The Decreto Crescita/Growth Decree”, updates and improves the tax regime (originally enacted in paragraph 2 of Article 16 of Legislative Decree 147/15) for those who move to Italy to work for at least two years while transferring their tax residence to Italy from 2020 onward.
The changes are:-
The percentage of tax exempt income rises from 50% to 70%, i.e taxable employment/self employment is 30% of the normal amount;
The exempt percentage rises to 90% for income from employment where the individual takes up residence in Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia or Sicily;
The 5 year period that the regime can apply can be extended for a further 5 years if the individual purchases residential property in Italy or has dependent children;
The requirements for access to the regime are reduced as follows:
a) it will be sufficient to have been resident abroad for tax purposes in the two tax (previously the requirement was five) periods;
b) Italian citizens who were not registered with AIRE (register of Italian nationals resident outside Italy), can prove that they were resident abroad in the two years preceding their move to Italy by reference to the relevant Double Taxation Treaty;
(c) all workers (e.g. non-managerial employees, football players without a university degree, etc.) may benefit because the worker will no longer be required to have a high level of qualification or specialisation;
d) the work must be carried out mainly in Italy;
The other requirements remain the same:
a) the transfer of the residence in Italy in accordance with art. 2 of the TUIR (and therefore – very briefly – registration in the registry office of residents or movement of the main center of business and interests in Italy or stay in Italy for most of the tax period);
(b) maintenance of residence in Italy for at least two tax periods;
The changes to the regime, greatly enhances the attractiveness of the regime for people coming to work in Italy and the Italian tax authorities have been taking quite a liberal approach in their responses to requests for guidance via the official ruling procedure.
The tax exemptions do not apply to social security contributions – which can represent a significant cost. It is also necessary to do a comparison with the flat-tax regime. For further information and/or a comparison between the regimes please contact us.