Tax Flash – Italian attractive tax regimes for individuals

Upon recent law amendments made by the Law Decree 30 April 2019 (the “Decree”) and the 2019 Budget Law, the tax package for individuals moving to Italy became very attractive.

The Decree1 has significantly amended, as from the 1st of January 2020, the inbound tax regime aimed at making even more attracting for non-resident workers to become Italian tax-resident (the “Inbound Workers Regime”). The former 50% income exemption has been widened to 70% (90% in some cases) if certain conditions are met.

The 2019 Italian Budget Law2 already introduced, as from the 1st of January 2019, a new beneficial tax regime aiming to attract individuals holding foreign pensions and transferring their tax residence to Italy (the “Foreign Pensioners Regime”). The latter Regime provides for a 7 per cent substitutive tax of individual income tax (“IRPEF”) on foreign-sourced income in lieu of progressive tax rates, irrespective of the actual amount of the foreign-sourced income.

The aforesaid regimes add up to the Italian € 100.000 flat tax regime for high net worth individuals moving to Italy, introduced as from 2017 (the “HNWI Regime” and, together with the Inbound Workers Regime and the Foreign Pensioners Regime, the “Regimes”)3 forming overall a very attractive tax package for individuals who move to Italy.