Italy: Limitations the applicability of the preferential tax regime for so-called “impatriated” workers

In order to understand the magnitude of the changes introduced and their implications for the taxation of individuals, it is deemed of fundamental importance to highlight the differential elements with respect to the previous text of the new regime. Moreover, it is highlighted that the latter will come into force as of 1 January 2024, it being understood that under the current wording of the draft text "those who have achieved their tax residence in Italy by 31 December 2023" will still be subject to the previous "Impatriates" regime pursuant to Article 16 of Legislative Decree 147/2015.

The redrawing of the regime begins with a reduction of the eligible income from the previous 70 per cent to the current 50 per cent of total income from employment and self-employment. It will therefore no longer be possible, unlike previously, to bring business income within the scope of the relief. At the same time, the extension of the relief in specific family or patrimonial situations is no longer envisaged, nor is the increase in the relief (90 per cent tax relief on income) for those who move to the regions of southern Italy, i.e. Abruzzo, Molise, Campania, Apulia, Basilicata, Calabria, Sardinia and Sicily. In addition, a quantitative limit of EUR 600,000 per year is established, which corresponds to the maximum amount of income on which it is possible to benefit from the reduction of the tax base: it follows that income above this threshold will be subject to taxation according to the ordinary rules. 

Finally, as regards the reference amount for calculation of social security contributions in case of “Impatriate” workers, clarifications had recently arrived from the social security agency (Inps) through the publication of Circular No. 52/2023. The document, relating to business income earned by natural persons, focuses on equality of treatment between the social security and the tax sphere in terms of applicability of the Impatriate relief. This implies that the income base on which social security contributions are calculated must be the same as that identified for income tax purposes. 

However, since this paper mainly refers to the category of business income, which is eligible for the beneficial regime under the former rules but not under the current ones, it is legitimate to wonder whether these indications will also be relevant starting from 1 January 2024 for workers that earn employee or self-employment income and are allowed to benefit from the dispositions of the new discipline, who will also benefit from a 50 per cent reduction in the taxable contribution base. Clarification by the Legislator or the social security agency on this issue would be definitely appreciated.  

As already mentioned, the transfer of tax residence to Italy is a binding prerequisite for the access to the preferential tax treatment in question. More in depth, the following conditions must be met:

With specific reference to this requirement, a recapture regime is introduced to ensure compliance with the constraint or, alternatively, the loss of the benefit: “If the tax residence in Italy is not maintained for at least five years following the transfer, the worker forfeits the benefits and the tax authorities recover those already received with the application of the relevant penalties and interest”.

The conditions for the exercise of the option have been updated and further specified, in particular as far as the identification of the employment or self-employment activity whose income is eligible for relief is concerned: