The Italian Revenue Agency has clarified in its answer to ruling No. 460 of 20 September 2022 that a taxpayer who returns to Italy to carry out a self-employed activity benefiting from the flat-rate regime may not avail himself of the regime provided for impatriate workers.
Table of contents:
- Article 16 of the Internationalisation Decree
- The incompatibility between the two regimes according to Circular No. 33/E of 28 December 2020
- Regulatory framework
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1. Article 16 of the Internationalisation Decree
The Italian Revenue Agency published the answer to ruling No. 460 of 20 September 2022 concerning the benefit of the special regime for inpatriate workers in the hypothesis that, as a result of the application of the forfaitary regime in the first tax period following the return to Italy, no income was earned that contributed to the formation of the overall income.
Article 16 of Legislative Decree No. 147 of 14 September 2015 (the Internationalisation Decree) introduced the ‘special regime for impatriate workers’. Pursuant to paragraph 1 of that article, the facilitated regime can be applied by those workers who:
- transfer their residence to the territory of the State;
- have not been resident in Italy during the two tax periods preceding the transfer and undertake to reside in Italy for at least two years;
- work on Italian territory for the most part of the year.
The relief entitles one to a reduction of the taxable base of up to 30% if the worker establishes his residence in a region of northern Italy, or up to 10% (with an exclusion of 90% of the income from work) if the residence is acquired in a region of southern Italy.
The impatriate regime is available to taxpayers for five years from the tax period in which they transfer their tax residence to Italy and for the following four tax periods.
2. The incompatibility between the two regimes according to Circular No. 33/E of 28 December 2020
In relation to the provisions in question, the Italian Revenue Agency has already provided several clarifications in Circular No. 33/E of 28 December 2020, in particular, with reference to the subjective and objective requirements for accessing the tax relief, the prerequisites for accessing the additional five-year period of relief, the temporal scope of application of the aforementioned provision, and the regulatory changes concerning the requirement of registration in the registry of Italians residing abroad (the so-called AIRE) in order to benefit from the tax relief in question.
In particular, for what concerns the case at hand, Circular 33/E specified that the special regime for impatriated workers is applicable only to income (from employment, similar to employment and self-employment) which, produced in the territory of the State, contributes to the formation of the taxpayer’s total income according to the ordinary provisions of the TUIR.
2.1. Considerations about the “Regime Forfettario“
The adherence to the forfetary regime, on the contrary, entails determining taxable income according to ‘forfetary’ criteria, applying to the amount of revenue or remuneration received the profitability coefficient to a different extent depending on the ATECO code that distinguishes the activity exercised, on which is then applied a substitute tax of income tax, regional and municipal surcharges, and the regional tax on productive activities equal to 15 per cent.
Circular No. 33/E of 2020 clarified that a taxpayer who returns to Italy to carry out a self-employed activity benefiting from the flat-rate regime will not be able to avail himself of the regime provided for impatriate workers, as the income produced under the flat-rate regime does not participate in the formation of the overall income.
In conclusion, a taxpayer who has transferred his tax residence to Italy in April 2022, and has opted for the “regime forfetario” in relation to the current tax year, in the following years and until the completion of the five-year period potentially eligible for the tax relief (i.e. from 2023 to 2026), he will not be able to benefit from the different regime provided for by Article 16 of Legislative Decree No. 147 of 14 September 2015.