Italian inbound workers tax regime

Subjects in scope

The italian inbound workers tax regime (“impatriati“), introduced by Article 5 of Legislative Decree 209/2023, replacing the previous regulation under Article 16 of Legislative Decree 147/2015, provides for a 50% reduction in the taxable income base for workers who transfer their tax residence to Italy under Article 2 of the TUIR, provided the following conditions are met:

• Workers must not have been tax residents in Italy in the three tax periods preceding their transfer, which becomes:
  • Six tax periods if the worker was not previously employed in Italy for the same entity or for an entity belonging to the same group.
  • Seven tax periods if the worker, prior to their transfer abroad, was employed in Italy for the same entity or for an entity belonging to the same group.
• The work activity must be carried out for the majority of the tax period (i.e., at least 183 or 184 days) within the Italian territory.
• Workers must have the qualifications of high specialization or expertise.
• Workers must commit to being tax residents in Italy for a period of at least 4 years.

Benefits of the regime

The benefit, capped at a maximum of €600,000, applies starting from the tax period in which the transfer of tax residence to Italy occurs and for the subsequent four tax periods, without the possibility of extension.

The eligible income for the tax relief includes:

• Employment income (Article 49 of the ITC);
• Income assimilated to employment income (Article 50 of the ITC);
• Self-employment income “arising from the practice of arts and professions” (Article 53, paragraph 1, of the ITC).

Additional income received by the beneficiary, such as dividends or rental income, is taxed under the ordinary rules.

Unlike the regime for new residents under Article 24-bis of the ITC, the inbound workers regime applies solely to income generated in Italy. Therefore, income sourced from abroad is taxed according to ordinary regulations.

Compatibility with other tax schemes

According to the Italian Revenue Agency’s guidelines (Circular No. 17 of May 23, 2017), an individual transferring to Italy cannot benefit from both the italian inbound workers tax regime and the new resident regime in the same tax period. However, it is possible to benefit from one regime for one or more tax years and the other for the remaining years, provided the objective and subjective requirements of the respective regulations are met.