Reform of the Italian Impatriates Regime, Tax Residence Test and Incentives for Transfers of Businesses to Italy.

Further changes to the Impatriates Regime (Rientro dei Cervelli) and other tax incentives for moving to Italy

Reform of the Impatriates Regime


The Italian Council of Ministers has approved approved the final draft text of the law modifying the Impatriates Regime. 

See this article for the latest information

Italian Council of Ministers Press release n. 54 of 16 October  2023
Reform of the Italian Impatriates Regime, Tax Residence Test and incentive for transfers of businesses to Italy. 

Italy’s Council of Ministers met on Monday 16 October 2023, at Palazzo Chigi, under the chairmanship of President Giorgia Meloni to discuss the draft 2024 budget law and program,


The Council approved a draft bill containing the State budget forecast for the financial year 2024 and the multi-annual budget for the three-year period 2024-2026 and the update of the Draft Budgetary Plan (DPB).


Amongst the measures announced in a press release issued by the Council of Ministers are a substantial reform of the beneficial tax regime regime for Impatriated Workers and the introduction of a similar type of relief for companies that move their activities to Italy.


Note that this is a draft bill and subject to amendment before it is passed.  It is not yet current law.


Impatriated workers 

Employed or self-employed workers who transfer their tax residence to Italy will be eligible for a new beneficial tax regime replacing the one currently in force.   The new regime is intended to apply to workers who are tax resident in Italy with effect from FY 2024 (the calendar year ending 31 December 2024.) The old rules will apply to those who transferred their residence effective FY 2023 and prior years. These individuals will stay in the current regime for the remainder of its 5 year (or ten year if extended) term. 

The relief will consist in a 50% reduction in computing taxable earnings, as opposed to the current 70% or 90%.   In summary it appears the conditions for the relief applciable to psot FY 2023 arrivers will be: 

  • The regime will apply for a maximum of five years. The possibility of extending for a further five has been withdrawn;
  • Taxpayers must be in possession of  high qualification or specialisation requirements;
  • Beneficiaries must not have been resident in Italy for the previous three tax periods;
  • The tax reduction under the new regime will be 50 percent (as opposed to the current  70%/90% reduction;
  • It appears there will be an annual upper income limit of 600,000 euros.  Income over that amount will not be elegible for the relief;
  • For employees there must be a new relationship of employment with a different employer from the foreign employer before the transfer to Italy. The new rules also appear to exclude employees of an Italian company belonging to same group of companies as their former foreign employer. But this condition is not, at present clear; 
  • The work activity must be carried out for the greater part of the tax year from Italian territory, in line with the current regime.

Impatriated workers will be subject to clawback of the tax relief, with interest, but apparently without penalties, if they do not maintain their tax residence in Italy for the full five year period. 


The government responding to critism on the grounds of the potential (illegal) retroactive effect of the legislation, especially as regards workers who have moved to Italy in the second half of FY 2023, has amended the draft text of the legisation, such that the old rules will continue to apply to people who have registered a transfer of residence with an Italian Comune on or before the end of December 2023. Registering as resident prior to 31 December 2023 will, if the legislation is approved as drafted, allow access to the current version of the regime, even though the worker is not  tax resident in Italy for FY 2023, under the Italian test of residence,  which is based on a 183 day test.

The current rules for researchers, university professors and sports workers remain unchanged.

Pending the Parliamentary approval process, all the above is to be treated as a draft proposal for reform of the Impatriates Regime. It is not yet law. 

Transfer of corporate residence

The new rules intend to provide an incentive for the carrying out of economic activities in Italy State by way of a tax incentive. This will consist of a reduction in the computation of taxable profits for the purposes of income taxes of 50 percent. This will apply to entities carrying on business activities and to professional associations currently working abroad and who transfer their activities to Italy. to Italy and previously carried out in a foreign country outside the European Union or the European Economic Area.

The relief applies in the tax period in which the transfer takes place and for the five following Clawback of the tax benefits also applies the activity which has been transferred to Italy is  subsequently transferred to a state not belonging to the European Union and the European Economic Area during the period in which the benefit applies or within ten tax periods from the end of the relief regime. 

The activities must have been carried out outside Italy for 24 months prior to the transfer.

Tax residency

For individuals the civil law concept of residence will be replaced with a criterion of a substantial nature, in which residence is the place where the taxpayer’s personal and family relationships are closest and/or a test of physical presence in the territory of the State. The civil law rules on residence remain unchanged. 


The new test of tax residence will depend on whether the criteria are satisfied for the greater part of the tax year also taking into account non-consecutive periods. Fractions of days will be taken into account under the physical presence test. 


With regard to corporate residence of legal persons, references to the “main object of the company test”, which has given rise to disputes and risk of double taxation, and to the criterion of the “seat of administration” will be eliminated. Corporate residence will therefore depend on three alternative tests.


  • the place of the “registered office”;
  • the “place of effective management”;
  • The “place of principal ordinary management”.

The latter two tests of residence represent a move to more of a “substance over form” approach to determining a company’s tax residence.  The tests are designed to look at the place where strategic decisions are taken and the management activities of the company are actually carried out.  


 Next Steps

The draft bill needs to go through the Parliamentary approval process which may result in modification, or indeed complete exclusion, of the government’s proposals, over forthcoming weeks. Once the Parliamentary approval process is complete, it is expected that the Tax Agency will issue operating guidelines. 


We will update this post as further details emerge.


2 Comments on Reform of the Italian Impatriates Regime, Tax Residence Test and Incentives for Transfers of Businesses to Italy.

    • Latest news is here. In short the post 2024 regime will be less beneficial that the previous one – lower rates of exemption, cap at Euro 600k of annual earnings, longer prior period outside Italy for returnees and longer minimum period of stay – but it is not as bad as orginally proposed. And people moving infra group will be admitted under the new rules, albeit with more stringent condtions. Also the extension of the old regime for those who registered as resident with their Comune has been confirmed. We are just wating for the decree to be published. It’s been a rush job by the Italian Government and a number of open questions of detail remain, but this will need to wait until we see the final version of the Decree and guidance from the Tax Agency.

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