Italy is undoubtedly a highly desirable place to live, with its famous heritage and architecture, the pristine coastal resorts and metropolitan cities, and, of course, the cuisine and culture that attract expatriates from around the world.
One of the many considerations for any expat either living in Italy or considering a move is the taxation system, which is often regarded as notoriously complex. Financial advice is recommended for any expat, with many factors to assess, from retirement planning options and pension transfers to overseas assets, investment structures, and income taxation.
In Italy, this role may be more relevant to a wider proportion of expats. While income tax is based on progressive tax brackets, similar to many other countries, the complications relate to the contrasts between tax levies, exemptions and rates, which can differ between each province, region and city.
Rather than having only the central taxation authority that sets all federal tax bands and allowances, each of the metropolitan regions within Italy can determine additional municipal and provincial tax rates – which expats must understand to be able to plan accordingly and protect their wealth.
Understanding Financial Advice and Taxation Titles in Italy
Knowing the terminology is important, ensuring you hire an experienced and qualified professional to provide the necessary assistance. Two of the most common designations are:
- Ragioniere – a finance professional who holds a diploma level qualification and works as an accountant or in another role, certified by either a technical or commercial institution.
- Commercialista – either an accountant, lawyer or adviser who holds a BSc in Economics and is permitted to provide services related to finances, tax, economics, commercial transactions and other accounting matters.
In comparison to the financial advice sector in the UK, a commercialista might be somebody who works as an accountant, and a ragioniere might be a mortgage adviser, accounts assistant or bookkeeper – although that may depend on whether they work within a private accountancy practice, for a bank or finance association, or for another organisation.
Expats can also hire a promotore finanziario (financial promoter), a position often assumed to be the equivalent of an independent financial adviser in Britain. However, many professionals with this title work for a bank rather than offering direct financial advice, wealth planning or tax management services.
Following the publication of a new piece of legislation called the Unified Financial Text in 1991, promotori finanziari are permitted to offer advisory services on a fee basis. Many now choose to work separately from banks to address perceptions that advisers may only be able to sell products available from their respective organisations.
Choosing the Right Financial Adviser as an Italian Resident Expat
As we’ve already seen, it may not be obvious which accountant, financial adviser or tax specialist is suitably knowledgeable to provide the guidance or retirement advice you need to structure your affairs and protect your financial future while living in Italy.
The market is further complicated by the regulatory structure, which is devolved between three primary organisations:
- The Commissione Nazionale per le Società e la Borsa (CONSOB) is responsible for regulating and supervising the financial markets within Italy and is tasked with protecting consumers buying retail investment products.
- The Banca d’Italia, or Bank of Italy, is the central bank and oversees asset management and investment services provided by commercial organisations and financial institutions.
- The Istituto per la Vigilanza sulle Assicurazioni (IVASS) is the regulator for insurance services and providers.
Any company or adviser within Italy looking to provide investment services or activities to the public, including retail investment products, must be an Italian investment firm – or a società di intermediazione mobiliare. Asset management companies, or società di gestione del risparmio, are allowed to offer some investment advice services, although these may not be comprehensive.
Italian residents can access the CONSOB register to verify whether any company or organisation they are considering using is registered as an authorised investment adviser.
The most essential aspect to look for is whether an adviser is independent, represents an investment firm, or is an adviser linked with a bank or other financial provider. This scenario is much like deciding whether to speak to an in-house mortgage adviser at your bank when selecting a product, as opposed to consulting an independent financial adviser, whose only priority is to offer unbiased advice to help you make informed decisions.
The challenge is that stepping into an advisory firm in Italy doesn’t always mean the consultants are guaranteed to be independent. Depending on their position, an adviser may not be able to provide advice on any product, tax-efficient structure or strategy that appears to be the best option for your financial situation.
Restricted financial advisers are commonly limited in what they can recommend or the products they can offer, including insurance products like life protection insurance or critical illness insurance.
Why Is it Difficult to Access Independent Financial Advice in Italy?
Most Italian residents who seek financial advice rely on their bank or an asset manager who is authorised by CONSOB. This model means that, in many cases, a restricted adviser works for an institution and may not be able to provide comprehensive advice or may not be IVASS authorised to offer guidance about insurance coverage.
A qualified accountant or investment manager may be allowed to market their services as independent provided they are paid by the bank or financial institution they represent – rather than charging the client a separate fee. That means many act as restricted advisers, receive a nominal salary and earn the majority of their incomes through commissions.
This system often comes as a surprise to expats, who assume the Italian financial markets will work in much the same way as they do in the US or the UK – and automatically perceive that an independent adviser must meet strict regulatory requirements and be registered and authorised by a body such as the Association of Chartered Certified Accountants (ACCA).
Therein lies part of the answer: independent financial advisers can hold an accreditation such as the ACCA designation anywhere in the world. This qualification, alongside many others, is available to international applicants of a professional standing.
Whether they primarily work within Italy, have relocated to Italy following a career in financial advisory services and wealth management elsewhere, or specialise in personalised services for Italian residents from overseas, a professional adviser who is truly independent should always hold a recognised qualification.
Next, we’ll look at some of the options and share our suggestions for expats living in Italy who need to feel confident that the recommendations they are given are in their best interests.
Download our FREE Guide to Expat Taxes in Italy
Tips for Expats in Italy Looking for Independent Financial Advice
The information we’ve outlined here shares some insights into why the Italian tax system and the access to independent financial advice is considered so challenging – but that by no means indicates that there aren’t a number of skilled, reputable and well-established advisers on hand who offer unbiased and unrestricted advice.
Options may include:
- Sourcing advice and support from different professionals, depending on their authority to practise within Italy. This route isn’t recommended since splitting your advisory services between an investment adviser, an insurance provider, and a taxation specialist will normally mean a lack of cohesion or understanding of your overall financial needs.
- Relying on advisers working within banks or financial institutions – many banks also provide robo advisers, which operate as automated services to answer basic questions about fees, products and tax liabilities. Again, this isn’t preferable since we would never suggest making important financial decisions based on generic advice.
- Working with an international expat specialist in investment management, taxation planning and strategic wealth management, incorporating everything from pension transfers to insurance and education fee planning to income tax and cross-border asset declarations.
Many expats, particularly those with a high net worth or with international assets and investment portfolios, opt to consult a global expat financial advisory specialist rather than navigate the difficulties of the domestic advisory landscape or depend on restricted advice.
While this can be beneficial in terms of peace of mind, it is also a sensible solution since expats commonly have financial profiles and tax exposures that are more complex than those of a lifelong resident who has never lived, worked or owned assets in any other jurisdiction.
Expats with property assets within the UK, queries about how to manage pension products, or potential inheritance tax exposure in their home country require tailored support when managing their finances. They need assistance from an adviser who understands both tax systems and can draw on that knowledge to offer reliable and customised advice.
Chase Buchanan Wealth Management recommends working with a specialist Private Wealth Manager who lives or has lived in your country of residence since this depth of on-the-ground knowledge will surpass that of an adviser who doesn’t have first-hand experience working in the region or liaising with the tax authorities.
For any further information about any of the details we have shared in this guide or for help from the capable Chase Buchanan team in finding the professional financial advice and support you need, please get in touch.
*Information correct as of April 2024