Some key findings about the tax residence of sportspersons in Italy

This article provides some insights with regard to the potential issues facing sportspersons transferring their tax residence to Italy. Firstly, an overview about the general criteria required to define the concept of residence is provided. Secondly, the analysis addresses the major issues concerning the key-elements required to ascertain the tax residence in Italy of sportspersons and the mechanism used to solve conflicts of jurisdiction in situations of dual residence under tax treaty law. Last but not least, some remarks about the preferential tax regimes available in Italy for sportspersons.

Contents: 1. Definition of residence/domicile under domestic law – 2. Individual Income Tax applied to residents – 3. Territoriality principles for the taxation of non-residents – 4. The two key-elements required to ascertain the tax residence in Italy of sportspersons – 5. The concept of residence in tax treaty law and the mechanism to solve conflicts of jurisdiction in situations of dual residence – 6. How a sportspersons’ management company could affect the centre of vital interests of the individual – 7. Opportunities given by preferential tax regimes enacted in Italy for new residents and inbound workers

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1. Definition of residence/domicile under domestic law    

For Italian tax purposes (art. 2, par. 2 of the Income Tax Act, “ITA”), an individual is considered resident, whether national or not, for the greater part of the tax year (i.e. 183 days in the calendar year, or 184 days in the leap year) he is:

  • registered in the Civil Registry of the Resident Population; or
  • resident in Italy; or
  • domiciled in Italy.

The definition of “residence” and “domicile” is contained in art. 43 of the Italian Civil Code (“ICC”), according to which:

  • residence is the place where an individual has his habitual place of abode;
  • domicile is the place where an individual established the centre of vital interests (i.e. the place where the personal and economic connections are closer).

Therefore, the assessment of tax residency of an individual in Italy is either connected to a formal element, given by the registration in the Civil Registry of the Resident Population (unless proven otherwise), or to a substantial element,such as the residence or domicile in Italy.

Principles of Italian tax law (art. 3, par. 1 of the ITA) require that the effective situation of the taxpayers be ascertained for the purpose of allocating taxation rights, given that residents  are subject to the Italian individual income tax on their worldwide income (see Section 2) while non-residents – due to the limitations of the territoriality principle – are only subject to taxation with respect to Italian sourced income (see Section 3).

2. Individual Income Tax applied to residents

Taxation of residents is imposed, on a calendar year basis, on personal income earned (either in the form of cash or in kind). Taxable income is divided into the following six categories:

  1. income from land and buildings;
  2. income from capital;
  3. income from employment;
  4. income from self-employment;
  5. business income;
  6. miscellaneous income.

Earned income is taxed on a cash basis (net deductible expenses and losses, if any) and subject to the following progressive tax rates (also “IRPEF”, standing for “Imposta sul Reddito delle Persone Fisiche”):

Income (Euro) Tax rate
up to 15.000 23%
from 15.001 to 28.000 27%
from 28.001 to 55.000 38%
from 55.001 to 75.000 41%
over 75.001 43%

3. Territoriality principles for the taxation of non-residents

Non-resident individuals are taxed on a territorial basis in so far as income earned derives from sources located in Italy. For the purposes of computation of income, the same rules and the same tax rates applied to residents, also generally apply to non-residents.

According to art. 23, par. 1 of the ITA, the following sourcing rules apply to income earned by non-residents:

  1. income from land and buildings is deemed to arise in Italy if the property is located therein;
  2. income from capital is deemed to arise in Italy if it is paid by the State, by resident entities or by Italian permanent establishments of non-resident entities with the exclusion of interest on deposits and bank accounts;
  3. income from employment is deemed to be Italian sourced if the employment activity is performed in Italy (the same territoriality principle applies to income assimilated to employment);
  4. income from self-employment is deemed to arise in Italy if the relevant professional activity is carried-out therein;
  5. business income is deemed to be Italian sourced whenever it derives from activities performed within the territory through an Italian permanent establishment;
  6. miscellaneous income qualifies as domestic income if it derives from activities carried-out in Italy and relates to assets located therein, including capital gains deriving from the disposal of shareholdings in resident entities (with some exceptions, as listed by art. 23, par. 1, lit. f), n. 1)-2)-3) of the ITA).

