Before you move to Italy you need to ensure that your finances are in order and that you have enough to live a sustainable life in your new home. There are many factors that you need to take into account before you can determine how much money you have to have saved and available to you before relocating.
The costs of living in Italy are relatively low compared to other Western European nations and the quality of life is superb. This makes it one of the world’s premier destinations for relocating Expats and consequently there are over 5 million foreigners living in Italy!
However, before we detail the most important considerations that will determine how much money you need to move to Italy it’s worth familiarizing yourself with a rough estimate of the general living costs in Italy.
Key Factors To Consider.
The following are the key factors that determines how much money you should have before moving to Italy:
Your Age And Situation.
Your age and situation in life are essential factors that need to be considered if you’re planning to move to Italy. Professionals who are already established in their career and are moving to Italy for a new job are likely to be earning an excellent salary and will be able to rely on an ongoing salary during their stay.
On the other hand, younger people who are moving to Italy in a more speculative way, in the hope of finding work, may need to save some money before they leave in order to be financially secure while looking for work. However, younger people tend to be able to live more cheaply and so this needs to be taken into account as well.
Ideally, no matter what your age, you should probably save at least 4 to 6 months worth of living costs that you can fall back on while you are overseas. This can be used to cover your rent and other expenditures as well as to pay for any unexpected medical treatment that may be necessary.
Is Your Relocation Permanent Or Temporary?
If you are planning to move to Italy on a permanent basis then you will need to have a pretty secure financial situation in order to be able to create a long term sustainable life in the country. A long term move will also require you to move your possessions with you; something which can cost quite a lot to ship internationally.
For those who are only planning to visit for a few years it’s less important to have large savings before you leave. Also, if you are only planning to stay for a few years you probably won’t need to take all of your furniture and other possessions with you and so you can save on costs by keeping them in long term storage back at home.
Are You Moving To Italy On A Full Or Part Time Basis?
A full time move to Italy will entail different costs than a part time move. Part time moves to the country will mean that you’ll have to pay for frequent travel to and from Italy as well as complications with storing your possessions, renting your properties and arranging multiple Visas.
However, a full time move will cost more upfront and then less than a part time move once you’ve settled into your new home. This is, nonetheless, a complicated consideration that you’ll have to think hard about before you depart for Italy.
What Sources Of Income Do You Have?
Depending on your source or sources of income you will have to make a decision about how much money you should take with you when you move. For example, if you have investments which deliver regular returns that you can rely on then you will be more able to relocate with less savings in your bank. If you rent a property in the US then you can use the rental income to cover the vast majority of living costs in Italy because of the lower costs of living.
Alternatively, if you are relying only on your job, or a future job, to support your lifestyle then you should be more cautious and try to save as much as you can before you depart for Italy.
Don’t forget, that after you’ve moved to Italy you will be relatively cut off from your support networks at home and so ensuring that you have a secure financial position is even more important than it would usually be!
Do You Need A Car?
While you’re in Italy it can be hugely beneficial to have your own car. This will open up large areas of the country which are otherwise difficult to access if you rely solely on public transport. However, owning a car comes with costs that you need to factor into your plans. Alternatively, you can rent a car in Italy as well.
You can ship a car from the United States to Italy but it can be quite expensive to do so. Alternatively, you can easily buy a new or second hand car once you arrive in Italy. You can apply for an International Driving License which will last you for a year but after that you will need to apply for an Italian driving license. You will also need to pay for driving lessons and a test before you can obtain your official Italian driving license.
If paying for a car in Italy is beyond your means then you can certainly make use of the public transport which is excellent in all major cities; although it is less efficient in rural parts of the country.
As a broad guideline owning and maintaining a car in Italy will cost you between $300 and $400 per month including insurance and gasoline. There may be additional parking fees which you’ll also have to pay if you are regularly parking your car in urban areas.
Depending on your health and your healthcare policy this cost can be extremely varied. The Italian healthcare system is world class and provided that you have a good insurance policy you can obtain any treatment that is necessary.
Once you have applied for and received your residency permit you can also access the Servizio Sanitario Nazionale (SSN), the state health service, free of charge for most treatments. In fact, the vast majority of Expats who are working in Italy should automatically qualify for state healthcare but you should always check with your employer first if you are moving to Italy to start a new job.
