The new 2024 'impatriate' tax regime

Returning to Italy with the aim of having privileged tax treatment will become more difficult, or at least less convenient, from 1^st January 2024. Due to a new intervention of the legislator (delegated law conferred to the government with law no. 111 of 9 August 2023), we are in fact witnessing a downsizing of the scope of the facilitating rules (art. 16 of the Legislative Decree no. 147/2015 and para. 2-bis, 2-ter and 2-quater of art. 5 of the Legislative Decree no. 34/2019) that had been conceived to “bring the brains back” to Italy. The draft of the implementing decree of the tax delegated law on international taxation, in fact, preliminarily approved by the Council of Ministers on October the 16^th, downsizes the scope of the current facilitative regime in favour of repatriated workers, with more stringent requirements such as a reduction to 50% of taxable income, maximum income and restrictions for high qualifications.

More precisely, the current “impatriate regime” (Legislative Decree 147/2015), which would therefore cease on December the 31^st 2023 (the new rules will not, however, have retroactive effects on those who will have moved before the end of this year), provides, for at least five years, a substantial reduction, to the extent of 70%, of the income threshold subject to taxation. This reduction goes as high as 90% if the transfer from abroad takes place in one of the regions of southern Italy: Abruzzo, Molise, Campania, Apulia, Basilicata, Calabria, Sardinia and Sicily. The measure was particularly successful, having led to the return to Italy of a large number of individuals (21,200 in 2021 alone).

On the contrary, the new framework, according to article 7, will reduce the facilitation both qualitatively and quantitatively.

First of all, those with business income are excluded from the benefit, while the scheme remains in force for holders of employment income, income assimilated to employment income, and self-employment income.

There is also a quantitative limitation with regard to the amount of income produced: the facilitation is in fact only possible for the first 600,000 euro of income, just as the measure of the facilitation itself is limited; it is lowered in fact to 50% of the amount of the income instead of the aforementioned abatements.

A further turning point to be noted is the usability of this regime, to which specific requirements, different from the previous ones, have been added. This means, that the new “impatriate tax regime 2024” will be applicable to taxpayers who transfer their residence in the territory of the State, in accordance with Article 2 of the TUIR, as of 1 January 2024, respecting the following criteria:

- workers must not have been tax resident in Italy in the three tax periods preceding the transfer to Italy (instead of the previous 2) and, in addition, they must undertake to be tax residents in the State for at least five years;

- the work activity must be performed in Italy, under a new employment relationship with a party other than the one where the employee was employed abroad before the transfer as well as those belonging to the same group;

- the work activity must be performed for most of the tax period in Italy;

- workers must possess 'high qualification' requirements or specialisations, as defined by the special legislation on the subject (1). These requirements include regulated professions, holders of high-level professional qualifications (2), certified by the country of origin and recognised in Italy.

To conclude, this facilitation, which is limited to five tax periods following the return to Italy, is not subject to distinctions based on family or patrimonial situation. If the worker does not maintain tax residence in the territory of the State for at least five years, he will forfeit the benefits and those already enjoyed will be recovered, with the application of the relevant penalties and interest. On the other hand, it is still binding the rule according to which the tax benefit is available both to Italian citizens registered with AIRE and to those not registered, but only if they have been tax residents in another State with which Italy has signed a convention against double taxation. To conclude, the relief applies in compliance with the conditions and limits provided for by the EU regulations for de minimis aid.

To sum up, we are witnessing a net downsizing of the scope of the facilitation rule, with a probable decrease in the number of entities that will benefit from it in the years to come. In this sense, it will be necessary to verify the consistency of this reduction with the content of the delegating law, which expressly referred to a rationalisation of incentives for workers to return to Italy.

Dott. Andrea Spinella

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(1) As defined by Legislative Decree No. 108 of 28 June 2012 and Legislative Decree No. 206 of 9 November 2007.

(2) Classified in levels 1, 2 and 3 of the ISTAT classification of occupations CP 2011.