2024 Changes to Italy’s “Regime degli Impatriati” Expat Tax Scheme: 3 Implications for Future Expatriates

VERY IMPORTANT: This article covers a matter subject to change. Under the proposed rules, existing expats benefitting from the expat tax scheme "Regime degli Impatriati" will keep their current scheme. These changes will, if approved, only apply to new Italian tax residents from 2024. We will update this page as matters become clearer.

Update (28/10/2023): it has now been confirmed that, no matter what, people taking up residency in Italy by 31/12/2023 (i.e. registering their address in Italy) will benefit from the "Regime degli Impatriati" under the existing rules. The new rules will apply from residents from 2024. Note that the day you submit your residency application at the town hall counts as your first day of residence, no matter how long it then takes the comune to process the paperwork.

The Italian Ministry of Economy has proposed changes to the "Regime degli Impatriati" tax scheme that could significantly alter its appeal to future expatriates. It's crucial to understand that this draft isn't final and is still subject to negotiation, but it's worth examining the proposed changes to evaluate potential impacts. If you have other questions, you can, as usual, ask TAX AI at the bottom of the article.

Proposed Changes to the "Regime degli Impatriati" Tax Scheme

The proposal envisages a new tax regime starting from 2024, applicable for a maximum period of 5 years. This regime targets highly-qualified or specialised workers who haven't been residents in Italy in the three previous taxation periods. If these workers fail to maintain their fiscal residence in the subsequent five years, they would be required to return the benefits with interest.

Here's a breakdown of some key proposed changes:

Reduction in Tax Benefits

The proposed changes suggest a reduction in taxation benefits from 70%-90% to 50%, with an income benefit cap set at €600,000. This proposal marks a significant shift from the current scheme, which offers a more substantial reduction in taxable income.

Eligibility Criteria Modification

Under the proposed scheme, expatriates must possess high qualification or specialisation. This is a substantial shift from the current criteria which are broader and don't explicitly require high qualification or specialisation.

Mandatory Residence Maintenance

The proposal introduces a clause that necessitates the maintenance of fiscal residence in Italy for five years following the use of the scheme. Failure to do so will result in a repayment of the benefits with interest. This contrasts with the current scheme, which doesn't have explicit clauses demanding the retention of residency.

Exclusion of Certain Professions

The proposed changes leave unchanged the provisions for researchers, university professors, and sports workers, which were previously covered.

Implications for Future Expatriates

The proposed changes, if enacted, could significantly alter how attractive the "Regime degli Impatriati" scheme is to future expatriates. Here's why:

Limited Tax Reduction

The proposed changes could see a reduced tax reduction for future expatriates, making the scheme less financially appealing.

Stricter Eligibility Criteria

The proposed high qualification or specialisation requirement narrows the pool of eligible expatriates. This might exclude individuals who would have been eligible under the current scheme.

Penalty for Changing Residence

The proposal's clause necessitating residence maintenance and imposing penalties for non-compliance could potentially deter individuals who aren't certain about long-term residency in Italy.

In conclusion, while the proposed changes to Italy's "Regime degli Impatriati" tax scheme could impact its attractiveness to future expatriates, it's important to keep in mind that these changes are still in a draft stage and open to negotiation. As such, intending expatriates should seek professional tax consultation to remain updated on the evolving situation.