Decree Law: Italian Income Taxes in Monaco

Impact of the new decree in Monaco: Income Tax Law in Italy

 

With the recent amendments introduced by Legislative Decree No. 209 of 27 December 2023, the law on income taxes in Italy has undergone important updates that not only profoundly reform the tax system for Italian residents, but also open up new perspectives for those contemplating the possibility of moving abroad. In this context, Monaco emerges not only as a tax haven, but as an ideal lifestyle destination, combining economic benefits with an incomparable quality of life.

This guide is designed to navigate through the new legislative waters, offering Italians a beacon in Monaco's complex tax and real estate landscape. Whether you are a professional looking for unique opportunities in the heart of the Mediterranean, a retiree looking for serenity and mild weather, or simply an adventurer eager to explore the possibilities this principality has to offer, here you will find valuable information to make enlightened decisions.

But that's not all. For Italians already residing in Monaco, this decree opens up new scenarios and potential challenges. We'll explore together how these changes will affect your tax situation and how you can navigate these waters to maintain your advantageous position, whether you're considering selling, buying, or simply enjoying life in your own slice of paradise.

We therefore invite all Italians, both at home and in the heart of Monaco, to discover with us how this decree can represent not only a change, but a real opportunity. Follow us on this exploratory journey, where the goal is not only to understand the law, but also to discover how Monaco can become your next chapter in life, or how it can continue to be the best choice for your real estate investment. We are Petrini Exclusive Real Estate Monaco, the Monegasque real estate agency specialized in Italian clients, with more than 30 years of experience Eugenia Petrini will accompany you in your needs and questions. With a team of experts at your disposal, including Italian tax lawyers, we will help you in the best possible way in your new adventure.

 

Overview of Legislative Decree no. 209

Legislative Decree No. 209 of 27 December 2023 marks a significant turning point for the Italian tax system, introducing fundamental updates that directly impact Italian residents and those considering moving abroad. These legislative changes are particularly pertinent for those considering Monaco as a residential or tax alternative, offering new opportunities and challenges.

 

Here is the original decree Published in the Official Gazette

Consolidated text of 22/12/1986 n. 917

Consolidated Income Tax Act.

Published in the Official Gazette no. 302 of 31/12/1986

Article 2

Taxable persons. (EDITOR'S NOTE: For the application of the provisions of this article, see Article 1, paragraph 89 of Law No. 244 of 24 December 2007.)

Article 2 - Taxable persons. (EDITOR'S NOTE: For the application of the provisions of this article, see Article 1, paragraph 89 of Law No. 244 of 24 December 2007.)

Effective as of 29/12/2023
Amended by: Legislative Decree of 27/12/2023 n. 209 Article 1

1. Taxable persons shall be natural persons, resident and non-resident in the territory of the State.

2. For the purposes of income tax, residents shall be deemed to be persons who, for the greater part of the tax period, including fractions of a day, have their residence within the meaning of the Civil Code or their domicile in the territory of the State or are present there. For the purposes of this provision, domicile shall mean the place where the person's personal and family relationships develop. Unless proven otherwise, persons registered for most of the tax period in the resident population registry are also presumed to be residents.

2-bis. Unless proven otherwise, Italian citizens who have been removed from the registry of the resident population and transferred to States or territories other than those identified by decree of the Minister of Economy and Finance, to be published in the Official Gazette, are also considered residents.

 

Here are some explanations of the decree

Article 1 - Taxable Persons

  • Persons liable for income tax are natural persons, regardless of whether they reside or do not reside in the territory of the State. This means that income tax applies to all individuals, whether they are resident in Italy or abroad.
  • If you reside in Monaco, you are considered a Monegasque resident and not subject to Italian income taxes. Article 1 of Legislative Decree No. 209 of December 27, 2023 states that natural persons, regardless of their residence or non-residence in Italian territory, are taxable persons for income tax in Italy. Since you are a resident of Monaco, you are not subject to Italian income taxes, but you are subject to Monaco's tax laws, which, as mentioned in our article Taxation in Monaco: An Overview, do not provide income tax for Italian residents. Based on your residence in Monaco, you can enjoy a favorable tax regime where you are not required to pay income tax in Italy.

Article 2 Tax Residence and Domicile

  • Residents are considered to be persons who, for most of the tax period, including fractions of a day, have their residence within the meaning of the Civil Code or their domicile in the territory of the State, or are present there. In addition, domicile is defined as the place where the person's personal and family relationships mainly develop. In the absence of evidence to the contrary, it is also presumed that the persons registered for most of the tax period in the resident population registries are resident for tax purposes in Italy.
  • If you are a resident of Monaco but have family in Italy and spend a significant portion of the year in Italy, you may be considered a tax resident in Italy under this article, unless you can prove otherwise. However, tax laws can be complex, and interpretations can vary depending on individual circumstances. For this reason, we recommend that you settle in Monaco with your family. Our agency can help you by explaining how many rooms you need for the number of members of your family , we can help you to create an apartment in Monaco, which reflects all the characteristics you are looking for.

