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Italian Compliant Bonds
The Italian Compliant Investment Bond
Italy is fast becoming the go-to place for High Net Worth (HNW) and Ultra High Net Worth (UHNW) individuals.
There are several options for those who move their tax residence to Italy, including a special income tax rate of 7% for retirees in certain regions, business owners, ‘inpats’ and professionals in qualifying industries.
The Italian government introduced a flat tax regime in 2017, under which those who qualified paid €100,000 in tax on foreign-sourced income, irrespective of their actual earnings. Italian-sourced income would be subject to income tax in Italy at the normal rate. The flat tax allowance was increased to €200,00 following political pressure in 2024, then to €300,000 in 2025. This is still seen as good value by very high earners. Income of €1m would attract substantially higher income tax in other EU countries.
The attraction of Milan
Even at this level, Italy has become a highly attractive place for the well-heeled to relocate to. Business owners, investment professionals and high earners are flocking to Italy, particularly Milan, to take advantage of the tax regime and experience ‘La Dolce Vita’. First, the pandemic and now the instability in the Gulf region have prompted wealthy families to recognise the benefits of diversifying their asset portfolios rather than relying on a single low-tax country to base their financial affairs.
Milan is particularly attractive as it’s the largest business centre in Italy. Major investments have been made in infrastructure, and English is widely used and spoken. Italy is a stable country with an excellent healthcare system and is one of the top destinations worldwide for food, historical sites, and art. Being centrally located in Europe, it’s easy to travel anywhere on the continent.
Consequently, there’s a noticeable movement of the wealthy from the UAE and Gulf countries to Italy.
Flat taxers (as they are known) also benefit from no Italian Inheritance Tax, which provides more certainty when planning their estate and succession strategy. This is particularly attractive to (U)HNW UK citizens since the introduction of the Non-Long Term Residence rules. No longer will they be subject to UK Inheritance Tax on non-UK-situs assets, as they would have been under the old Domicile rules.
So, it also makes sense to remove as many assets as possible out of the UK if you become Italian tax resident under the flat tax regime.
Wealth Tax on foreign assets also doesn’t apply, and Capital Gains Tax on non- Italian investments is exempt for flat taxers. Tax reporting requirements are simpler, as the Italian tax office doesn’t require all
foreign interests to be declared. This includes companies owned by the individual and property holdings.
Changing tax residence to Italy under the flat tax scheme follows the same principles as for any other country. Individuals have to adapt their finances to a new system and face different investment opportunities.
One such opportunity is the Italian Compliant Investment Bond.
This product has been developed specifically to meet the needs of (U)HNW individuals who qualify for the flat tax scheme.
Investing in Insurance Bonds offers several benefits:
Milan is particularly attractive as it’s the largest business centre in Italy. Major investments have been made in infrastructure, and English is widely used and spoken. Italy is a stable country with an excellent healthcare system and is one of the top destinations worldwide for food, historical sites, and art. Being centrally located in Europe, it’s easy to travel anywhere on the continent.
Consequently, there’s a noticeable movement of the wealthy from the UAE and Gulf countries to Italy.
Flat taxers (as they are known) also benefit from no Italian Inheritance Tax, which provides more certainty when planning their estate and succession strategy. This is particularly attractive to (U)HNW UK citizens since the introduction of the Non-Long Term Residence rules. No longer will they be subject to UK Inheritance Tax on non-UK-situs assets, as they would have been under the old Domicile rules.
So, it also makes sense to remove as many assets as possible out of the UK if you become Italian tax resident under the flat tax regime.
Wealth Tax on foreign assets also doesn’t apply, and Capital Gains Tax on non- Italian investments is exempt for flat taxers. Tax reporting requirements are simpler, as the Italian tax office doesn’t require all
foreign interests to be declared. This includes companies owned by the individual and property holdings.
Changing tax residence to Italy under the flat tax scheme follows the same principles as for any other country. Individuals have to adapt their finances to a new system and face different investment opportunities.
One such opportunity is the Italian Compliant Investment Bond.
This product has been developed specifically to meet the needs of (U)HNW individuals who qualify for the flat tax scheme.
Investing in Insurance Bonds offers several benefits:
- A wide range of investment options including Funds, Shares, Alternative Structures, Fixed Interest and Managed Portfolio Services.