4. The two key-elements required to ascertain the tax residence in Italy of sportspersons

According to art. 43 of the ICC, an individual is deemed to be resident in Italy if s/he has in the territory, either:

  • an habitual abode; or
  • the “centre of vital interests”.

As regards the habitual abode, it should be noted that the identification of the habitual abode in Italy requires the existence of at least two elements: an objective one, aimed at proving the degree of permanence of the individual in a given place (i.e. physical presence), and a subjective one, presumed by the willingness to return – as much as possible – to the place where the individual voluntarily placed the habitual abode (i.e. proving, in this sense, a stable permanence of the person in Italy, due to the maintenance of personal relations or economic businesses).

According to Circular No. 304 of 2 December 1997 of the Italian Revenue Agency (hereinafter also “Circular No. 304”), “in order for the condition of habitualness of abode to be met, neither the continuity nor the permanence of the person in such place is required. Accordingly, it can be verified even when the person works or carries-out other activities outside the Municipality of residence (in Italy), provided that s/he retains a stable dwelling in that place, returns there whenever possible and demonstrates the intention to maintain there the center of the family and social ties” (author’s translation).

With regard to the centre of vital interests, its interpretation assumes a key-role in determining an individual’s tax residency status, as the connections must be evaluated in view of the broad meanings attributed to the personal relations and economic interest of the individual. In this case, any reference is made to the physical presence of the person and her/his family members in Italy, to social and personal habits, availability of accommodation or social and business relationships.

Therefore, in consideration of such wide-ranging interpretation, the point is to determine whether, and to what extent, in assessing the tax residency of an individual in Italy, personal relations should prevail over economic interests or, vice-versa, the latter should prevail over the former. Taking into account that – unlike the criteria of the habitual abode – a test of the length of physical presence in Italy is not required, rather the intention of the individual to establish in Italy the centre of the personal and economic interests becomes the decisive factor.

According to Circular No. 304, the domicile in Italy must be derived by all factual elements which – directly or indirectly – reveal the presence, in a certain place, of the overall (i.e. personal and economic) relationships of the individual, in order to evaluate and balance their role in the person’s life under investigation. Thus, the following factors are significant in establishing the tax residence in Italy (par. 4.1 of the Circular No. 304):

  • availability of a permanent home;
  • presence of family members;
  • domestic income generating investments;
  • attendance at business meetings;
  • executive positions in various domestic companies;
  • hotel expenses;
  • membership of clubs and associations;
  • holding of bank accounts.

In short, the investigative activities from tax authorities should be aimed at collecting elements in order to evaluate the various relationships of the individual within the Italian territory, namely:

  • the effectiveness of personal connections of the individual;
  • the prominence of economic interests, such as the intention to repatriate financial assets or proceeds;
  • the willingness to return to the territory, even in the near future, also taking into consideration public statements or specific facts.

More recently, the Italian Revenue Agency has issued further guidance. In Protocol No. 43999/2017, it provided instructions for the tax officials’ control and audit activities targeted at determining whether the transfer of tax residence from Italy of individuals registered in the Registry of Italians Resident Abroad would be effective (eventually ascertaining the “centre of vital interests” in Italy and, therefore, reassessing the tax residence).

Additionally, in ProtocolNo. 47060/2017 the tax authorities supplied the taxpayers –  interested in applying for the special tax regime of new residents (which requires, amongst other factors, that the applicants have not been Italian tax residents for at least 9 out of the last 10 years preceding the option, see Section 7) – with a checklist (also to be attached to the application) aimed at self-disclosing the presence (or the absence) of personal and economic ties of the same taxpayer with Italy (in order to gain access to the special regime).

In brief, the following could be fundamental alerts the Italian Revenue Agency may consider while assessing the tax residency of individuals in Italy, in consideration of the ascertained taxpayers’ personal and economic relations in the territory (the following list is not exhaustive):

  • transfers of money from or to foreign countries;
  • presence of family members;
  • availability of motor vehicles or pleasure craft;
  • bills for energy and water consumption;
  • VAT number for business purposes;
  • capital contribution to domestic companies;
  • appointment in executive committees;
  • payment of social contributions for domestic personnel;
  • relevant information collected by the declaration of withholding agents;
  • carrying-out of transactions relevant for VAT purposes.

