1. New Regulations to Reduce Income Tax in Italy
- Italy has recently introduced new income taxes for foreigners to encourage highly qualified people or foreign residents to establish their residence in this country by means of offering special tax incentives.
- In order to benefit from these incentives, you need to transfer your residence for tax purposes to Italy. You are considered resident if you spend more than 183 days in a year in Italy.
- These benefits are applicable to four main scenarios: professors and researchers, expat workers holding a university degree, other expat workers and new residents.
2. Professors and Researchers
They can benefit from a reduction of the tax base by 90%, that is, only 10% of their income will be taxed. The benefit applies for four years and is applicable to both employees and self-employed. The conditions to be able to benefit from this tax exemption are as follows:
- Holding a university degree or an equivalent qualification. Qualifications obtained abroad need to be demonstrated through a “declaration of value” from the competent consular authority
- Have been resident abroad for a minimum of two years, carrying out documented research and teaching activities at a public or private research centre or university
- Carry out research and teaching in Italy in universities, research centres or companies with an organisational structure aimed at research
- Acquire the residence for tax purposes in Italy
3. Expat Workers Holding a University Degree
This group can benefit from a reduction of the tax base by 50%. The benefit applies for five years and is applicable to both employees and self-employed.
It is applicable to EU citizens and to non –EU citizens coming from countries with which there is a double taxation agreement or an agreement regarding the exchange of information for tax purposes. The conditions to be able to benefit from this tax exemption are as follows:
- Hold a degree
- Have continuously worked or studied outside Italy in the last 24 months
- Acquire the residence for tax purposes in Italy
4. Other Expat Workers
This group can benefit from a reduction of the tax base by 50%. The benefit applies for five years and is applicable to both employees and self-employed.
It is applicable to EU citizens and to non –EU citizens coming from countries with which there is a double taxation agreement or an agreement regarding the exchange of information for tax purposes. The conditions to be able to benefit from this tax exemption are as follows:
- have continuously worked or studied outside Italy in the last five years and commit to stay in Italy for at least two years
- acquire the residence for tax purposes in Italy
- working mainly within Italy
- for employees, holding managerial roles or being highly qualified or highly specialised
5. Favourable Tax Regime for New Residents
- This incentive is for new residents who have been resident outside Italy for at least nine out of the ten previous years. It applies to income generated abroad, for which a substitute tax applies.
- It can be extended to family members who also transfer their residency in Italy and has a duration of maximum fifteen years.
- The amount of the substitute tax payable for income generated abroad is 100,000 Euros per year and 25,000 Euros for each additional family member.
