Law decree no. 34/2019 (so called “decreto crescita”) introduced measures for economic growth, including significant tax incentives aimed at attracting highly remunerated workers to italy.
More specifically, the changes improve the tax incentives for inpatriate workers, providing an higher increase on the exemption of the income from employment/self-employment and on extension of the tax benefit term for individual who transfer their tax residency to italy from 1 january 2020.
The new regime
The special tax regime for “inpatriates” (i.e. Certain individuals transferring to italy for working purposes) offers a beneficial tax treatment to italian source employment or self-employment income.
The amendments simplify the requirements to access the tax regime by reducing the necessary tax periods of foreign residence (from 5 to 2 tax periods) and improve the tax exemption by reducing from 50% to 70%/90% the relevant irpef taxable basis.
More specifically, non-italian tax resident individuals (regardless their citizenship) transferring the tax residence in italy since the above date, will benefit of a reduction of the taxable income equal to 70% for 5 tax periods (10 tax periods under certain conditions). A reduction of taxable income equal to 90% applies to taxpayers who transfer their residence to certain regions of southern italy (abruzzo, molise, campania, puglia, basilicata, calabria, sardinia and sicily).
In accordance to the above, the following conditions should be met:
- i.The workers have not been resident in italy in the two tax periods preceding the transfer;
- i.The workers do not to transfer the tax residence abroad before the expiry of two years after their relocation to italy;
- iii.The working activity is performed in italy for a period exceeding 183 days during the year.
Moreover, other simplifications apply as the holding of a university degree, the executive role or the high specialization are no longer required and the enrolment with “aire” (the register of italian citizens living abroad) prior the transfer should not be considered as a mandatory requirement to benefit from the special regime.
Changes are also introduced for the special regime for researchers and professors allowing the 90% exemption of taxable income as the duration of the special regime is extended from four to six years, with the possibility of a further extension where additional requirements are fulfilled.