Evidently it is no straightforward task to establish whether the assessment of a taxpayer’s domicile in Italy (indeed, the residence for tax purposes) should first and foremost derive from personal or business ties within Italy. Local jurisprudence has ruled both ways; however, it is possible to determine that Italy’s tax courts consistently rule in support of the view that personal and family connections should overcome business interests, in order to establish the “centre of individual interests”.

The same approach has been envisaged by the OCED in the Model Tax Convention (2017), where the Commentary to art. 4 (Residence), par. 15, makes it clear that:

If the individual has a permanent home in both Contracting States, it is necessary to look at the facts in order to ascertain with which of the two States his personal and economic relations are closer. Thus, regard will be had to his family and social relations, his occupations, his political, cultural or other activities, his place of business, the place from which he administers his property, etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts of the individual must receive special attention. If a person who has a home in one State sets up a second in the other State while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has his family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first State”.

The matter at hand spreads its effects also in the case of sportspersons, who are usually characterized by a high degree of international mobility as well as widespread economic interests.

As an example, one of the leading cases in the sports sector is Resolution No. 351/2008, concerning a tax ruling filed by an Italian coach appointed as manager of the England national football team. The Italian Tax Authorities held the view that the tax residency of an individual in Italy must be tested considering the overall ties (personal and economic) within the territory: however, particular consideration should be given to personal relations over the economic interests (in Italian, the Resolution reads as follow: “(..) gia’ la risoluzione del Ministero delle finanze del 14 ottobre 1988, n. 8/1329, aveva considerato fiscalmente residente in Italia un soggetto che, pur avendo trasferito la propria residenza all’estero dove svolgeva la propria attività, aveva mantenuto il centro dei propri interessi familiari e sociali in Italia. Quindi la circostanza che il soggetto mantenga in Italia i propri legami familiari o il “centro” dei propri interessi patrimoniali e sociali è di per sè sufficiente a realizzare un collegamento effettivo e stabile con il territorio italiano”).

From the analysis carried out so far, it is possible to conclude that the indicators are symptomatic of a certain “vitality” of the person in a given place (i.e. Italy, in the specific case), can be identified in: (i) the will to establish personal and social relationships in the territory, (ii) the willingness to stay and to return to the territory as soon as possible and (iii) the relocation of the economic interests (e.g., real estate investments) in the territory.

However, a mere transposition of these principles into the factual reality of sportspersons is not straightforward for at least two reasons. The first concerns the type of activity carried-out, being an activity characterized by a level of “dynamicity” particularly significant as the professionals are continuously required to travel for performances or sporting, as well as non-sporting, commitments all over the world (i.e. tournaments, sponsors’ events). Secondly, the incidence of economic interests in the management of sportspersons is extremely important (i.e. income from image rights, sponsorships and advertising), so that it would be easy to shift the balance of the “centre of vital interests” to Italy rather than abroad (or vice-versa). Regarding this point, the most interesting judgments date back to a few years ago: this fact is undoubtedly a sign that a preventive assessment of risks/benefits deriving from the transfer of tax residence abroad from sportspersons has been undertaken over time, as it has assumed an extremely important role in the choice of the individual – also in consideration of the possible damages that could come about in terms of image (being a public figure)  by transferring the residence abroad; particularly when migrating to a privileged jurisdiction.

In the Author’s opinion the following judgment should be noted.

Italian Supreme Court, Case No. 12311/2016. The facts concern a racing driver who moved his residence from Italy to the Principality of Monaco in 1987 (country included in the blacklist found in the DM of 4 May 1999) and had been subject to a tax audit on the years 1997 to 2000. For years 1999-2000, the Judges rejected the taxpayer’s appeal basing their conclusions on the fact that a number of circumstances proved the usual presence of the taxpayer to be in Italy, such as:

  • the location of business interests;
  • the willingness to visit his child and family who had remained in Italy;
  • the opening of various bank accounts;
  • the presence in the territory for various reasons;
  • the fact that various sponsorship contracts provide Italian Courts as the place of dispute resolution;
  • the signing of insurance policies in Italy;
  • the delivery of mail to an Italian address.

In short, the Court held the view that the overall personal and economic ties should be taken into consideration assessing therefore, that the centre of vital interests (i.e. domicile) of the taxpayer to be in Italy.

