The new special tax regime in favour of repatriated employees no longer provides for the possibility to benefit from an extension of the period covered by said regime beyond the fifth tax period starting from the transfer of the tax residence in Italy.
An exception is contemplated in the sole case where the employee has transferred his or her residence in Italy during 2024 (Art. 5, par. 10, Presidential Decree No. 209/2023).
That is not the case for employees to whom the previous tax regime for repatriated employees applies (Art. 16, Legislative Decree No. 147/2015). Clarifications are needed with reference to repatriated employees whose fifth tax period of application of the special tax regime expired on 31 December 2023, making a clear distinction between those who transferred their tax residence to Italy by 29 April 2019 or in the period between 30 April and 2 July 2019.
Repatriated employee between 30 April and 2 July 2019
An employee who transferred his or her tax residence to Italy in the period between 29 April and 2 July 2019 and in respect of whom the special tax regime for repatriated employees pursuant to Art. 16 of Legislative Decree No. 147/2015 was applied may continue to benefit from the favourable tax regime for five further tax periods – i.e. until 31 December 2028 – in the event that on 31 December 2023 he/she has:
- at least one minor or dependent child, including in pre-adoptive foster care
- become the owner of at least one residential property unit in Italy, after the transfer of tax residence in Italy or in the twelve months preceding such transfer.
In the further five tax periods during which the special tax regime continues to apply, only 50% of the income produced in Italy contributes to the formation of the total taxable income; if the repatriated employee has at least three minor or dependent children, even in pre-adoptive foster care, only 10% of the income produced in Italy contributes to the formation of the total income.
Upon the expiration of the fifth tax period covered by the special tax regime – which, for those who repatriated between 30 April and 2 July 2019, coincides with 31 December 2023 – the employee is required to submit to his employer the documentation attesting the existence of the above-mentioned subjective requirements.
The employer will operate the withholding on the 50% or 10% share of taxable income from the month following the receipt of the request submitted by the employee.
Repatriated employee by 29 April 2019
The employee who transferred his or her tax residence to Italy by 29 April 2019 and who, as of 31 December 2019, is a beneficiary of the special tax regime for repatriated employees (Article 16, Legislative Decree no. 147/2015) is entitled to extend the period of application of said tax regime in compliance with the terms and conditions established by the Revenue Agency (Directoral Order no. 60353/2021).
The option may be exercised provided that the repatriated employee:
a) has been registered in the Register of Italians residing abroad (AIRE) or is a citizen of an EU Member State;
b) has paid – in a single instalment – an amount equal to:
- 10% of the amount of income produced in Italy and subject to the favourable tax regime in the tax period preceding the period during which the option is exercised, and provided that at the time of the exercise of the option the employee:
– has at least one minor child, including in pre-adoptive foster care or
– became the owner of at least one residential property unit in Italy after the transfer of residence or during the twelve months preceding it or became the owner within the eighteenth month from the date of exercise of the option; - 5% of the income produced in Italy and subject to the special tax regime relating to the tax period preceding that in which the option is exercised, if at the time of exercising the option the employee:
- has at least three minor children, including in pre-adoptive foster care and
- becomes (or has already become) the owner of at least one property unit.
We remain available for any further clarification.