Member News

Italian Tax Incentives to Attract Inbound Workers

As of 1 January 2020 a favourable Italian tax regime is in effect to attract “inbound workers”, including
sportsmen and sports agents, who earn the majority of their income from activities carried out in Italy.
Income from employment, self-employment and the like (“Eligible Income”) of inbound workers who
become Italian tax residents will be partially exempt from Italian income tax. 70% (for inbound workers,
other than professional sportsmen) or 50% (for professional sportsmen) of the Eligible income will be
exempted from income taxes (“Tax Incentives”). The 70% exemption will apply also to business profits
generated by inbound workers who will start a business in Italy as from fiscal year 2020.

The new regime:

  • broadens the category of inbound workers that are eligible for the Tax Incentives;increases the ordinary income tax exemption from 50% to 70%;
  • provides for a specific income tax exemption (50%) with regard to professional sportsmen;
  • introduces a higher income tax exemption (90%) and an extension of the Tax Incentives if certain
    requirements are met.

Who can benefit from Tax Incentives

The Tax Incentives apply to workers who move their tax residency to Italy as from fiscal year 2020. To
benefit from the regime at stake, inbound workers must (i) become Italian tax residents, (ii) not have
been tax resident in Italy during the previous 2 fiscal years before moving their tax residency to Italy,
(iii) undertake to remain in Italy for at least 2 years and (iv) perform their activity mainly in Italy.
In principle, to become resident in Italy for tax purposes, individuals must be, for the greater part of a
fiscal year (i.e., more than 183 days):

  1. enlisted in the Registry of the resident population (Anagrafe della popolazione residente); or
  2. resident in Italy according to Article 43 of the Italian Civil Code (the residency of an individual is
    the place where he / she has his habitual abode); or
  3. domiciled in Italy according to Article 43 of the Italian Civil Code (the domicile of an individual is
    the place where he / she has established the principal centre of his / her business and interests –
    so called centre of vital interests).

The eligibility for Tax Incentives is available also to Italian citizens who have resided abroad in the
previous two fiscal years before moving back to Italy. Italian citizens who failed to enlist with the
Anagrafe degli Italiani Residenti all’Estero (AIRE) when moved abroad can still opt for the special
regime so long as they moved back to Italy after 2018 after being tax resident in the two previous fiscal
years in a country or territory where a double taxation convention with Italy is in force.

Inbound workers

The partial exemption for income earned by inbound workers (other than professional sportsmen) is
increased to 90% if qualifying individuals move their residency to one of the following Italian Regions:
Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia and Sicily.
The above-mentioned Tax Incentives are available for 5 fiscal years, starting from the fiscal year in
which the relocation occurred. The renewal of Tax Incentives for a further 5 fiscal years is granted to
qualifying individuals who:

  1. have at least one underage child or a dependent child (figlio a carico), even in pre-adoption foster
    care; or
  2. buy a residential real estate in Italy, after the relocation to Italy or during the 12 months preceding
    such relocation. The purchase of the residential real estate may be made either by the individual
    or by his / her spouse, cohabitant, son or daughter (even in co-ownership).

If the requirements listed under a. and b. above are met, the Eligible Income earned by qualifying
individuals is 50% exempt from Italian income tax for a further 5 fiscal years.

If qualifying individuals have at least three underage children / dependent children (even in preadoption foster care), the exemption is increased to 90% for a further 5 fiscal years (“90% Children
Exemption”).

Peculiarities of qualifying professional sportsmen

A 50% exemption applies to professional sportsmen falling under the scope of Law no. 91 of 23 March
1981, according to which professional sportsmen are athletes, coaches, team managers and athletic
trainers who (i) perform sports activities in exchange for a consideration on a continuing basis and (ii)
are recognized as professional by a Federation. The ordinary 70% exemption should apply to
qualifying non-professional sportsmen and sports agents.

The 50% exemption for professional sportsmen applies for 5 years. The further 5 fiscal years renewal
is granted also to professional sportsmen provided that the requirements listed under a. and b. of
Section 2 above are met. No 90% Children Exemption applies to professional sportsmen.

To access the Tax Incentives, professional sportsmen shall make a specific option and pay a charge
(contributo) corresponding to 0.5% of their taxable income. Modalities and conditions of the option will
be established by a decree to be issued.

Other special tax incentives for non-Italian tax resident individuals

For non-Italian tax resident individuals (including sportsmen and sports agents) who (i) will still earn the
majority of their income from activities performed out of Italy and (ii) want to move to Italy, it is possible
to opt for a flat tax regime whereby in lieu of ordinary income taxes a flat amount of EUR 100,000 per
year applies on any income sourced outside of Italy, regardless of the amount.

Income from Italian sources will remain subject to ordinary regime. The option for the flat tax must be
made through the annual tax return and lasts 15 years. It can be waived at any time during that term.
Further benefits apply to this special regime.

To qualify for the option, an individual must:

  1. have been a tax resident of countries other than Italy for at least 9 of the 10 years preceding the
    year during which he or she becomes an Italian tax resident;
  2. request a ruling (interpello) from the Italian Tax Authorities by the deadline for the filing of the tax
    return relating to the fiscal year in which he / she became resident in Italy for tax purposes and
    receive the approval of his / her flat tax regime election.

Contact:

Fabio Ilacqua

Partner – Head of New York Office

GOP USA, LLC – One Rockefeller Plaza, Suite 1610,

New York, NY 10020 Tel.: +1 212 957 9600 E-mail: filacqua@gop.it

Compliments of Gianni, Origoni, Grippo, Cappelli, & Partners, a Member of the EACCNY