Italian Supreme Court, Case No. 961/2015 – 12559/2010. In this case the taxpayer (a motor racing driver) transferred his tax residence from Italy to the Principality of Monaco. In their conclusions, the Judges stressed the view that, from an analysis of facts and circumstances, it emerged that after having formally transferred his tax residence abroad, the taxpayer kept strong personal and social ties with Italy in consideration of his willingness to return and remain in the territory as much as possible (as proved,  by amongst other things,   utility bills of the property rented in Italy and the continuous contact maintained with fans and family members). The Judges, in their conclusions, aimed at identifying the tax residence to be in Italy, also took into account the economic interests of the racing driver in Italy. Remarkably, they found, inter alias, that the taxpayer leased a prestigious property in Italy from a Monegasque company controlled by a Dutch entity which was (presumably) owned by family members (being the same Dutch entity to whom he had disposed of his image rights) and it was also found that he had been a driving instructor at the safer driving school for motor racing drivers (to whom he also contributed financially) run by the brother.

Italian Supreme Court No. 20285/2013 – 20545/2013 – 5388/2017 – 5489/2017. In the cases under consideration, a professional sportsperson had transferred his tax residence to the Principality of Monaco. The Judges deemed that the tennis player successfully proved his genuine transfer of residence (together with his family), acknowledging that the relocation abroad was at the centre of personal interests (wife) as well as the intention to return to the Principality of Monaco (demonstrated by the adequacy of expenses such as the rental of an apartment, utility bills for water and energy, telephone expenses, banks contracts) despite his professional activity requiring his presence around the world to play in ATP Tournaments on an almost continuous basis.

5. The concept of residence in tax treaty law and the mechanism to solve conflicts of jurisdiction in situations of dual residence

The network of Italy’s bilateral tax treaties generally follows the OECD Model Tax Convention (hereinafter also the “Model”), a “tool” developed by the OECD countries which serves as a “guideline” for the negotiation and implementation of double tax treaties between Contracting States.

Art. 1 of the Model provides that tax treaties apply to individuals who are residents of one or both Contracting States. The expression “resident of a Contracting State” is defined in art. 4, par. 1 of the Model, according to which “For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature (…)”.

As illustrated in the Commentary to art. 4 of the Model, the concept of residence as used in tax treaty law is typically based on the domestic concept of residence as used by the Contracting States to cover the various forms of personal attachment to a State, insofar as this gives rise to a comprehensive taxation (full liability to tax). Therefore, it is possible to determine that tax treaty law does not establish its own standards that must be met in order to determine the place of residence, nor provides criteria for domestic laws regarding residence of individuals, rather it is aimed at connecting individuals with one or both Contracting States solely by reason of their link (i.e. domicile, residence or any other criterion of a similar nature) with a given territory and in accordance with domestic law. In this sense, the Commentary (see Preliminary remarks to art. 4) makes mere reference to situations based on the taxpayers’ personal attachments to the State (such as, domicile under domestic law) and to connecting criteria (such as physical presence of the person).

As a matter of principle, tax treaties are not as such aimed to levy or impose taxes  on individuals falling within the scope of art. 1, rather are directed at allocating taxation rights between Contracting States limiting the application of a tax (provided by domestic laws) to individuals who are residents of the other State. This is the case of dual residence situations whether a person should result tax resident of two States according to both domestic laws (as could be, for instance, the case of an Italian national who transferred his residence abroad but remained listed in the Civil Registry of the Resident Population in Italy). In such case, art. 4(2) of the Model provides that “To solve this conflict special rules must be established which give the attachment to one State a preference over the attachment to the other State”. In addition, “As far as possible, the preference criterion must be of such a nature that there can be no question but that the person concerned will satisfy it in one State only, and at the same time, it must reflect such an attachment that is felt to be natural that the right to tax devolves upon that particular State”.

Therefore, in consideration of the relationship between international law (such as tax treaty provisions) and Italian tax law – regulated by Constitutional Law (art. 117) and Presidential Decree No. 600/73 (art. 75), according to which tax treaty provisions should prevail over domestic law – resolution of dual residence situations (as well as the elimination of double taxation that would arise the taxpayer being theoretically subject to unlimited taxation in both States) should be devolved to the tie-breaker rules contemplated by art. 4, par. 2 of the Model.

