In order to promote economic development and boost the real estate market, the Italian tax authority has introduced numerous benefits to assist people who have or are considering moving their residence to Italy, either for professional or personal reasons.

The relevant law, Law n. 232 of 11 December 2016 (also known as Italian 2017 budget law), has introduced three new tax rules and exemptions for three different kinds of workers. As previously mentioned, all the benefits provided, require as mandatory the transfer of the fiscal residence to Italy by the individual who wishes to benefit from them. Additionally, there are minimum periods of time that the individual must maintain residence, depending on the specific benefit granted.

1. Professors and researchers

Exemption of 90% for four years on the income generated in Italy

Requirements:

  • to have been permanently resident abroad 
  • to have a university degree or equivalent
  • to have carried out teaching or research activities abroad for at least two years
  • to transfer the tax residence in Italy, according to art. 2 of the TUIR (Testo Unico delle Imposte sui Redditi)
  • to continue teaching or research activities in Italy 

2. Workers 

Exemption of 50% for five years on the income generated in Italy.

2.1 Workers holding a University degree

Requirements:

  •  to have graduated
  •  to have worked as an employee or self-employed abroad for 24 months, or to have studied abroad for 24 months and to have obtained an academic degree
  • to transfer the tax residence in Italy, according to art. 2 of the TUIR (Testo Unico delle Imposte sui Redditi)
  • to be employed or  self-employed in Italy

2.2 "Other workers"

Requirements:

  • to transfer the tax residence in Italy, according to art. 2 of the TUIR (Testo Unico delle Imposte sui Redditi)
  • to not have been resident in Italy during the previous five fiscal periods
  • to remain in Italy for at least two  years
  • to work mainly in the Italian territory
  • to work for companies which are based in Italian territory or for foreign companies which are controlled or control a company established in Italian territory (only for employees)
  • to hold an executive position or to be in possession of high-level qualifications or specialisations (only for employees)

3. New residents

Substitute tax for the value of € 100.000 per year (€ 25.000 per family member) for 15 years on the income produced abroad.

Requirements:

  • to transfer the tax residence in Italy, according to art. 2 of the TUIR (Testo Unico delle Imposte sui Redditi)
  • to have been resident abroad during the previous nine fiscal periods

When a business asks an employee to relocate to a foreign country for a period of time it is a significant decision and not all employees are prepared to uproot themselves and their families without compelling reasons and incentives. The Italian authorities have created extremely attractive tax benefits for individuals who are employed to work in Italy and businesses would do well to consider focussing on Italy for the overseas deployment of their staff.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.