whereas Italian domestic law focuses on personal and family ties only. That gap is where mistakes happen, and it is one of the most common reasons people end up with unexpected obligations in both countries.
Visa type and tax regime are closely linked in Italy in a way that has no real equivalent in the UK system. The digital nomad visa, the investor visa and elective residency each carry different commitments and different consequences, and choosing the wrong route can have real financial implications down the line.
For entrepreneurs working remotely in Italy, permanent establishment risk is a serious consideration. Under updated OECD rules, a home office used for operational business activity rather than simply auxiliary or advertising purposes can be sufficient grounds for the Italian tax authority to assess a permanent establishment, even where the employer is based overseas.
A well-structured approach to an Italian move covers three phases: an assessment phase before any action is taken, an implementation phase where the appropriate regime is applied for and, in the case of the flat tax, a ruling is filed with the Italian tax authority, and an ongoing compliance phase covering annual tax management and any issues that arise.
The consistent message throughout is the same one LSR Partners gives to every client considering a cross-border move: plan before you act. Once the wrong steps have been taken, you cannot always undo them.
About our guest:
Fabrizio Battaglia is a partner at Studio Tributario Associato - Battaglia Cesari Zangrillo, a specialist tax firm based in Rome with deep expertise in cross-border and international taxation for high-net-worth individuals and entrepreneurs.
Website: https://www.studiobcz.it/ Connect with Fabrizio on LinkedIn: https://www.linkedin.com/in/fabrizio-valerio-battaglia-4043b23/
Ready to talk through your own situation?
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