Thus, a taxpayer should be deemed to be resident in the Contracting State in which, following this hierarchical order for application purposes:

  1. he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be resident only of the State with which his personal and economic relations are closer, this being understood as the centre of vital interests;
  2. if the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be resident only of the State in which he has an habitual abode;
  3. if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
  4. if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement procedure laid down in Article 25 of the Model.

Some considerations about tie-breaker rules.

Permanent home available. It should be noted from the wording of art. 4, par. 1 of the Model, as well as from the Commentary (par. 12), that the permanent abode criteria must be examined when the individual owns or possesses (i.e. he has the availability of an apartment rented or rented furnished room) a home/place that must be arranged and retained for his personal use, at all times continuously and not occasionally for the purposes of a stay, which is (instead) symptomatic of a short duration as could be, for instance, “travel for .pleasure, business travel, educational travel, attending a course at school, etc” (see Commentary, par. 13).

Centre of vital interests. As regards the first subsidiary criteria, the valuation of the centre of vital interests of the person must be applied where the individual has (or, has not) a permanent abode available to him in both (or, in neither) Contracting States. This preference criterion decides in which State the individual’s personal and economic relations are closer, looking at different indicators such as the place where the individual’s family and social relations are located, his occupation and activities (political, cultural or other), the place from where he manages his properties. The factual situation of the individual should be assessed in its entirety, even if the Commentary (par. 15) holds that personal acts of the individual must receive special attention.

Habitual abode. It may, however, be impossible to allocate the centre of vital interests in one of the Contracting States: in which case, it is necessary to look at the second subsidiary criteria establishing the place of permanent abode. The examination of this criterion requires considering the length of stay in a given place (objective element): the wording of the Commentary (par. 19) suggests that the comparison between the length of time for testing an habitual abode in each Contracting State must cover a period sufficient to determine whether the residence in each of the two States is habitual and to also determine the intervals at which the stays take place.

Nationality. There are no particular issues to discuss with regard to this criterion (see Commentary, par. 20).

MAP. There are no particular issues to discuss with regard to this criterion (see Commentary, par. 20).


Interim conclusions.

As discussed so far, the concept of residency for tax treaty purposes is decisive to:

  1. define the application of tax treaty provisions to individuals;
  2. allocate taxation rights between Contracting States; and
  3. eliminate double taxation arising in situations of dual residence conflicts.

Overall, if Italy has signed a double taxation convention with a Contracting State, treaty provisions always prevail over domestic law.

Last but not least, it is possible to assume that an individual is tax resident in Italy for tax treaty purposes where one of the following conditions is met:

Condition Meaning under Italian tax law
Permanent home available Falls within the notion of residence under art. 43, par. 2 of the ICC
Centre of vital interests Falls within the notion of domicile under art. 43, par. 2 of the ICC
Habitual abode Falls within the notion of residence under art. 43, par. 2 of the ICC
Nationality Citizenship

6. How a sportspersons’ management company could affect the centre of vital interests of the individual

The assessment of international sportspersons’ tax residence (i.e. the place where the centre of vital interests is located) could be affected by an additional element, in cases whereby the management of image rights, sponsoring and advertisements are made through an entity held by the same sportsperson: the place of location of the management company.

In tax treaty law, art. 17 of the Model regulates the allocation of income derived by (entertainers and) sportspersons. In particular, the rationale behind this special rule has been that of providing the network of tax treaty laws with an anti-avoidance measure targeted at the possible non-payment of taxes in both the performance state and in the state of residence of (entertainers and) sportspersons, since Article 17 represents a deviation from the normal allocation rules of the Model (which gives exclusive taxation rights to the individual’s state of residency, in Article 7) providing for primary taxation rights to the state where the performance takes place and secondary taxation rights to the sportsperson’s state of residency, thereby reducing forms of double taxation through Article 23 of the Model.

Art. 17 of the Model reads as follows (emphasis added):

1. Income derived by a resident of a Contracting State, as an entertainer or a sportsperson, from that resident’s personal activities as such exercised in the other Contracting state, may be taxed in that other State;

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson acting as such accrues not to the entertainer or the sportsperson but to another person, that income may, notwithstanding the provisions of Article 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

International sportspersons should therefore be aware that while ascertaining the centre of vital interests, Italian tax authorities could evaluate whether the individual holds a qualifying (or sole) shareholding in a management company located in Italy. At this proposal, both Circular No. 1/2018 issued by the Italian Tax Police (Guardia di Finanza) and Protocol No. 43999/2017 issued by the Italian Revenue Agency consider that, in determining an individual’s tax residence in Italy, the following factors should also be taken into consideration:

  • the ownership of a shareholding by the individual; and
  • the participation in companies qualified by limited share base (“società a ristretta base azionaria”).

