The Decree replaces the previous inpatriate tax regime, but that regime remains applicable, on a residual basis, to workers who transferred their registered residence to Italy prior to 31 December 2023. 

The new regime is more restrictive than the previous regime in terms of who is eligible, what amounts of income are covered, the length of not being a tax resident in Italy prior to the transfer, and the duration of the commitment to living in Italy. 

The new regime applies to workers who transfer their registered residence and tax residence to Italy during or after tax year 2024, on the conditions that the worker: 

• undertakes to be resident for tax purposes in Italy for at least four years (the tax benefits can be clawed back if the worker fails to meet this commitment); 
• performs work activity within Italy for the majority of each tax period; 
• meets the requirements of high qualification or specialization as defined by law; and 
• has not been a tax resident in Italy for at least the three tax periods prior to their transfer.   

This last condition (that the worker has not been a tax resident in Italy for the prior three tax periods) assumes that the worker will be working for a new employer. If the worker will be performing the working activity in Italy for the same entity (or an entity within the same group) with which he or she worked abroad before the transfer, this minimum period is extended to: 

• six tax periods, if the worker has not been previously employed in Italy for the same entity or group; or 
• seven tax periods, if the worker has previously worked in Italy for the same entity or group. 

The new regime provides for a 50% reduction in the tax base for covered income produced in Italy. In other words, only 50% of the covered income is subject to taxation. This is subject to an annual income limit of EUR 600,000 and to the conditions and limits provided for by the EU regulations on de minimis aid.  

The types of income eligible for this break are: 

• employment income; 
• income treated as employment income (e.g. directors’ fees); and 
• self-employment income derived from the exercise of certain arts and professions. 

The tax base percentage is further reduced to 40% when the worker moves to Italy with a minor child, or in the event of the birth of a child or the adoption of a minor child after the worker moves to Italy. In the latter case, the benefit is applied starting as of the tax period in progress at the time of the birth or adoption and for the remaining period of the regime, on condition that the child remains resident in Italy during the period of the regime. 

The following is an example of how the tax break would work to the benefit of a hypothetical employee (all figures in EUR): 

The favourable tax regime will apply starting from the tax period in which the worker transfers his or her tax residence in Italy, and for the following four tax periods.  

For workers who transfer their registered tax residence during 2024, the regime can be extended for an additional three tax periods if the worker has purchased a residential real estate unit used as a primary residence in Italy by 31 December 2023 and, in any case, within the twelve months prior to the relocation to Italy. 

While the new inpatriate tax regime is less generous than the prior regime, it still provides significant benefits for qualified workers who move to (or return to) Italy.