Published on and written by Cyril Jarnias
San Marino, this small landlocked state in the heart of Italy, is attracting more and more expatriates seeking favorable tax conditions. With its picturesque landscapes and rich historical heritage, the world’s oldest republic offers much more than a pleasant living environment. It also provides one of the most competitive tax systems in Europe. Discover all the tax advantages that make San Marino a top destination for expatriates.
An Attractive Tax System for Individuals and Businesses
San Marino’s tax system stands out for its simplicity and particularly low tax rates, making it a true tax haven in the heart of Europe.
Personal Income Tax
Personal income tax in San Marino is based on a progressive scale ranging from 9% to 35%. The tax brackets are as follows:
These rates are significantly lower than those in most European countries, representing a considerable tax advantage for expatriates.
Corporate Income Tax
The standard corporate income tax rate in San Marino is 17%, one of the lowest in Europe. Additionally, new businesses benefit from a 50% reduction on this rate for the first 5 years of activity, bringing the effective rate down to just 8.5%.
VAT
Unlike most European countries, San Marino does not apply VAT but a single tax on imports called the “monofase tax.” Its standard rate is 17%, with reduced rates for certain products and services.
Property Tax
There is no property tax per se in San Marino. Property owners are simply required to pay a registration tax when purchasing a property.
Good to Know:
Expatriates residing in San Marino benefit from a very favorable tax system compared to most European countries, with significantly lower tax rates on income and corporate profits.
Special Schemes to Attract Investors and Retirees
San Marino has implemented several special tax schemes aimed at attracting foreign investors and retirees.
Tax Regime for New Residents
Individuals who transfer their residence to San Marino can benefit from a preferential tax regime called “atypical residence with reduced taxation.” This regime allows paying a flat tax of 7% on foreign-source income, with a minimum of €10,000 and a maximum of €100,000 per year.
Tax Regime for Retirees
San Marino offers a very advantageous tax regime for foreign retirees. Individuals over 60 years old who receive a pension of at least €50,000 gross per year can benefit from a flat tax rate of just 6% on their pension.
Tax Regime for Entrepreneurs
Entrepreneurs who start a business in San Marino can benefit from a total exemption from corporate income tax for the first 3 years of activity, followed by a reduced rate of 4% for 4 years, then 8% for 5 years.
Good to Know:
These special tax schemes make San Marino a particularly attractive destination for investors, retirees, and expatriate entrepreneurs seeking tax optimization.
Tax Returns: Simplicity and Transparency
The tax return system in San Marino is characterized by its simplicity and transparency.
Income Tax Return
Residents of San Marino must file their income tax return by June 30 of the year following the income year. The return can be filed online through the Sammarinese tax administration portal.
Corporate Income Tax Return
Companies must file their corporate income tax return within 6 months of the close of their fiscal year. They must also make quarterly advance payments based on the tax from the previous year.
Accounting Obligations
Businesses are required to keep accounts in accordance with international standards and have their annual accounts certified by a certified public accountant in San Marino.
Good to Know:
Although San Marino’s tax system is relatively simple, it is recommended that expatriates consult a local certified public accountant to ensure compliance with all tax and accounting obligations.
Practical Tips for Optimizing Your Taxes in San Marino
Here are some tips to make the most of San Marino’s advantageous tax system:
Choose the Right Residency Status
It is crucial to choose your tax residency status carefully based on your personal situation. Expatriates have several options, including ordinary residence, atypical residence with reduced taxation, or retiree status.
Plan Your Move
Good planning for your move to San Marino is essential to optimize your tax situation. It is recommended to consult a specialized tax attorney before transferring your residence.
Structure Your Investments
San Marino offers many tax optimization opportunities for investors. It may be advantageous to structure your investments through a Sammarinese company to benefit from local tax advantages.
Meet Filing Obligations
Although taxation is favorable in San Marino, it is crucial to strictly comply with all filing obligations to avoid any risk of a tax audit.
Good to Know:
San Marino’s tax system is particularly advantageous, but it is important to do thorough research and seek guidance from professionals to optimize your tax situation legally.
San Marino offers an extremely attractive tax framework for expatriates, with some of the lowest tax rates in Europe and particularly advantageous special schemes. Whether you are an individual seeking tax optimization, an entrepreneur looking to grow your business, or a retiree in search of a tax haven, San Marino has many assets to offer. However, it is crucial to do thorough research and seek guidance from professionals to make the most of this tax system while remaining compliant with local and international regulations.
Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
