Italy: Tax Benefits for People Who Transfer to Italy
By Thomas Pichler, Pichler Dejori Comploj Partner
For several years now, the Italian tax system has provided favourable measures for workers who decide to transfer their residence to Italy. In July 2019, a new preferential tax regime, introduced with Legislative Decree No. 34/2019, expanded those benefits in terms of percentage of income tax exemption (from 50% to 70%) and facilitated the subjective requirements. The new regime is now also accessible to workers who do not have a university degree or do not hold any management positions. Accordingly, professional athletes (e.g., soccer players) and artists (e.g., singers or actors) can also now benefit from those tax benefits.
To fall within the scope of the new preferential regime, Italians or foreigners need to transfer their fiscal residence to Italy pursuant to Art. 2 of the Italian Income Tax Act. To prevent abuse, the person should not have resided in Italy for at least two years and should not have worked mainly in Italy in the two tax periods preceding the transfer.
Furthermore, the new regime allows not only employees or persons who gain incomes similar to salaried work (e.g. board of director fees) to apply for the preferential regime, but is accessible also for freelancers (e.g. lawyers, architects, consultants, doctors, engineers) and persons who start an entrepreneurial activity in Italy. Interestingly, there is no upper limit of income on which the benefits apply.
The benefits last for five years and are applicable to persons who transfer their fiscal residence to Italy, beginning from 1 January 2020.
Under certain conditions, an extension in terms of exempted income (up to 90%) and in terms of period (up to ten years) is conceded to those persons who move to certain Italian regions (Southern regions or Island regions such as Sardinia and Sicily) and have minor or dependent children, or decide to acquire residential property in Italy.
Thomas PichlerGGI member firm
Pichler Dejori Comploj Partner
Auditing and Accounting, Tax Consulting
T: +39 0471 288333
For almost 40 years now Pichler Dejori Comploj Partner has provided advice on tax issues, business management, and corporate law in relation to national and international clients. The main office is based in Bolzano, South Tyrol, Italy,and the branch office is in Milan.
Thomas Pichler is a certified tax advisor. He successfully completed a BA in economics, followed by a two-year MA in corporate tax legislation from the Cattolica University of Milan. In 2017, Pichler received the “Master of Laws – LL.M” in international tax law from the WU.
Published: International Taxation Newsletter, No. 11, Autumn 2019 l Photo: Giacomo - stock.adobe.com