7. Opportunities given by preferential tax regimes enacted in Italy for new residents and inbound workers

In recent years, Italy has created a number of favourable taxation regimes with the aim of becoming one of the EU’s leading countries for foreign investment: the country’s package of special taxation schemes has now been widened in an attempt to attract new residents and inbound workers who are willing to relocate to Italy.

Sportspersons are undoubtedly well ranked among potential beneficiaries.

Special regime for new residents

Access to this regime allows non-Italian resident individuals to split taxation of their worldwide income by paying a flat substitute tax of Eur 100,000 per year on their overall foreign sourced income while applying ordinary Individual Income Tax to the portion of Italian sourced income. Moreover, the Regime provides for exemption from net wealth taxes as well as from inheritance and gift taxes on assets and immovable properties located abroad.

Election to the regime is available for a maximum of 15 years to those individuals who have been non-Italian tax residents for at least 9 out of 10 years preceding the first year of the option coming into effect. The regime can however be revoked at any time by the taxpayer or forfeited under specific circumstances.

Furthermore, the regime can be extended to the taxpayer’s family members provided that the minimum requirements set out by the regime are fulfilled. In such cases, the family member would be subject to a reduced substitute tax of Eur 25,000 per year.

Additionally, foreign sourced income, irrespective of its country of origin and regardless of the tax treatment at source, is deemed to be covered by the substitute tax, provided that no tax credit is granted in Italy on taxes paid abroad. Nonetheless, taxpayers can exclude specific countries from the Regime through the “cherry-picking” mechanism: in this case, any foreign income sourced in those selected countries will be subject to ordinary Italian taxation (as well as to wealth taxes, inheritance and gift taxes for assets located abroad) and, as a result, a foreign tax credit would be granted to avoid forms of double taxation.

Taxpayers can also submit an advanced tax ruling to the Italian Revenue Agency with the aim of verifying the existence of the requirements necessary in order to apply for the Regime. Such ruling is not mandatory and, in any event, non-binding for the taxpayer.

This regime is particularly targeted at international entertainers and sportspersons with a high degree of sporting mobility or to professionals who derive a consistent portion of their income from sources located outside Italy, such as income from the exploitation of image rights or, more generally, from various forms of endorsement.

Special regime for inbound workers

Non-resident individuals acquiring tax residence in Italy are entitled to opt for the special scheme, pursuant to which Italian sourced income deriving from:

  • an employment relationship,
  • self-employment, or
  • business activity

is generally 70% exempt from taxation in Italy. The exemption is increased to 90% in cases where individuals are willing to transfer their tax residency to one of the following Italian regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia and Sicily. It is also increased to 90% if the individual/worker has 3 children under the age of 18 or dependents (even in pre-adoption foster care).

Access to the regime is available upon fulfilment of the following conditions:

  • the individual must have been non-Italian tax resident for the last 2 tax periods preceding the first year of the option coming into effect;
  • the individual should commit to remain Italian tax resident for at least 2 tax periods from the first year of the option coming into effect;
  • the work activity (i.e. the relationship of employment, of self-employment or business activity) must be predominantly carried-out in Italy (for a period of at least 183 working days for each calendar year).

Eligibility for the regime is available to EU citizens and non-EU citizens of countries that have a double taxation convention or exchange of information agreement signed with Italy.

The benefit is generally available for 5 years (the year of relocation and the following four), with the possibility of renewal for a further 5 years if the individual/worker has at least one child under the age of 18 or dependents (even in pre-adoption foster care); and/or the individual/worker buys a property in Italy after his/her relocation or during the last 12 months preceding the transfer (the purchase can be made even from the spouse, the cohabitant or from a son or daughter).

An exception to the rule, is income deriving from performances qualifying as “professional” sporting activities in Italy which are 50% exempt from taxation, irrespective of the Italian Region where the sportsperson transfers his or her residency.


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