In recent years, Italy has sought to attract skilled workers from abroad through the so-called “inpatriate regime”. With the entry into force of Legislative Decree No. 209/2023, significant amendments have been introduced that substantially revise the tax incentives available to those who decide to relocate to Italy for work.
What is the inpatriate tax regime and what are its objectives?
The inpatriate regime is a set of tax incentives designed to attract skilled workers, executives and professionals to Italy. The aim is to encourage the so-called “return of talent”, making relocation to Italy more advantageous.
What were the main requirements under the previous legislation?
Under the rules in force prior to Legislative Decree No. 209/2023:
- Workers were required not to have been resident in Italy for the two years preceding their transfer.
- The obligation to maintain Italian residence was at least two years.
- Employment, self-employment and assimilated income was taxed at 30% (or 10% for those relocating to the southern regions of Italy).
- An additional five-year extension was available in the event of dependent minor children or the purchase of a residential property.
What changes under Legislative Decree No. 209/2023 with regard to the incentives?
Under the new legislation, the tax incentives are restructured as follows:
- Employment income in Italy is taxed at 50%.
- A maximum threshold of €600,000 per year has been introduced for eligible income.
- The additional benefits for southern Italy and the five-year extensions have been abolished.
How have the residency requirements changed?
The required period of non-residency in Italy has increased from two to three years, whilst the obligation to maintain Italian residence has risen from two to four years. In practice, those wishing to avail themselves of these incentives will need to demonstrate a longer period of residence abroad and to maintain Italian residency for a longer period.
Is a high level of professional qualification still required?
Yes, Legislative Decree No. 209/2023 has reintroduced the requirement to hold a high level of professional qualification, making the regime effectively more selective. This condition had been partially relaxed under earlier versions of the legislation.
Why might these amendments reduce the attractiveness of the regime?
The new rules aim to create a more targeted and selective regime, however:
- The tighter residency conditions and the reduction in incentives may deter some foreign workers.
- The abolition of extensions and the benefits for southern Italy removes further incentives that were previously available.
On what basis should foreign workers assess a potential relocation to Italy?
Those considering a move to Italy must take into account:
- The new rate of taxation (at 50%) and the €600,000 ceiling.
- The more stringent conditions regarding the period of non-residency (three years) and the obligation to remain in Italy (four years).
- The requirement to hold high-level professional qualifications in order to meet the criteria for the regime.
What is the primary objective of this new inpatriate regime?
The purpose is to make the measure more selective and focused on highly qualified workers, whilst preserving the interest in attracting expertise from abroad. The legislature considers that this approach better promotes a return of talent that is more closely aligned with the genuine needs of the Italian labour market.
Conclusion
The 2024 inpatriate tax regime, as defined by Legislative Decree No. 209/2023, introduces substantial amendments to the previous incentives. Whilst the objective remains to attract qualified workers to Italy, the tightening of residency requirements, the 50% rate of taxation and the reintroduction of conditions linked to high-level professional qualifications may reduce the regime’s attractiveness for certain profiles. To assess the application of the new legislation in your specific circumstances, please contact me.