Expats in Italy
With the news this week that Italy is launching a Digital Nomad visa, and with many of our clients living in Italy already, this article is an overview of the core financial issues for international professionals moving to Italy.
Italy is reaching out to remote professional workers around the globe- Digital Nomads– to encourage them to base themselves as residents in Italy for a year. There are a number of bureaucratic hurdles to pass, but for many the prospect of a year in Italy may seem like a dream opportunity.
To qualify for an Italian digital nomad visa, you will have to be able to show an income above a threshold, be a tertiary educated and experienced professional, and have health insurance, and housing in place amongst other criteria.
Italy is just the latest country in Europe to offer these short term Digital Nomad visas. If you want to read more about all the countries where you can apply for such a visa, read this article from Euronews.
Digital Nomads represent only a small portion of the international professionals that are living outside their home country across the EU. We help clients that may fall into several categories. If you live in Italy and any of these sound like you, we can help you to manage your financial life.
Working international professionals living outside their home country,
Those moving towards, or in, retirement outside their home country, that have chosen to make Italy their home, and
Italian citizens returning home having lived and worked overseas.
Why Italy?
When we ask our clients that are based in Italy, why they have chosen to live there, we get 4 main responses:
They are here for their career. Italy remains the 3rd largest economy in the EU, and as a founding EU member, offers great career potential across many industries and sectors. Most of our clients right across the EU are working professionals.
They are there for lifestyle – food, culture, climate, the overall experience. Some of our clients have either chosen to prioritise lifestyle ahead of career, or are fortunate enough to be able to combine both and live in Italy to take advantage of the regional diversity, the world leading gastronomy, and the beautiful countryside, coastal regions and cities.
They are planning to retire in Italy or are in retirement. Our clients approaching or in retirement will often refer to lifestyle and cost of living as key factors in selecting Italy as a home for retirement.
They are Italians that have spent a number of years living and working internationally and are moving back ‘home’. Coming back to one’s home country is a relatively prevalent occurrence for those that have led internationally mobile careers. Unexpectedly though, it is often not straightforward and can be difficult to adjust. It also carries the same financial complexities and important decision points as moving to a new country.
Whether you are coming to Italy for the first time to live and work, or you are returning after many years away, when it comes to managing your finances, there are some core things you need to know and that we can help you with.
Italy- the economy and cost of living
Whether you are in Italy for your career, lifestyle, or a combination, realities of cost of living and the economy need to be considered.
As we mentioned above, Italy is the 3rd largest economy in the UE after Germany and France. The Italian economy has been relatively strong, post-Covid. The 2024 OECD report described Italy’s economic performance as resilient, perhaps slowing in 2024 and accelerating again into 2025. As reported across media last month, the Italian economy grew at a faster pace than Germany in Q2 2023 and is expected to do so for much of 2024. It could be argued that this is reflective of a slowing German economy rather than a robust Italian one.
Italian inflation has, like most of the EU, fallen rapidly in 2023 and is now at the European Central Bank 2-3% per annum range.
That great comparator, the Big Mac Index, shows Italy has caught up with Germany and Austria, but overall cost of living is lower in Italy compared to Germany. Italy wins on the sunshine index.
Finally, the average salary in Italy is lower than in Germany, although as an international professional, this may be less impactful for you if you are paid according to your global industry standard.
The practicalities:
Local Bank accounts– when you move to a new country, once of the first items to check off on your list is to set up a local bank account. Banks across the EU are party to the European Union bank deposit guarantee scheme, implemented after the 2008 financial crisis. This scheme provides a retail individual with a guarantee of up to €100,000 per person, per account should the bank fail. Note though, this only applies to retail investor individuals, and does not apply to companies, professional investors or other entities.
Code Fiscale– if you don’t have one already, to function in Italy you will need to obtain your code fiscal, this is your tax identification number.
Health & Insurances – depending on your citizenship, you will be required to register with the SSN (Italian Health Service) and/ or obtain private health insurance to ensure all your health needs and costs are covered.
Housing– one of the big decisions all expats face when they move countries is where and how to live. Many internationals choose to rent initially to more thoroughly test an area. There are no restrictions for expats that wish to purchase property in Italy. The decision to continue to rent or buy, is one that must be assessed in the context of your broader life goals. You should consider factors such as cost of acquisition (this is the taxes, fees, duties and renovation costs), affordability, and the time you intend to remain in Italy. Remember that property like any asset class, can go up or down in value.
Currency – if you are moving to Italy from outside the EU, or even from another European Union country and you have assets in another currency outside the region, how you manage transfers between countries can have a significant impact on your financial position. Some paths can be very expensive. We recommend you speak with us and look at our market competitive Black Swan Capital Exchange offering here: https://blackswancapital.eu/currency-exchange/.
Pensions and Retirement– like much of the EU, Italy has a tiered pension system and navigating it can be complex. The state pension is available for Italian residents that have made at least 20 years worth of contributions (Note there are some transfer potential for pensions between EU countries). This is different from some other EU countries and a fact you should incorporate into your financial planning. The pension age is currently 67 but can change in line with life expectancy. The employer pension system is a contribution related system, where the amount you will be entitled to in retirement will be dependent on the amount of contributions made by you and your employer, and a number of other factors including GDP, cost of living, your health and family makeup. In short it is complex, and you should get advice.
The big decisions:
The way you manage your finances in one country may not be appropriate, tax-effective, or in some cases even compliant in another country. It is important to get independent and specialist advice from someone like Black Swan Capital.
Remain goal focused– our starting advice is to always make decisions based on what you are trying to achieve. Moving countries can be a stressful time. The costs and complexities can derail your financial plans. We always advise to make all decisions based on your goals, your dreams.
Structure– Staying focused also means being structured with a process to ensure all relevant and important points are addressed. This can include bank accounts in other countries and currencies, investments and property in other parts of the world, new investments and property in Italy, state, employer and personal pensions in Italy, and the pensions you leave behind. This list is not exhaustive. Having a good advisory partner to help you through this can save you time, stress and cost, as well as setting you up well for life in your new country.
Remain compliant– as we mentioned above, compliance requisites may be different between countries; you need to make sure your investments are aligned to the framework in which you are living.
US Compliance– Italy is a popular destination for US expats and professionals. At Black Swan Capital we specialise in working with US citizens and accidental Americans to ensure they remain compliant with the US authorities, with their local environment, and to make sure they stay on track with their financial goals. Getting it wrong can be expensive, make sure you take the time to speak with us to ensure you are compliant.
Managing your finances– every decision you make has an opportunity cost. Do you buy a property, invest in the stock market, put the money in the bank, or invest into your personal pension? There is no right or wrong answer to this. The real message here is that whatever you do must be right for you. It goes back to what you want to achieve, and not what the next hot thing in the markets is purported to be, or what a company, bank, or individual is selling.
There is a recurring theme here: at Black Swan Capital our approach is objectives-based, which means all decisions made and advice provided is centred around what is most important in your life and what you want to achieve now, and in the future. This applies to international professionals wherever you are living, it Italy or across the European Union.
With qualified and experienced staff in the region, we hold an independent investment firm license from the Netherlands Authority for Financial Markets (www.afm.nl) one of the highest standards in Europe and are overseen by the Dutch Central Bank (www.dnb.nl). Our license has been ‘passported’ and approved across every country in the EU, including Italy.
Speak with us today to see how we can help you. www.blackswancapital.eu
