Key changes to the Impatriate Tax Regime

The Draft Decree implementing the tax reform on international taxation, preliminarily approved by the Italian government on 16 October, significantly overhauls the tax relief for “Impatriate” workers. 

The new regime provides for the repeal, as of 1 January 2024, of the Impatriate Regime previously in force (see Article 16 of Legislative Decree 147/2015, as well as Article 5, paragraphs 2-bis, 2-ter and 2-quater of Legislative Decree 34/2019), which will continue to apply only with respect to individuals who have transferred their tax residence to Italy before 2024. 

The proposed Scheme would seem, inter alia, to take a step backwards from the previous provisions and, as of FY 2024, would only allow access to the favorable regime to those workers with high qualification and specialization requirements, who will be able to benefit from a 50% tax-free allowance if their income reaches a pre-established maximum. 

The Draft Decree also provides that the scope of application of the 'new' favorable regime includes income from salaried and equivalent employment and from self-employment generated in Italy, but not income of individual entrepreneurs (who benefit from the regime in the current legislation). 

The tax relief for professors and researchers remains unchanged (see Article 44 of Decree-Law No. 78/2010), while the regime reserved for professional sportsmen still needs to be clarified in a first reading. 

One of the most important updates is the introduction of a maximum capped at 600,000 euros. 

The new tax-free allowance, as mentioned above, will be 50 per cent rather than 70 per cent and, unlike in the past, there will be no further reduction for those who move to southern Italy (where the tax free-allowance is currently 90 per cent). 

The provision also reverts to including in its scope only those persons who meet the requirements of a high qualification or specialization, as defined by specific decrees. 

Also modified are the requirements linked to previous foreign residence and maintenance of Italian residence, under penalty of having to pay back the benefits claimed, in addition to relevant sanctions and interest. 

In fact, it will be required that the worker have been resident abroad for the three tax years preceding transfer to Italy (instead of the two tax years required under the current regime) and that they undertake to reside in Italy for at least five tax years instead of the two required under the current regime. 

Finally, with reference to the requirements concerning the work activity to be performed in Italy for the greater part of the tax period, the new regime requires that the work be carried out under a 'new' employment relationship with a different entity from the one where the employee was employed abroad prior to the transfer, as well as from those belonging to the same group of companies (which, at first sight, limits the scope of the benefit). This aspect affects the “remote workers” who can benefit from the regime in the current legislation.

Edited by Giulia Sorci