Italy has revised the tax benefits for natural persons (eg, individuals) who intend to take up residence in the Bel Paese (the ‘beautiful country’, as Italy is known to Italians). Previously, income tax relief was given at the rate of 70%, or 90% for southern regions. From the beginning of 2024, the government has set the rate at 50% for the entire national territory and has revised the requirements to benefit from the relief.

The new rules

Individuals who transfer their residence (relocate) to Italy from January 2024 onwards, and who receive income from employment, income assimilated to employment and/or self-employment income deriving from the exercise of arts and professions, are granted a 50% income tax rebate for income up to €600,000 per year.

The following conditions must be met for the person to be eligible for the tax incentive:

1. they must undertake to be fiscally resident in Italy and to maintain tax residence for at least four tax periods, corresponding to the minimum time to avoid forfeiture of the relief (see below);
2. they must not have been tax resident in Italy in the three tax periods preceding their relocation;
3. the work activity must be carried out for the greater part of the tax period in Italy; and
4. the person must be highly qualified or specialised.

The rules are modified where the person is employed in Italy by the same or a related entity that employed them before they moved to Italy. In this case, condition 2 above is extended to six tax periods unless the worker was previously employed in Italy by the same entity, in which case it is extended to seven tax periods.

Persons registered for the greater part of the tax period – 183 days (or 184 days in the case of a leap year) – in the registers of the resident population are presumed to be resident in Italy, unless there is proof to the contrary of residence abroad. Non-consecutive periods and fractions of a day are taken into account.

Highly qualified or specialised workers

This condition is met where the person:

• has a higher education qualification issued by competent authorities in the country where it was obtained certifying the completion of a higher education course of at least three years’ duration, and the relevant higher vocational qualification, falling within the levels:
  • legislators, entrepreneurs and senior management; 
  • intellectual, scientific and highly specialised professions; and 
  • technical professions of the ISTAT classification of professions CP 2011, attested by the country of origin and recognised in Italy; and
• is in possession of a licence to practise the professions regulated therein. These are the following professions: pharmacist; architect; midwife; veterinarian; dentist; nurse; and surgeon.

Duration, extent of relief and possible extension

The tax relief is available for five tax periods (the preferential period). If the worker, having acquired it, does not maintain tax residence in Italy for at least four tax periods, he forfeits the benefits and the tax authorities will recover any tax underpaid, plus interest.

The tax relief is increased to 60% where: 

• the worker moves to Italy with a minor child; or
• a child is born or adopted during the preferential period. The increased benefit begins for the tax year of birth/adoption and continues throughout the preferential period.

In both instances, the child must continue to live in Italy. 

The tax relief is extended from five tax periods to eight tax periods where the person: (1) relocates to Italy in 2024; and (2) acquired residential property in Italy by 31 December 2023 and, in any case, in the 12 months preceding their relocation to Italy.

Teachers and researchers

For teachers and researchers, no changes are made to the regime introduced in 2020 (referred to as the ‘brain gain’). This gives tax relief equal to 90% of the income produced in Italy for the tax period in which residence is transferred and the following five periods (ie, for six tax periods in total).

The relief is extended to:

• eight tax periods, in the case of taxpayers with a minor or dependent child or who became the owner of at least one residential property in Italy after they relocate to Italy or in the previous 12 months;
• 11 tax periods, in the case of taxpayers with at least two underage or dependent children; or
• 13 tax periods, in the case of taxpayers with at least three underage or dependent children.

Those who carry out teaching and research activities in Italy can access the regime if they meet the following requirements:

• they have a university degree or its equivalent;
• they have been resident abroad on a non-occasional basis;
• they have carried out documented research or teaching activities abroad for at least two continuous years at public or private research centres or universities; and 
• they acquire tax residence in Italy, and maintain it for the entire period of eligibility (in the event of transfer abroad, the benefit ceases from the tax period in which tax residence in Italy is lost).

Italian citizens who are not registered with the Register of Italians resident abroad can also benefit from the regime, provided that, in the two tax periods preceding the transfer, they have resided in another state within the meaning of a double taxation agreement.

The former regime

A person who relocated to Italy before January 2024 and qualified for the former regime will continue to benefit from the former regime for the remainder of the preferential period. Income tax relief is given at the rate of 70%, or 90% for some regions of Italy, for five tax periods. The preferential period may be increased in some circumstances, similar to the extensions set out above in relation to the new regime. 

Concluding comments

The new relief means that Italy continues to be an attractive place for individuals to move to for work. However, the changes to the conditions for relief should be noted, including by employers with a presence in Italy.

Andrea Matera, ACA, Owner of Studio Andrea Matera in Genova and Rapallo, Italy. His previous article considered the tax rules that apply on buying property in Italy. A future article will look at the rules around setting up a business in Italy.