Italian 'brain drain': with new Decree, more benefits from 2020
The Italian Government, with the approval of Legislative Decree no. 34 of 30 April 2019, which came into force on 1 May 2019, has made important changes to the two preferential regimes reserved for employees and non-employees who decide to transfer their tax residence to Italian territory.
More precisely, the regulatory changes have affected:
- Art. 16 of Legislative Decree 147/2015 concerning the tax regime of advantage of the so-called "impatriate" and "impatriate" workers.
- Art. 44 of D.L. 78/2010, which regulates the return of researchers and teachers (so-called brain return).
Regime of impatriates
With the introduction of Legislative Decree 147/2015, the Italian legislator had, from the beginning, attempted to attract highly skilled workers to its territory by granting them an important tax relief on income earned in Italy.
In truth, however, the original text of the law had many stakes that made it difficult to apply the tax system in question and, likewise, excluded many possible users from the benefit because of some limitations too stringent.
In order to eliminate the previous regulatory distortions, the Legislative Decree was adopted by the Italian Government. It has brought numerous simplifications to this regime, first of all eliminating any reference to the work activity carried out and extending, in this way, access to all employees or, even, self-employed.
To date, following the introduction of regulatory changes, the income from employment, assimilated and / or self-employment earned by a natural person who transfers the tax residence in Italy under Article. 2 of Presidential Decree 917/1986 from 2020, will be exempted to the extent of 70% of the total amount.
The extension of this benefit is expressly provided for also to workers who start a business activity in Italy starting from the tax period following the one in progress on 31 December 2019.
In order to benefit from this advantage, it is necessary that:
- the workers have not been resident in Italy in the two tax periods preceding the above-mentioned transfer and undertake to reside in Italy for at least two years (it should be remembered that, before the changes, the period of stay abroad was instead of five years);
- the work activity is carried out mainly in the Italian territory.
These favourable measures apply from the tax period in which the transfer of residence to Italy took place and for the following four periods.
As regards the duration of this benefit, in the presence of particular conditions of the worker (such as, for example, the purchase of a residential property unit in Italy or the presence of up to two minor or dependent children), access to the benefit scheme may be extended for a further five years. In this case, the above mentioned incomes, in the following five tax periods, will be exempted to the extent of 50% of their amount.
It should also be noted that the above exemptions are even more significant if you choose to reside in one of the regions of southern Italy. In fact, the percentage of exemption of income is raised to 90% in the event that the subject transfers the residence in one of the following regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, Sicily.
As regards the requirements for access to the scheme, the regulatory changes has expanded the number of people who can enjoy tax exemptions: from 1 May 2019 can access the new version of the facility also Italian citizens who have not registered with AIRE and returning to Italy from 1 January 2020, provided that in the two tax periods preceding the transfer have had residence in another state under a double taxation agreement on income.
With the amendments made by the this Decree, the Legislator put an end to an issue that was particularly debated in the past, relating to registration in the AIRE register, before considered a fundamental requirement for access to the preferential regime reserved for impatriates. Today, however, by express legislative will, the failure to register Italians residing abroad is no longer a cause of hindrance, but the acquisition of foreign residence will prevail according to the dictates of international conventions against double taxation.
Favourable regime for the return of researchers and teachers
In parallel with the changes made to the regime of impatriates, the Legislator also intervenes on the subject of facilitation measures reserved for teachers and researchers who decide to move their residence in Italy from 2020.
For the purposes of income tax, the Decree Law 34/2019 provides for the exemption of 90% of the emoluments received by teachers and researchers who have carried out research or teaching abroad for at least two years continuously.
The duration of the special terms has been extended from 4 to 6 years. The Legislator provides, in fact, that the preferential regime applies from the tax year in which the researcher or teacher transfers his residence in Italy pursuant to art. 2 of Presidential Decree 917/1986 and for the next five tax years.
Also in this case, the validity of the benefit may be extended to seven, ten or twelve tax periods following the transfer referred to above, when specific situations occur (such as, for example, the number of minor or dependent children or the purchase of a residential property in Italy).
Italian lecturers and researchers who are not members of AIRE and who have returned to Italy since 1 January 2020 may also benefit from these benefits, provided that they are resident in another State in accordance with a double taxation agreement on income in the two tax periods preceding the transfer. Also for this benefit, as in the case of the impatriate regime mentioned above, the Legislator has eliminated any reference preclusive for those not registered with the AIRE, expanding also in this case the number of subjects to which the tax system of advantage applies.
For more information, our experts from Fidinam Italia are at your disposal.
Avv. Filippo Tornambè
Managing Director Fidinam Italia
Dott.sa Raffaella Arena
Avv. Carlotta Parente