In 2015, Italy enacted a special tax regime for high skilled workers who move to Italy to work there for an Italian employer, on assignment to an Italian affiliate of a foreign multinational, or on their own as independent consultants and service providers. Eligible taxpayers (who include Italian citizens, and foreign nationals who are citizens of a country with a tax or exchange of information treaty with Italy) must not have been Italian tax residents at any time during the five years prior to their relocation to Italy, must establish and maintain their tax residence in Italy for at least two years, must own a higher degree or perform managerial or high skill functions, and must work primarily (that is, more than 183 days) in Italy. The 50 percent taxable income deduction is limited to a period of five years and does to apply to other income, not arising from employment or performance personal services.

We reported previously about the special tax regime for foreign high skilled workers in a post issued on July 14, 2018, to which we refer for more details.

The draft legislative decree with urgent measures for economic growth put forward by the Italian Government a few days ago, and referred to as the Growth Decree, would enhance the special tax regime for foreign high skilled workers in many significant respects, including the following:

– eligible taxpayers would include foreign entrepreneurs who move to Italy to carry out a trade or business;
– the taxable income exemption (extended to business income) would increase from 50 to 70 percent, and up to 90 percent for taxpayers who establish their residence in the Italian southern regions,
– the tax exemption period would be extended for additional 5 years, with a 50 percent tax exemption, for taxpayers who, in the 12 months before, or at any time during the first five years after, establishing their residence in Italy, have purchased a residential real property in Italy,
– the tax exemption would also be extended for additional 5 years, with a 50 percent tax exemption for taxpayers with at least one, or 90 percent tax exemption for taxpayers with at least three, minor dependents in Italy claimed on their income tax return.

The special tax regime for high skilled people working or doing business in Italy, coupled with the simplified and visa free procedure for the assignment of foreign personnel to Italian affiliates of foreign-based enterprises, appears to be very attractive, and coupled with the special forfait tax regime for hight net worth individuals and the new 7 percent flat rate tax regime for foreign retirees, makes Italy a very attractive jurisdiction for globally-minded people, entrepreneurs and investors and for foreign multinational groups interested in expanding their business and workforce in Italy.

The legislative process for the draft decree to be become law requires the approval of the Government, and the final passage into law by the Parliament.