The new legislation on taxation could push many athletes to move their residence to Italy. We have to take a step back, though, to better understand what we are talking about. The best possible thing to do is to explain what the Flat Tax is and the reasons why Italy could be a new tax heaven thanks to the introduction of this new tax.

The Flat Tax is preferential taxation (provided in the last Budget Act) for those who have had a foreign residence for many years and decide to move to Italy. By activating this taxation, those who decide to reside in the Bel Paese could pay a fixed fee of €100,000 a year applicable only on foreign income, whereas they would normally pay taxes on income generated within Italy (this is the reason why it is not a true flat tax).

The measure is applicable to those who currently are not resident in Italy or Italians who were not resident in Italy for at least nine of the last ten years. This form of taxation can be exploited for a maximum of 15 years. In addition, it is also applicable to family members in possession of the requirements. In this case, they will benefit from a substitute tax of €25,000. According to the current data, the Flat Tax could be applicable to around 1,000 people.

Barcelona - Lionel Messi
Barcelona – Lionel Messi

The Flat Tax makes Italy a possible new tax haven

How can the Flat Tax benefit athletes around the world? This tax will probably not be beneficial to those footballers that are currently playing in Italy. It would be difficult for them to demonstrate that their income, even that coming from foreign companies (as in the case of image rights), is not produced within the Bel Paese. On the other hand, it could be a great advantage for those players that are now earning like a multinational company. Let’s focus on the Portuguese superstar Cristiano Ronaldo. He would pay the tax on salaries and sponsors but he could only pay €100,000 for his income from assets (such as hotels or real estate associated with his name).

In the case of athletes involved in other sports the situation is different, especially for those with operations in several different countries. We are talking about a broad category, from golfers to tennis players as well as drivers (Formula 1 and MotoGP), cyclists, and skiers. These would be all athletes who receive income mainly generated from activities away from Italy, therefore, they would get a huge benefit moving their residence to Italy because they could pay only €100,000 per year to the Italian tax authorities. This would be a great benefit not only for those who live abroad today but also for those who are already in low-tax countries. A kind of “tax haven“, therefore, not only for sheiks or celebrities but also for athletes.