A bill that included very generous tax incentives for workers looking to relocate to Italy has been made into law.
The ‘Decree of Growth’, also known as the ‘lavoratori impatriati’ regime, is aimed at any type of worker, regardless of their qualification or skill level.
It expands on the previous version, which only included managers, executives and entrepreneurs.
Passed under ‘Law 58’, it reduces the income tax payable to just the first 30% of the worker’s employment income for the first five years, meaning that 70% is untaxed.
However, if the individual was to relocate to southern Italy or to the islands of Sicily and Sardinia, the incentives would be even greater with income tax payable only on the first 10% in the first five years – meaning that 90% is untaxed.
Additionally, if they buy a house or if they have a dependent child, the regime can be extended for a further five years and income tax will be paid on the first 50%.
But if there are three or more dependent children the exemption stays at 90% for the following five years.
The Italian government has been stepping up its effort to incentivise people to move to the country over the last couple of years, by introducing two other tax measures.
One allows recent tax residents to pay an annual €100,000 (£90,000, $112,000) substitute tax on their foreign-sourced income; the other offers a 7% flat-tax rate on the foreign income of retired expats.
More flexibility
Businesses setting up across Italy from 2020 will also be eligible for tax reliefs, according to Alessandro Belluzzo, head of the London office of Italian law firm Belluzzo International Partners, who advised the Italian government on the decree.
He said: “To benefit from the ‘impatriate’ regime, it is now sufficient, for all categories of individuals who could be considered eligible, to have been tax resident in a country other than Italy for the two fiscal years preceding the period of validity of the new regulations.
“It remains a prerequisite that ‘work is carried out predominantly in the Italian territory’, while the requirement that the work is carried out for a company or associated companies based in Italy has been removed.”
From 2020, Italians who have been tax residents in countries where Italy has a tax treaty with, will also be eligible to apply for the incentives.
