Pre-Immigration tax Planning Under Italy’s New resident Workers and Entrepreneurs Special tax Regime

Italy operates a preferential tax regime for new residents that provides a 70% tax exemption for income derived from employment, professional services or business carried out in Italy. As a result of a series of tax rulings issued by the Italian tax administration, the regime is available also to employees or professionals who work for foreign employers without a fixed place of business in Italy. Remote workers can therefore benefit from the tax abatement, which results in an effective tax rate of 11%. Income derived partly within and partly without Italy is apportioned based on calendar days or working days, at the taxpayer’s election. The working day rule is particularly beneficial for top level executives who can spend substantial personal traveling abroad while still maximizing the scope of the tax exemption. The tax benefit applies for a period of five years, which can be extended for additional five years if certain requirements are met at a reduced 50% taxable income exemption (equal to an effective tax rate of 17%).

In this area, we advise our clients with pre-immigration tax planning services designed to ensure access to the special tax regime and to maximize eligible income by properly structuring client’s personal affairs and business activities in a way that fit into the regime, properly timing the establishing of Italian tax residence, and handling their tax return filing obligations on an ongoing basis