Italian Inbound Tax Regime

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The tax regime is a personal income tax (IRPEF) incentive for individuals returning to Italy after a period abroad, and working in Italy as employees, self‑employed professionals, or entrepreneurs.
It allows taxation on only a portion of income for a period that varies depending on the case.

How it works (general rules)

  • The incentive reduces taxable income (50%, 30%, or 10% depending on the period and eligibility requirements).
  • It applies for 5 years, with possible extensions.
  • Requirements include:
    • having lived abroad for a certain period (2, 5, 6, or 7 years depending on the specific rule),
    • transferring tax residency to Italy,
    • working mainly in Italy for at least 183 days per year.

 

Which regime applies? Depends on the return date to Italy

 

Returns from 2024 onwards (new regime)

  • Exemption: 50%
  • Duration: 5 years
  • More limited extension (e.g., +3 years) only under specific conditions, such as purchasing a main residence
  • Stricter requirements:
    • at least 3 years abroad (increasing to 6–7 years when returning to work for the same employer or group)
    • mandatory to maintain Italian tax residency for 4 years
      → failure to do so triggers full repayment of the tax benefit plus interest
  • Under the new regime, the incentive can be combined with other tax benefits (e.g., “researchers and professors” regime)

Maintaining eligibility

To keep the benefit each year, you must:

  • be tax resident in Italy,
  • work mainly in Italy (≥ 183 days),
  • perform actual work activity in Italy.

Failure to meet the conditions → loss of the benefit for that year or full clawback.

Practically how is it applied?

  • Employees:
    request application through the employer → reduced taxable base for payroll withholding.
  • Self‑employed professionals:
    apply the benefit directly in the annual tax return.
  • If the employer does not apply the regime:
    it can be applied when filing the tax return.

Summary

The regime allows taxation of only a portion of income produced in Italy for 5 years (with possible extensions), with different percentages based on the return date:

  • 50% (from 2024 under the new rules)