Tax regime for “inpatriated employees” in Italy
Francesco Carlini & Francesco Lavino
by Francesco Carlini & Francesco Lavino
Legislative Decree 147/2015 introduced a tax incentive for employees who transfer their tax residence in Italy, providing a reduction in the taxable income for the calculation of personal income tax (IRPEF) and related surcharges.
Updated in 2024, the law provides a reduction of taxable income under the following conditions:
The employee commits to being a tax resident in Italy for at least four tax years;
The employee wasn’t a tax resident in Italy during the previous three tax years before the transfer (a longer period may apply if the employee continues performing a job related to the previous employment abroad);
The employee’s work is primarily carried out in Italy during the tax year; or
The employee holds a high level of qualification or specialisation.
The tax incentive is applicable to annual employment income up to EUR 600,000, and is valid for a period of five tax years. It provides a 50% reduction in taxable income for IRPEF and related surcharges.
For example, if an employee earns EUR 100,000 in 2025, only EUR 50,000 will be subject to taxation, while the remaining EUR 50,000 will be exempt. If the employee has at least one dependent minor child, the reduction increases to 60%.
To meet the qualification requirement, the employee must have completed at least a three-year higher education program and obtained a corresponding professional qualification.
IRPEF rates for 2025
The IRPEF rate is calculated using a progressive three-tier system:
23% on EUR 0 to 28,000;
35% on EUR 28,801 to 50,000; and
43% on income over EUR 50,001.
Additional surcharges may apply based on the region and municipality of residence:
Regional tax: up to 3.33%;
Municipal tax: up to 0.80%.
Optional regime for foreign retirees
Since 2019, Italy has also offered a special tax regime for foreign retirees who transfer their residence to Southern Italy. This regime allows for a flat 7% substitute tax on all foreign-source income.
Italy continues to position itself as an attractive destination for foreign employees and retirees, offering favourable tax incentives for those who relocate their residence and economic interests to the country.
XLNC member firm ABACOModena, ItalyT: +39 059 34 34 00
Audit, Accounting, Tax, Corporate Finance, Strategy, Management Consulting
Francesco Carlini is a certified public accountant who focuses on accounting and tax compliance. He has extensive experience managing legal entities operating in the arts sector, and has gained significant expertise in tax and social security advisory for high-net-worth individuals, both nationally and internationally. Contact Francesco Carlini.
Francesco Lavino is a certified public accountant who advises corporations on both ordinary and extraordinary activities, with a focus on accounting and tax consultancy, including international taxation. He also assists building and energy companies with tax issues related to the energy sector. Contact Francesco Lavino.