- Plan holders can select their own investment manager and transfer existing investments into the Bond.
- Investment can be denominated in any major global currency, including GBP, EUR, USD and CHF.
- No Capital Gains Tax or Dividend Tax is payable whilst assets are held in the Bond. CGT is only potentially payable when a chargeable event occurs (usually death or withdrawal of funds). Tax is deferred and can be managed in line with overall tax strategy.
- Income from foreign sources can be taken free of additional Income Tax.
- Assets can therefore roll-up tax free.
- Unlimited beneficiaries can be appointed. This enables ultimate flexibility upon the policyholder's death. This can be changed at any time, and percentages to existing beneficiaries can also be altered if desired.
- No Inheritance Tax is payable in Italy, which makes distributions quick and easy. Article 1920 of the Italian Civil Code states that payments to beneficiaries from an insurance product are exempt from inheritance tax.
- As the Bond is Compliant with Italian legislation, the policy is protected from creditors under Article 1973 of the Civil Code.
- Additional Death Benefits can be added to provide enhanced protection for beneficiaries. A minimum must be included to make the Bond Compliant. Accidental and enhanced death benefits can be added.
- Insurance companies are rigorously regulated, and policyholders benefit from the knowledge that their money is held in a secure environment. Ireland is well known as a highly secure country to hold investments.
- As the Italian Bond is ‘compliant’, the issuing Insurance Company acts as a tax agent for settlement of any stamp duty and CGT that might be payable. This makes it easy for the Policyholder to manage their tax affairs.
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Get in TouchSuitability
So, which type of investor is the Italian Compliant Bond suitable for?
- (Ultra) High Net Worth individuals who are looking to manage their tax and investments in the most efficient way possible.
- Those who understand and can bear an element of investment risk.
- Individuals who are looking to receive income on an ad hoc or regular basis from their investments.
- Wealthy Entrepreneurs.
- Investors with a 5 to 10+ year investment horizon.
- Individuals looking to manage their inheritance tax and succession planning
and pass on wealth to the next generation. - British taxpayers seeking to disinvest themselves from the UK for Inheritance
Tax purposes.
And who are they unsuitable for?
- Individuals looking to invest in ‘Options’ or leveraged arrangements.
- Those with an investment time horizon of less than 5 years
- The minimum investment is €500,000, so investors with less than that amount should look at other options.
- Individuals with a zero investment risk tolerance.
Summary
When moving from one country to another, the same rules apply for those choosing the flat tax regime in Italy. Lifestyle changes are inevitable, and so are financial planning decisions.
It’s important to combine investment opportunities with tax advantages to maximise your overall financial position.
The Italian Compliant Bond offers both, as well as additional tax-planning opportunities related to succession, inheritances, and passing wealth down the generations.
Paying the flat income tax rate means that supplementary income sourced from foreign investments is tax free and Capital gains Tax can be deferred until a chargeable event occurs.
Policyholders can appoint their own investment manager and transfer existing securities into the Bond. An almost unlimited range of investments are permissible, and portfolios can be denominated in a wide range of currencies.
For additional information on the Italian Compliant Investment Bond, please get in touch with us below:
It’s important to combine investment opportunities with tax advantages to maximise your overall financial position.
The Italian Compliant Bond offers both, as well as additional tax-planning opportunities related to succession, inheritances, and passing wealth down the generations.
Paying the flat income tax rate means that supplementary income sourced from foreign investments is tax free and Capital gains Tax can be deferred until a chargeable event occurs.
Policyholders can appoint their own investment manager and transfer existing securities into the Bond. An almost unlimited range of investments are permissible, and portfolios can be denominated in a wide range of currencies.
For additional information on the Italian Compliant Investment Bond, please get in touch with us below:
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‘Italian-compliant bonds’ Guide
‘Italian-compliant bonds’ Guide
Frequently Asked Questions
01
Are Spanish compliant bonds safe?
They are regulated insurance-based investment products, but their value depends on the underlying investments.
02
Are they worth it?
They can be highly effective for tax planning, particularly for long-term investors and retirees.
03
Can I transfer existing investments into a bond?
In many cases, existing portfolios can be restructured into a compliant bond.
04
Do I need to declare the bond in Spain?
The provider typically handles reporting requirements.