Nonetheless, when you first move to Italy you should definitely ensure that you have a good healthcare policy that you can rely on if anything were to happen.
What Expenses Do You Have Back Home?
Even though you’ve moved to Italy you may still have to cover certain costs back at home! For example, you may have to pay condo fees or pay for the storage of items that you have left behind. All this needs to be calculated in your planning because while you are overseas it will be much harder to deal with problems that arise back at home.
Which Region Of Italy Are You Relocating To?
There are huge differences in the cost of living in the various regions of Italy. Major tier 1 cities such as Rome, Milan and Florence are far more expensive to live in than the rural towns and villages. Living in a rural area can be extremely cheap and although you will have access to less services and amenities, traditional life in the provinces is idyllic and precisely why many people relocate to Italy. I live part time in Volterra. Check out my article on the cost of living in Tuscany.
Are You Planning To Travel While You’re In Italy?
Once you’ve settled in Italy you are in an ideal position to explore the whole country as well as the European continent in general. Transport in Europe is fairly cheap if you travel by train or bus and even intercontinental flight tickets can be bought for under $100 if you look for deals with the budget airlines.
However, you also need to take into account the cost of staying in hotels, eating out and visiting heritage sites while you are travelling in and around Italy. Even so, it’s certainly worth stretching your budget a little bit to take advantage of your new location in Italy and to try to see as much as you can while you have the chance.
Your Tax Liabilities In Italy.
One of the most important factors that you have to take into account when you’re planning your relocation to Italy is the tax implications of your move. The Italian tax system is fairly progressive which means that the higher your income is the more you will have to pay as a percentage of your earnings.
If you are a resident of Italy and live in the country for more than 183 days each year then you are required to pay tax on your income. If, on the other hand, you only spend a few months of each year in the country then you don’t need to pay any tax on your income.
The income tax rates in Italy range from 23% for low incomes up to 43% for higher income earners.
|Income Range (Euros)||Tax Rate (%)|
|0 – 15,000||23|
|15,000 – 28,000||27|
|28,000 – 55,000||38|
|55,000 – 75,000||41|
|75,000 – Above||43|
As well as income tax you also have to pay a municipal tax of up to 0.9% and a regional tax of between 0.7% to 3.33%.
Italy offers some good tax deals for Expat retirees with a 7% flat tax rate in Southern Italy. To be eligible for this offer you must officially move your tax residency status to a municipality in Southern Italy that has a population of under 20,000. Qualifying regions include Sicily, Sardinia, Campania, Abruzzo, Puglia, Molise and Basilicata. As a retiree you can take advantage of a 7% tax rate for the first 9 years of your stay.
You will also have to pay property taxes if you are buying a house. The property tax for purchasing a house is between 2% to 9%. This depends on whether it is your main residence or a second home. For your main residence the tax is 2% and for a second property it rises to 9%. You also have to pay the land registry tax which is usually between 50-200 Euros.
If you’re finding it difficult to calculate how much tax you would have to pay in Italy then you can contact a local financial services firm that can run through your accounts and personal situation to give you an exact figure.
Costs Of Living For 2 People In Italy.
The table below gives you a general idea about the cost of living in Italy.
|Expenses||Cost For Two People ($)|
|Rent||600 – 800|
|Utilities||200 – 250|
|Car (Gas/Insurance/Maintenance)||300 – 400|
|Property and Municipal Taxes||30 – 50|
|Groceries||200 – 300|
|Entertainment (Including eating out)||100 – 200|
|Healthcare||40 – 200|
|Clothes and Shopping||100 – 200|
|Total||1620 – 2500|
Keep in mind that the cost of living in Italy, like the United States, will depend on your living situation, work situation, healthcare costs, lifestyle, your location and other factors mentioned in the section above.
Establishing Financial Security Is Vital.
While you are making your plans to relocate to Italy your financial situation and future security should always be at the forefront of your mind. Without a solid financial base your time in Italy will be difficult and stressful so you should take special care when making any decisions that are related to your finances.
On the positive side of the equation, the cost of living in Italy is very cheap compared to comparable Western countries and with the excellent weather, fantastic food and huge wealth of art and culture to explore you’re bound to have a wonderful time in the country provided you’ve covered your financial bases.