The Italian government is set to undertake a major tax reform. The current special tax regime for recent immigrants, both Italian repatriates and foreign nationals moving for permanent residence, is set to undergo significant changes. 

How does the current tax regime work? 

Currently, both Italian returnees and expats from other countries can benefit from a favorable tax scheme: it allows them to pay taxes on only part of their income (between 10% and 30%, depending on the region) for 5 years (or 10 years with children), provided they have spent the previous 2 years outside Italy. For those coming to the southern regions, there is an even more substantial discount of 90%.

Proposed changes

According to the authorities' proposal, 50% of income will be taxed, regardless of region. Also, the preferential treatment will apply to those who have spent outside Italy not 2 years but 3 years, and the period during which you cannot leave the country, so that taxes will not be recalculated at the standard rate, will increase from 2 to 5 years. Notably, having children will no longer extend the grace period. In addition, the tax relief will not apply to incomes exceeding 600,000 euros.

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Public outcry

Activists are already mobilizing and collecting signatures against these amendments. They argue that the new tax breaks will become uncompetitive, especially for those with higher salaries and contract conditions abroad than in Italy. 

When will the amendments come into force?

While activists oppose the changes, Deputy Minister of Economy and Finance Maurizio Leo assures that the amendments will only come into effect on January 1, 2024. This means that those who will return or move to Italy this year will still have time to take advantage of the existing tax breaks. However, this does not solve the situation for those who are embroiled in lengthy bureaucratic processes and will not physically arrive in Italy until next year.