27 Aug 2024
Did you know that there are almost 160,000 OFWs working and residing in Italy? These expats are breadwinners for their families back home, and they send money to Philippines from Italy monthly. However, the new immigrant policies in Italy will affect the finances of these expats. Keep reading this blog to learn about the new policy changes.
Published in the Official Gazette No. 301 on December 28, 2023, Legislative Decree No. 209/2023 brought about significant revisions to Italy's tax structure for foreign workers in 2024.
The considerable reforms to international taxes brought about by this decree, which went into action on December 29, 2023, include a new advantageous system for workers who move their tax residence to Italy beginning with the tax year 2024. This may affect your remittance sending routine so it is recommended to choose the best service for this purpose.
This is a tax provision that lowers the tax rate to 50% on incomes up to a maximum of 600,000 euros annually in an effort to attract highly qualified worker. According to the draft legislation, relief under the expatriate regime would be cut to 50% for individuals who become residents on or before January 1, 2024, with a maximum amount of income eligible for relief of EUR 600,000.
In order to qualify for the relief, the employee would need to stay in Italy for four years and have three years of prior non-residence. According to the same criteria as those who would be eligible for a Schengen Blue Card, the relief will now only be granted to highly skilled or specialized individuals. The final legislation, with some burdensome requirements, reverses the draft legislation's apparent inability to apply the framework to transfers between companies.
Employers will have to assess the circumstances for workers who completed a project in 2023 and those who want to do so in 2024 in Italy. In the future, firms might have to implement extra measures to determine whether an individual qualifies for the expatriate regime, and they might have to modify assignment policy for assignments to Italy. This new tac regime may also have significant effects on your online money transfer from Italy to Philippines.
Prior to the implementation of the new laws, Italy offered a very accommodating expatriate regime with few requirements to qualify. For those who had not resided in Italy for the two fiscal years prior and who agreed to transfer their residence for two fiscal years but actually stayed resident, it allowed a reduction of 70% in taxable income from Italian sources (or 90% in the islands and south).
The five-year relief period might be extended by an additional five years at a 50% rate, provided certain requirements were satisfied. The relief may be based on self-certification and was simple to get without a verdict. It was effective in drawing in new laborers to Italy.
The following regulations will be in effect as of January 1, 2024, per the new legislation:
1. According to Article 2 of the TUIR (Decreto del Presidente della Repubblica), workers who have transferred their residence to Italy, that is, who have become tax residents in Italy for the fiscal year 2024, will be eligible for the relief. This includes employment income, income assimilation with employment income, and self-employed income.
2. A 50% relief will be granted, with a maximum of EUR 600,000. This means that, rather than being limitless like it is currently, the highest relief that would be granted will be EUR 300,000 in the event that income exceeds EUR 600,000.
3. Those who have one minor child will be eligible for a 60% relief.
The extended relief will be applicable from the fiscal year of the child's birth to the conclusion of the five-year period in the event of a birth or adoption. For the length of the benefit, the child must reside in Italy.
4. Those who relocate their "anagrafic" (i.e., registered) residence to Italy by December 31st, 2023, and who obtained a principal residence in Italy within the year preceding their transfer to Italy are eligible for an extension of relief.
5. The employee agrees to be a tax resident in Italy for a minimum of four tax years after the transfer, even though they were not resident there for the three years prior to the move.
6. Employees who work in Italy for the same employer they were employed by prior to moving there or an employer in the same group are subject to special regulations.
While this policy change will have a great influence on remittances, as there is an increase in the money transfer from Italy to Philippines on a regular basis, it will also benefit Italian companies. The 2024 Budget Law, which includes a new tax structure for foreign workers, presents a substantial opportunity for Italian businesses. This policy is a crucial component of the government's initiatives to draw in and keep top people, which directly affects the competitiveness and economic growth of the nation.
Businesses will benefit from this regime by having access to highly trained laborers and specialists in important industries, which can spur innovation and support corporate expansion.
Additionally, placing Italy in line with other nations that have implemented comparable tactics to draw in international talent helps Italy position itself more competitively on the world stage.
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ACE Money Transfer offers remittances that are speedy and quick. Your transaction is completed within a day from Italy to the Philippines.
ACE Money Transfer is significantly more affordable than other remittance services. It also has a very transparent structure which means, no hidden fees. Moreover, ACE offers market competitive exchange rates so you get good value for your money.
The new tax regime may be the good news that OFW was looking for. It will definitely make your finance management easier. ACE Money Transfer can do the same for you. Sign up today for free and send money online to Philippines from Italy for your lovely family awaiting your financial assistance.
In conclusion, while the new tax regime in Italy presents changes for expatriates, ACE Money Transfer remains steadfast in providing reliable and efficient remittance services from Italy to the Philippines. With our commitment to quick transactions, competitive rates, and transparency in fees, we continue to support the financial needs of Filipino families back home. Rest assured, your remittance process with ACE Money Transfer remains uncomplicated and efficient, ensuring your hard-earned money reaches your loved ones swiftly and securely. Join ACE Money Transfer today to experience hassle-free online money transfers that prioritize your peace of mind and financial security.
Yes, the relief applies to self-employed individuals who meet the criteria.
No, the employer does not necessarily have to be Italian, but the work must be performed in Italy.
Employees need to provide proof of tax residency and other relevant documents as specified by Italian tax authorities.
No, the new tax relief applies only to those who move their tax residence to Italy beginning in 2024.
The regime aims to attract highly skilled or specialized individuals from every industry.
Resources:
https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/01/TIES-Italy.pdf
