ITALY - FAVOURABLE TAX REGIME IN ITALY - United Tax Network Worldwide
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ITALY – FAVOURABLE TAX REGIME IN ITALY

The Italian Government approved the Growth Decree, which entered into force starting from May 1, 2019.


1. Expatriates.
Provisions in favor of expatriate personnel have to be highlighted as those who transfer their residence in Italy starting from FY 2020 may benefit from a 70% tax exemption on their income from employment, director’s income and self-employment income.


The exemption has a duration of 5 fiscal years, with the possibility to extend it for further 5 years, provided that specific requirements are met (presence of dependents, purchase of a residential property, etc.) In fact, exemption may rise up to 90% for additional 5 years if workers have at least 3 children (minors or dependent).


Finally, workers who transfer their residence to a region chosen among Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia or Sicily benefit from a tax exemption of 90% of their employment income.

2. Teachers and researchers

Starting from the 1st of January 2020, the benefit (90% exemption of their taxable basis) for teachers and researchers applies for the year in which the professor or researcher is qualified as tax resident in Italy pursuant to Article 2 of Italian Tax Code and for the following five fiscal years (for a total incentive period of 6 years).  Also in this case it is possible to extend the overall duration of the benefit for 8, 11 or 13 years, upon presence of certain conditions.

3. Double tax treaty application

The Growth Decree, with regard to Italian workers who are not registered with AIRE, provides that all persons returned to Italy as of January 1, 2020 and who have had their tax residency in another foreign State pursuant to a Double Tax Treaty can access tax benefits in the two years prior to the transfer in Italy.

Finally, those persons not registered with AIRE who have returned to Italy by December 31, 2019 and who have been resident in another foreign state pursuant to a Double Tax Treaty in the two years prior to the transfer in Italy, will apply the previous law provisions foreseen for expatriates and researchers.