Relocating to Italy: the Italian Tax Authority unveils new rules for employees

21 January 2021 | Applicable law: Italy

The Italian Tax Authority has issued new information on the incentives available to workers moving to Italy, providing updates on particular issues.

In summary, the tax regime applies to any employee, self-employed professional, or individual carrying out business activities who:

  • becomes Italian tax resident (regardless of their original State of residence);
  • commits to remain an Italian tax resident for the following two years;
  • has not been Italian tax resident for the last two years; and
  • spends the majority of their time work within the Italian territory (either for an Italian or a non-Italian enterprise and regardless of his/her role or qualification).

Individuals who meet these criteria are subject to individual income tax in Italy on only 30% of their employment/self-employment/business income. By moving to the southern regions of Italy, the taxable proportion of their income is reduced to only 10%. The tax regime applies for five years and can be extended for another five years (in total 10 years) subject to some additional conditions (e.g. the purchase of a residential property or where there is a minor child, etc.).

The Tax Authority's update sheds further light on several issues summarised below:

Professional sportspeople

The Tax Authority specifies that the regime will not apply to this category of workers until the implementation of a specific Government Decree which will regulate how a proportion of their income (equal to 0.5% of the taxable base) is allocated to supporting youth sport sectors in Italy.

Strict conditions concerning seconded workers

The regime applies to workers returning to Italy who have spent a period of time seconded abroad and working with another company, on the condition that their secondment is not "in continuity" with their previous employment relationship. In particular, the new employment relationship should entail a new and autonomous legal situation, with a substantial change in the services performed, new terms and conditions, a step-up in salary and role performed in the company. The update also mentions some situations in which the employment relationship is considered "in continuity" with the previous one, such as the recognition of annual vacation allowance accrued before the new employment agreement, the recognition of seniority from the date of first hiring and lack of a probationary period.

Non-resident employers

The tax regime can apply to employed and self-employed workers when the employer/client is not an Italian resident company. The Tax Authority specifies that if the worker's presence in Italy triggers the personal permanent establishment of the foreign company in Italy, the income gained by this will not be subject to the regime's exemptions.

Foreign citizens already on the Anagrafe registry

The application of the regime can also be extended to non-Italian citizens who have previously acquired residence in Italy and returned to their home country without first removing themselves from the Italian resident population register (Anagrafe).

Compensation and bonuses accrued before and during application to the regime

Any compensation or bonuses that the worker has accrued before relocating to Italy, as well as any received during the period in which he/she is resident in Italy benefitting from the regime, will be excluded from the regime, as they refer to activities carried out before relocating to Italy. Furthermore, any compensation/bonus accrued during the period of time spent in Italy under the regime, but received after the worker is no longer benefitting from the regime, will be taxed according to the ordinary tax rules.

Financial sector executives

The Tax Authority has clarified that the additional 10% tax that applies to certain employees of finance companies (e.g. managers), in the form of bonuses or stock options, is excluded from the regime.

Airline and shipping employees

The regime can apply to workers in these industries (e.g. pilots or captains) providing the worker performs his/her work on national air/ship routes or on land in Italy for a period equal to or greater than 183 days a year.

Procedural clarifications

To benefit from the regime, employees must issue a written declaration to their employers asking for the application of the reduced tax rates. Self-employed workers and individuals carrying out business activities will be able to apply the regime autonomously when filing their tax return, as well as presenting specific written requests to their clients for reduced rates. The Tax Authority specifies that applications can be made to the regime until the submission of so-called "late tax returns" (i.e. within 90 days of the official deadline). After this deadline has fallen, it will no longer be possible to apply for the regime. However, if a worker does not apply to the regime in their first year of residence in Italy, he/she is still able to apply in their following years of residence (up to the first five years of residence).

Foreign citizens

The regime has no limitation concerning the nationality of workers relocating to Italy (e.g. non-EU nationals or those from countries that have not signed double taxation treaties with Italy are also able to apply).

Relocation to Italy's southern regions

Workers who relocate to the southern Italian regions will be able to apply a 90% exemption on their income. Furthermore, if they carry out their work in a different Italian municipality, while maintaining their residence in the south, they will still be entitled to benefit from the 90% reduction. In other words, the regime's incentives apply according to the residency of the individual and not on the basis of where their work is carried out.

Five year extension

The update specifies that applications to extend the regime (e.g. when purchasing a house or in the case of a minor child) must occur before 31 December of the fifth year of utilising the regime. In the event that an applicant were to purchase a property by 31 December of their final year under the regime, but did not sign the final purchase deed until after that date, the regime will not be extended. Furthermore, it also clarifies that the regime has a final maximum duration of 10 years.

Extension in case of buying a dwelling

In cases where the regime is extended due to the transfer of real estate, such transfer must be a purchase/sale transaction. Furthermore, the purchase must relate to the full ownership of the dwelling and not only the purchase of the sole usufruct or bare ownership of it.


The regime can also apply to income derived directly by authors or inventors of intellectual works, industrial patents and processes, formulas or information relating to experience acquired in the industrial, commercial or scientific fields, including copyrights.

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This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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