Mon. Feb 24th, 2020

This is how pensioners want to capture southern Europe

It has officially opened the hunting to the foreign retiree. Portugal has marked a trend in recent years and now other Mediterranean countries have sharpened their weapons and want to take advantage of the change in the Portuguese tax regime and attract this category. So much Italy how Greece They go for the senior.

The Italian Government (supported by the previous Major League-Five Star Movement) decided in its latest budgets to introduce a rule to attract foreign pensioners, with the aim of reviving the economy of the south of the country, known as Mezzogiorno, which suffers from both weak growth and a growing depopulation.

Disadvantaged Regions

Italy seeks to attract pensioners to revive the southern economy

Indeed, one of the conditions to take advantage of tax benefits is to establish residence in the most disadvantaged regions of Italy (Sicily and Sardinia, plus six other areas of the southern peninsula) but also in any place: it has to be an urban center of at most 20,000 inhabitants. So if someone thought about settling in Naples or Palermo to enjoy the sun they will have to change their plans.

An image of the town of Corleone in Sicily

An image of the town of Corleone in Sicily
(Stefano Montesi – Corbis / Getty)

You will be required to stay at least five years, in addition to not having resided fiscally in Italy during the previous five years. You will only pay 7% tax on your pension (the call flat tax) and any other income from abroad. But your residence will have to be effective. Legal experts remember that in the chosen town the taxpayer must establish his “vital center of interests”, so that the purchase of a property or driving a vehicle with Italian registration can be evidence.

Retirement Recruitment

Experts doubt the impact of Italian incentives

“I don’t know how long this rule can take. Who will be installed in depressed areas, without adequate infrastructure or services? ”Commented a veteran Italian journalist who has followed step by step the elaboration of the law. Alberto Brambilla, an economist who collaborated with the League in the draft of the project, also expressed doubts. “Paying 7% in five years is difficult for a foreigner to make an important decision such as moving to Italy, perhaps buying a house and then having to pay taxes in full after five years.” We will have to wait for the next fiscal year to make a first balance.

Archive image of some Spanish pensioners

Archive image of some Spanish pensioners

In any case, the interested pensioner, in addition to checking networks of hospitals and roads available in such small urban centers, should know that in regions such as Campania or Calabria, the per capita income is just over half that of the European Union average; that the submerged economy rate is 22%, (when in the north of the country it is 13%) and that the size of the companies in terms of turnover is ten times lower than those of Lombardia, for example. Of course, cost of living, climate and gastronomy represent an added value.

Italy has a hard time because the retiree currently has a lot to choose from, just have your suitcase ready. In malt There is also a seductive tax regime since 2015: the Malta Retirement Program, focused on pensioners. In this case it is requested as a condition an investment in a real estate property of 275,000 euros or an annual rent for 9,600. So you can enjoy a 15% income tax (with a minimum payment of 7,500 euros). It is requested that the pension allows to pay at least 75% of the fiscal expenses. By the way too Cyprus (which offers the total tax exemption), Tunisia Y Morocco They work in this same line.


The minimum investment required in Greece is 500,000 euros to take advantage of a fixed tax of 100,000 euros

In their own way, Greece He also struggles to get part of the cake. Prime Minister Kyriakos Mitsotakis explicitly seeks to attract foreign capital this time. According to the bill announced last December by Athens, if a minimum of 500,000 euros (bonds, stocks, houses …) is invested, the taxpayer coming from abroad (retired or not) will be required a fixed tax on the rent of 100,000 euros, without any additional tax on your assets. The other condition is to reside in Greece for a minimum of 183 days a year.

Image of the island of Santorini in Greece

Image of the island of Santorini in Greece
(Peter Adams / Getty)

The Deputy Minister of Finance, Theodoros Skilakakis, justified it thus: “People with huge economic resources already have many ways such as tax havens to avoid taxes. We are interested in wealthy individuals who can invest in Greece and reside here. We have several projects, including real estate, that offer good returns. ”

The competition to win the pensioner is fierce. “We are seeing a true proliferation of tax incentives for the rich,” criticized the MEP, Sven Giegold. “There are countries that steal tax revenues from others. We have to make sure there are parity of conditions. ” But when he goes hunting, there are no friends.

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