MOVING FROM THE UK TO ITALY, THE “ROUNDTRIP” DILEMMA.

MOBILITY OF HNWIs AND SKILLED WORKERS FROM THE UK TO ITALY: THE “ROUNDTRIP” DILEMMA.

The unpredictable overlap between the post-Brexit and the Covid-19 eras appears to have reversed the “relocation trend” of HNWIs and skilled workers from the United Kingdom to Italy. Although the attractiveness of the Italian special tax regimes is certainly facilitating the process, the actual transfer between the two countries can be attributed to several different factors.

In this regard, while leaving (even temporarily) the UK, one needs to carry out bespoke personal, immigration, tax, and wealth management assessments to mitigate any risk of dual residence and/or double taxation going forward. A clear understanding of the main cross-border issues and (possibly) anti-avoidance rules would result in a tax-effective transfer of residence to the Bel Paese. Nevertheless, considering that the UK is likely to maintain its business, cultural and tax attractiveness, a further inversion of the trend cannot be a priori excluded.

The post-Brexit unrest, together with the (almost) concurrent spreading of the Covid-19 pandemic, have certainly influenced the mobility of high-net-worth individuals (HNWIs) and (skilled) workers from the UK to Italy. Most notably, due to the multiple lockdown periods and travel restrictions, numerous individuals have benefited from remote-working and/or have decided to temporarily relocate in other (or their home) countries. It is undeniable that Italy, thanks to its art, food, lifestyle, and heritage, is amongst the “newly” expats’ favourite choices.

Italy has certainly boosted its international attractiveness through the implementation of three special tax regimes reserved either to HNWIs (the “neo-resident” tax regime), workers (the “inbound workers” tax regime), and pensioners (the “neo-resident pensioners” tax regime). However, to make the most from the benefits of the said special regimes, each and every taxpayer should duly plan their relocation to Italy by considering a number of different factors.

While leaving (even temporarily) the UK, having a clear understanding of the main cross-border issues and (possibly) anti-avoidance rules would ensure that the timing of the transfer of residence, both from an outbound (UK) and inbound (Italy) perspective, is such that tax benefits are maximised. In this regard, aiming for a “better safe than sorry” strategy aimed (at least) at foreseeing the main personal, immigration, tax, social security, and wealth management issues arising from the relocation would give the taxpayer’s comfort and awareness while making their final decision.

From a UK perspective, carrying out a Statutory Residence Test in the year of departure, having regard to the operation of the applicable anti-avoidance rules (e.g., the “Temporary Non-Residence” rules), and identifying the categories of income and/or gains that might suffer double taxation (e.g., employment income, deferred remuneration, income from land, financial income, etc.) is of paramount importance out before the transfer.

Given all the above, should taxpayers rely on well-established (and predictive) relocation strategies, tasting a slice of Dolce Vita would be even more enjoyable. Still, considering that the UK is likely to maintain its business, cultural and tax attractiveness, a further inversion of the trend cannot be a priori excluded. Indeed, a departing UK res-non-dom might achieve a full reset of the remittance basis of taxation by returning to the UK after an absence of at least six years (having benefitted, in the interim period, from one of the said Italian special tax regimes).

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