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Relocation to Italy: tax incentives for new residents

  •  Under what tax regime can you become resident in Italy?

Did you know that individuals who relocate in Italy can benefit from tax incentives specifically designed for them?


These are:


a) the special tax regime for new resident workers

b) the flat tax regime for high-net-worth new residents

c) tax break for new residents with foreign pensions.


The special tax regime for the new resident workers:


This regime grants a significant exemption from the standard individual income tax to those who relocate to Italy to perform their working activity.


This tax regime can be applied to anyone, with no distinction for type of occupation or nationality, so it is for employees, self-employed workers, or entrepreneurs who wish to relocate to Italy.


Amount of the exemption:


The exemption from individual income tax is 70% of the income the new resident workers will originate from Italy. In practical terms, a new resident worker will pay Italian progressive income tax (rates range from 23% to 43%) only on 30% of her/his income.


Such exemption is increased to 90% (therefore only 10% of the income will be taxable) in case the new resident worker relocates to Southern Italy, in one of the following regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, Sicily.



The above exemption will last for five years. However, according to the current Law Decree, after 5 years workers will still be able to benefit from a 50% exemption for an additional 5 years if they have at least one under age child, or they have purchased a house in Italy in the 12 months before, or after, the relocation to Italy.




The special exemption is open to anyone as long as they have been resident outside of Italy during the two previous years, that they commit to reside in Italy for at least two years, and that their working activity is mainly performed on Italian territory.


In the event that someone has to leave Italy before the 2 years anniversary, the tax discount will be reversed.


All of the above applies to all eligible individuals who became tax residents of Italy from 2020. This is only one of the applicable tax incentive provisions that have been implemented for new residents in the country.


So, relocation: what an opportunity!


If you were considering buying a property in Italy and perhaps trying to live the Dolce Vita, this is the right time!


If you want to know more about other tax incentives in Italy contact us  or read more:

- the flat tax regime for high-net-worth new residents

- tax break for new residents with foreign pensions

Italy is waiting for you! 




You didn't give details for c) tax on retirees.  What is the tax rate and limits?
You also didn't say what the tax rate is on high net worth category.



Dear Steve

thank you for your comment.
The tax on retirees will be shared in the next newsletter but in any case, individuals with an income from a foreign pension or other source abroad, who transfer their tax residence to one of the municipalities with populations not exceeding 20 000 inhabitants may opt to have their foreign income taxed on a flat-rate basis of 7% - for each tax period in which the option is valid. This will apply for residency in the regions of  Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily, 

With regards to the tax rate on high net worth income: as mentioned in the article, there is no rate but one will pay a flat rate with the amount of  €100k - this will be instead of paying ordinary Italian Income Tax (up to 43 per cent) on their income.

Feel free to contact us should you have any further questions.

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