On May 1, 2019, decree-law no. 34 of April 30, 2019 with several measures intended to encourage economic growth entered into force in Italy (“Law”). Among several tax provisions, the Law has introduced a tax reduction for employees and self-employees returning to Italy after not being resident in Italy for the previous two years who undertake to remain in the country for the next two years. The aim of this provision is to make it easier for employers to attract valuable employees from abroad.
As of 2020, the main innovations are:
(1) Only 30% of returned employees’ income will be taxed (instead of 50% under previous tax regime);
(2) 30%-threshold falls to only 10% for those undertaking to reside in one of the following region: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardegna e Sicilia;
(3) Professors or academic researchers are entitled to further benefits, including the extension of the taxable income reduction benefit from 4 to 6 years (even up to a maximum of 13 years subject to certain conditions);
(4) Simplified conditions to access to such benefits;
(5) Further benefits for the following 5 years upon occurrence of specific conditions (i.e. number of minor children, acquisition of a property in Italy, undertaking residence in the South of Italy);
(6) Benefits are accessible for either Italians listed in Registry of Italian Residents of the Foreign Countries (acronym AIRE) either Italians not listed as long as they can provide evidence of having resided in a foreign country which signed a double-taxation convention in the two financial years preceding the return to Italy.
Compliments of AEM Carnelutti, a member of the EACCNY