Article 2-bis Italian Citizens Deleted from the Registry Offices

  • This provision concerns Italian citizens who have been removed from the resident population registry and have moved to States or territories other than those specified in a decree of the Minister of Economy and Finance, published in the Official Gazette. Unless proven otherwise, such nationals are considered resident for tax purposes. In other words, even if an Italian citizen moves abroad, if his destination is not among those listed in the ministerial decree, he will be considered resident for tax purposes in Italy, unless he can prove otherwise.
  • As a resident of Monaco and living permanently abroad, this provision should not affect your tax situation. If you are registered as a resident of Monaco and have proven your residence abroad, you should not be considered a resident for tax purposes in Italy. It is important to maintain accurate documentation of your residence in Monaco, your financial assets, and your habitual residence to prove your actual residence abroad, in case there are any questions about your tax status. Overall, if you are actually a resident of Monaco and have proven such residency, you should be subject to Monaco's tax laws and not Italian ones. However, for maximum security, it is always advisable to consult with an experienced tax advisor who can assess your specific situation and provide personalized advice. We are in contact with professionals who can help you. If you have any questions we can put you in touch with them.

These provisions clearly define the criteria for tax residence and the cases in which Italian citizens can be considered resident for income tax purposes. It is important to note that the interpretation and application of these rules can have a significant impact on the tax situation of Italian taxpayers. Therefore, it is advisable to seek professional tax advice to fully understand the implications of the new regulations.

 

Monaco as a Tax Destination

Monaco presents itself as an attractive choice for many Italians, thanks to its favorable tax regime, high quality of life and strategic geographical location. The decree could make the Principality even more inviting, offering clarification and potential incentives for those looking to optimize their tax exposure.

The decision to move to Monaco or maintain residence in Italy under the new tax regime requires a thorough assessment of one's personal and financial circumstances. Italians should consider factors such as the impact on their global income, potential tax breaks, and the legal implications of changing residence.

With an increasing number of Italian citizens considering Monaco as a destination to establish their tax residence, an extraordinary opportunity opens up in the Principality's real estate market. Monaco, renowned for its advantageous tax regime and high quality of life, is becoming increasingly attractive to Italians looking for a favorable tax environment and an excellent quality of life. This growing influx of Italians offers promising prospects for real estate investors, both national and international, who wish to seize opportunities in the dynamic Monegasque real estate market. Here are some of the arguments we give to our clients who want to invest here:

  1. Experience and Professionalism: Petrini Exclusive Real Estate Monaco is renowned for its extensive experience in the Monaco real estate market. Our industry expertise ensures that investments are carefully and accurately managed, ensuring safe and successful real estate transactions.

  2. Access to Prestige Properties: Petrini Exclusive Real Estate Monaco offers an exclusive portfolio of prestige properties in Monaco, including luxury residences, apartments and prime real estate. This allows investors to choose from a wide range of options to suit their needs.

  3. Local Market Knowledge: Petrini Exclusive Real Estate Monaco's in-depth knowledge of the Monegasque real estate market ensures that investors have access to detailed information on market trends, desirable neighborhoods, and the most lucrative investment opportunities.

  4. Personalized Assistance: Petrini Exclusive Real Estate Monaco offers a highly personalized service, tailoring solutions to the specific needs of investors. This includes advising on purchasing, sales, and property management, ensuring a hassle-free experience.

  5. Attractive Rental Yield: Monaco's real estate market offers attractive rental yields, thanks to the strong demand for short-term and long-term rentals. This makes real estate investments in Monaco a lucrative choice for investors.

  6. We are Italians and we understand your problems: Eugenia Petrini and her son Paolo Petrini are Italian, they moved to Monaco in 2000, for this reason they have already gone through all the processes to become residents. With more than 30 years of experience, Eugenia Petrini, an Italian entrepreneur, has followed hundreds of Italian clients and knows precisely the needs and solutions to help you move here. Choose a trusted partner who already knows your needs and requirements before you meet.

  7. Excellent Quality of Life: Monaco offers an exceptional quality of life, with world-class amenities, safety, vibrant culture, and a unique coastal environment. Investors can enjoy a life of luxury in the Principality.

  8. Economic Stability: Monaco enjoys long-lasting economic stability, making it a safe environment for long-term investment.

  9. Portfolio Diversification: Investing in property in Monaco can be an effective form of portfolio diversification, reducing overall risk and contributing to the creation of strong assets.

  10. Comprehensive Support: Petrini Exclusive provides comprehensive assistance, including property management, to ensure that investors are supported at every stage of their investment journey.

With Petrini Exclusive Real Estate Monaco, investors can benefit from their expertise and connections in the Monaco real estate market to make successful investments in an unparalleled tax and living environment.

 

Impact of Legislative Decree No. 209 for Italian Residents in Monaco

Legislative Decree No. 209 represents a milestone in Italian tax legislation, with significant changes to the Consolidated Law on Income Taxes. These changes directly affect Italian residents, including those who have chosen Monaco as their tax residence. While the decree aims to modernize and make the Italian tax system fairer, it is crucial for Italian residents in Monaco to understand how these new provisions will affect their tax situation. The definitions of tax residence and the new provisions on income generated abroad require special attention to ensure compliance with Italian and Monegasque tax laws.

However, for Italians in Monaco, the decree could also offer opportunities, as the Principality maintains its favourable tax regime. In conclusion, in order to successfully navigate the complex tax landscape, it is essential for Italian residents in Monaco to stay informed about the latest reforms and seek expert advice to optimize their tax situation and make the most of the opportunities offered by Monaco as a prime tax destination.

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