What are the benefits dedicated to foreigners moving to Italy, and how is the taxation and related bonus calculated?

The benefits dedicated to foreigners moving to Italy is a measure made available by the Italian state for both employees and freelancers who have been working in a foreign country and wish to relocate to Italy as workers, whether employed or self-employed.

In this article we will discuss two legislations: the one effective for all those who moved before Dicember 31, 2023, and the one applicable for those who moved to Italy from January 01, 2024.

Tax benefits for individuals who relocated to Italy in 2024

With this new taxation law, the percentage of tax relief has been reduced from 70% to 50% of the taxable income (compared to the previous regulation). This implies that a higher percentage of your salary will be subject to taxation, reducing the benefit. Taxable income in Italy refers to the amount on which taxes are calculated, and it is computed based on the gross annual income (RAL) from which deductible charges are subtracted (such as mandatory pension contributions, etc.).

Incentive for foreigners relocating to Italy remains highly advantageous despite the reduction imposed by the government in 2024, since it significantly lowers annual income taxes.

Moreover, this reduction in taxable income often results in a change in the income tax bracket, transitioning from the 43% of the highest italian bracket to the 23%-25% of the lower brackets. Additionally, it may offer the opportunity of receiving additional tax benefits, typically not available for people with a higher income.

In addition to the taxable percentage, a maximum income cap has been imposed, applying the benefit exclusively to the first 600,000 euros of annually income. As for the duration, it remains of 5 years, and it is no longer extendable for another 5 tax periods, as was the case in the previous regulation.

The requirements to access the benefits have also been modified. If you wish to learn more about the topic, click on this link: impatriate regime requirements.

Tax benefits for individuals who relocated before the end of 2023

This bonus is valid for those who moved their residence to Italy before December 31, 2023. For workers meeting the necessary requirements under this regulation, it entails a reduction of 70% in taxable income.

Additionally, the legislative measure aimed at encouraging the relocation of skilled professionals allowed for a further increase in the percentage of tax exemption or bonus if the worker decides to transfer their tax residence to one of the following regions:

Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardegna, Sicilia.

In this case, the worker can obtain a 90% exemption instead of the standard 70% exemption.