Recent changes in Italy’s tax policies for expatriates and retirees have reshaped the European landscape for those seeking to relocate. Italy has significantly reduced the benefits of its “Regime degli Impatriati” while maintaining its geographically restricted 7% Retiree Tax Scheme. In light of these developments, Albania shines as an appealing low-tax, low-bureaucracy alternative, providing unique benefits for both expatriates and retirees.
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Italy’s Changing Tax Landscape
The popular “Regime degli Impatriati”, providing a 50% to 90% reduction in tax for new Italian residents, has been downpowered by the ruling government beginning January 2024.
1. “Regime degli Impatriati” Revisions:
- Proposed reduction in tax benefits from 70%-90% to 50%.
- Tighter eligibility criteria requiring high qualification or specialisation (practically speaking, only individuals within a list of “highly specialised” professions can apply, and they will need to have their tertiary education credentials checked too).
- Mandatory fiscal residence maintenance for five years with penalties for non-compliance.
2. 7% Retiree Tax Scheme:
- Flat 7% tax rate on foreign income for retirees only.
- Long-term planning advantage with nine years of applicability.
- Limited to specific less-populated regions in Italy (Southern Italy only, with residence in towns with fewer than 20,000 inhabitants).
While these schemes in Italy offer benefits, the impending changes and geographical limitations may reduce their attractiveness for some.
Albania’s Appeal for Expats and Retirees
Albania stands out as an increasingly attractive option for expatriates and retirees, especially in light of these changes in Italy. Here’s why:
- Favourable Taxation:
- Albania offers competitive tax rates and simpler tax structures for foreigners. Most income types are taxed at a low 15%, while dividend income is taxed at 8%.
- Zero tax on foreign pensions remitted to Albania.
- Absence of a Double Taxation Treaty with the US can be mitigated through Foreign Tax Credits.
- Cost of Living:
- Lower cost of living compared to Italy, stretching the value of pensions and savings.
- Affordable real estate options, both for renting and buying.
- Cultural and Natural Beauty:
- Rich cultural heritage and stunning natural landscapes.
- Diverse range of lifestyles, from vibrant city life in Tirana to serene coastal towns.
- Welcoming Community:
- Growing expat community providing a supportive network.
- Friendly local population known for hospitality.
- Strategic Location:
- Proximity to major European destinations – including daily direct sea and air links to Italy itself.
- Ideal for those wishing to explore the Mediterranean region.
Albania Offers Easier Residency With Less Paperwork
Albania offers residency options for expats and retirees in a relatively straightforward manner compared to some other countries like Italy. Here are a few key points:
- 1. Visa-Free Stay: US citizens can stay in Albania for up to 12 months without a visa. This means you can live and explore the country for a year without the need for any specific residency permit.
- 2. Temporary Residence Permit: If you wish to stay in Albania for a longer period beyond the 12-month visa-free stay, you can apply for a temporary residence permit. The process is generally less complex compared to other countries.
- 3. Long-Term Residence: For those who plan to stay in Albania for an even longer period or permanently, there is an option to apply for a long-term residence permit. This permit is typically valid for 5 years and can be renewed indefinitely.
It is advisable to consult with experts to explore visa options. You can start by reading our visa guide.
Italy Vs Albania: And The Winner Is…
With Italy revising its tax incentives, it’s an opportune time to consider Albania as a viable alternative for expatriation. Whether you are an expatriate seeking new professional opportunities or a retiree looking for a peaceful and cost-effective retirement, Albania offers a blend of benefits that can cater to diverse needs and preferences – all with easy options to visit Italy any time you like.
For more detailed information and personalized advice, we encourage you to use our TAX AI tool at Expatax. Offering tax advice, accounting services and relocation services, are dedicated to helping you navigate the intricacies of expatriation and find the best fit for your international living goals.
