New Tax Benefit for Repatriated Workers
The favorable tax regime for workers relocating to Italy, as stipulated by Article 16 of Legislative Decree No. 147/2015, has been repealed by Article 5 of Legislative Decree No. 209/2023.
The previous regime only applies to individuals who transferred their residence to Italy by December 31, 2023, or, in the case of sports employment contracts, to those who signed the contract by the same date.
The new tax benefit for repatriated workers provides a temporary favorable tax regime for workers who transfer their residence to Italy starting from the 2024 tax year (Article 5 of Legislative Decree No. 209/2023).
Under the new tax regime for repatriated workers, income equivalent to employment income and self-employment income derived from the exercise of arts and professions produced in Italy, up to an annual limit of 600,000 euros, contributes to the total income at only 50% of their amount (compared to the previous 30%). Business income is no longer among the categories of eligible income.
Enhanced Benefit for Repatriated Workers with Minor Children
Legislative Decree No. 209/2023 provides an additional favorable treatment for repatriated workers with minor children.
The employment income contributes to the total income at only 40% (instead of 50%) if:
a) the worker relocates to Italy with a minor child;
b) a child is born or adopted during the period of the benefit. In this case, the enhanced benefit starts from the tax year in which the birth or adoption occurs and continues for the remaining benefit period.
The greater benefit applies if the minor child or adopted minor resides in Italy during the period the worker benefits from the regime.
Requirements for the New Benefit
The new tax benefit for repatriated workers applies to:
Workers who commit to residing in Italy for at least four years;
Workers who have not been tax residents in Italy for the three tax years preceding their relocation;
Workers whose employment activity is primarily conducted in Italy during the tax year;
Workers possessing the high qualification or specialization requirements indicated by Legislative Decree No. 108/2012 and Legislative Decree No. 206/2007.
The second condition, not being a tax resident in Italy in the previous tax years, requires clarification. If the worker is employed in Italy for the same entity they worked for abroad before relocating, or for an entity within the same group, the minimum foreign residency requirement is:
- Six tax years if the worker has not previously been employed in Italy for the same entity or an entity within the same group;
- Seven tax years if the worker was previously employed in Italy for the same entity or an entity within the same group before relocating abroad.
- Entities within the same group include those with a direct or indirect control relationship and those under the common direct or indirect control of another entity.
Regarding the fourth condition, high specialization is achieved when the worker has obtained a higher education degree (bachelor’s degree) from the competent authorities of the country where it was earned, confirming the completion of a higher education (university) program of at least three years and the relevant higher professional qualification, falling within levels: 1 (legislators, senior management), 2 (intellectual, scientific, and highly specialized professions), and 3 (technical professions) as indicated by the ISTAT classification of professions (CP 2011) and recognized by Italy.
Duration of the Tax Benefit for Repatriated Workers
The regime for repatriated workers applies from the tax year in which the fiscal residence is transferred to Italy and for the four subsequent tax years.
If fiscal residence in Italy is not maintained for at least four years, the worker loses the benefits and the tax authorities will recover those already used, with the application of relevant interest.
Italian citizens are considered residents abroad if they are registered in the Registry of Italians Residing Abroad (AIRE) or if they have had residence in another state based on a convention against double taxation on income.
Extension of the Benefit
For individuals who transfer their residence in 2024
the favorable regime for repatriated workers applies for an additional three tax years if the worker has purchased a residential property as their main home in Italy by December 31, 2023, or within twelve months before the relocation.