international taxation
Tax|10 January 2024|

Inpatriates’ tax regime: new rules in force from 2024

The Legislative Decree no. 209 of December 27th 2023 on international taxation has been published on the Official Gazzette of December 28th 2023 and has entered into force on December 29th 2023. The new special tax regime for inpatriate workers will apply starting from 2024 and has introduced the chance to apply the tax concession also in case of intra-group mobility, envisaging a longer period of residence abroad.

The Legislative Decree containing “Provisions on international taxation,” has been published on the Italian official Gazzette on December 28th 2023; among others, the new rules on tax residency and inpatriates tax concession will apply starting from January 1st 2024.

Compared to the previous draft approved on October 16th 2023, the new text takes on board some of the comments presented by the parliamentary committees about the favorable tax regime for inbound workers. In particular, the government was asked about the advisability, among other things, of providing for the possibility of access to the tax concession also for cases of intra-group mobility. In fact, the text sketched out in the draft decree sent to Parliament in November provided that, for the purposes of access to the favorable tax regime, the work activity in Italy had to be performed by virtue of a new employment relationship established with a party other than the one with which the worker had been employed before the transfer to Italy and in any case, not belonging to the same corporate group.

The original – really unwise – wording of the draft decree thus ended up excluding from the tax concession in fact any hypothesis of intra-group mobility. In fact, not only workers who had returned from a period of secondment abroad would have been affected, but also certainly genuine cases, such as, for example, assignments of qualified personnel to Italian companies in the same group, or even those of recruitment in Italy of personnel coming from a company of the same group, which can only be fully in line with the purpose of the rule, moreover even in cases in which the workers concerned paradoxically have never been resident in Italy. In order to avoid elusive practices, it would have been more effective to increase, for intercompany transfers, the years of residence abroad required to benefit from the favorable regulations. And so it was done.

Workers who move to Italy to work for the same employer (including returns from a secondment position) or for an entity belonging to the same group, will then be eligible for the tax benefit; however, for them there is an increase in the minimum period of residence abroad requirement.

In fact, Paragraph 1(b) of Article 5 of the decree stipulates that, for intragroup mobility, the minimum foreign residence requirement is (as opposed to the ordinary 3 years of foreign residence required for the generality of workers) of:

  1. six tax years, if the worker has not previously been employed in Italy in favor of the same entity or an entity belonging to the same group;
    .
  2. seven tax years, if the worker, prior to his transfer abroad, was employed in Italy in favor of the same entity or an entity belonging to the same group.

As stipulated in last October’s draft, the taxpayer must be highly qualified, as per requirements specified in Legislative Decree No. 206 of Nov. 6, 2007, for regulated professions, and Legislative Decree No. 108, for those who hold a higher professional qualification falling within levels 1 (legislators, entrepreneurs and senior management), 2 (intellectual, scientific and highly specialized professions) and 3 (technical professions) of the Italian National Institute of Statistics (ISTAT) classification of professions “CP 2011”, attested by the country of origin and recognized in Italy.

Article 5 of the Legislative Decree confirms the 50% tax exemption within the annual income limit of 600.000 euros, with a commitment to reside in Italy for at least 5 years (under penalty of repayment of the benefit enjoyed and application of the related interest) and the three years of non-residence for tax purposes in Italy before the transfer (except for the more extended period of residence abroad of six or seven tax years, applicable to intercompany transfers only); Italian citizens not registered with Register of Italians living abroad (AIRE), the foreign tax residence – for the purposes of access to the benefit- can be proven under the terms of the convention against double taxation signed between Italy and the foreign country of residence.

The transitional regime remains for those who have registered their residence in Italy with the Anagrafe by Dec. 31, 2023, who will be eligible for the old regime condition.

The novelties also include the introduction of an increase of the tax exemption to 60% if the worker moves to Italy with a minor child or in the case of birth/adoption during the period in Italy. In the latter case, the greater relief applies from the tax period in progress at the time of the birth or adoption and for the remaining time the benefit is available.

In addition, the inpatriate scheme (again to the extent of 50 percent) will be extended for further 3 tax years for those who are going to register their residence with the Anagrafe in 2024, but have purchased a property in Italy used as their main abode by December 31, 2023 (and in any case within the 12 months preceding the transfer.

Below a comparison between the scheme in place up to December 31st 2023 and the new rules of Article 5 of Legislative Decree no. 209/2023:

Features and requirements of the Inpatriate Scheme (in case of access under paragraph 1 of Article 16 of Legislative Decree 147) from the year 2017 until April 29, 2019 Inpatriate Scheme requirements (para. from April 30, 2019 Inpatriate Regime Requirements as of January 1, 2024
Assessable income
Income from employment and assimilated, self- employment income Income from employment and assimilated, self-employment income, business income of the individual entrepreneur Income from employment and assimilated employment, self- employment income
Measure and duration of the tax concession
50% 70% (90% for individuals who move residence to one of the regions in southern Italy) 50% (60% in case of minor child)
Duration: 5 tax periods with an option to extend, under certain conditions, for an additional 5 tax periods for a fee (Art. 5 co. 2-bis of DL 34/2019) Duration: 5 tax periods with the possibility of extension, under certain conditions, for an additional 5 tax periods (with 50% or 90% exemption) Duration: 5 tax periods with the possibility of extension for an additional 3 tax years in the case of purchase of residential property used as a main residence (for those who register their residence in Italy during 2024)
No income limit No income limit Annual income limit of 600,000 euros
Subjective requirements
Not having been resident in Italy in the 5 tax periods preceding the impatriation Not having been resident in Italy during the 2 tax periods preceding the transfer of tax residence (including those not registered with AIRE, provided they had foreign residence under a Double tax treaty)

Not having been resident in Italy during the 3 tax periods preceding the transfer of tax residence (including those not registered with AIRE, provided they had foreign residence under a Double tax Treaty). In case of intragroup mobility:

  • 6 tax periods if the worker has not previously been employed in Italy in favor of the same entity or an entity belonging to the same group or
  • 7 tax periods if the worker, prior to his/her transfer abroad, was employed in Italy in favor of the same entity or an entity belonging to the same group
Maintenance of tax residence in Italy for at least 2 tax periods Maintenance of tax residence in Italy for at least 2 tax periods Maintaining tax residence in Italy for at least 4 tax periods
Work for a company resident in the territory of Italy under an employment relationship established with it or with  companies that directly or indirectly control the same enterprise, are controlled by it or are controlled by the same company that controls the  enterprise Work for a company resident in the territory of Italy under an employment relationship established with it or with companies that directly or indirectly control the same  enterprise, are controlled by it or are controlled by the same company that controls the enterprise The preclusion regarding returns from a posting abroad is removed. However, for any case of intragroup mobility a longer period of residence abroad prior to the transfer is required (see above)
Perform the work mainly in the territory of Italy Perform the work mainly in the territory of Italy Perform the work mainly in the territory of Italy
The employee must hold management positions or possess high qualification or specialization requirements None The employee must possess the requirements of high qualification or specialization
Vittorio de Chaurand
Vittorio de ChaurandPartner - General Manager ECA ITALIA

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