Rules applicable to the remuneration of an employee seconded abroad

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Regarding the remuneration rules of an employee seconded abroad, the Italian Revenue Agency has analyzed the relevant legislation in its ruling No. 428 of September 12, 2023.

The Case Presented by the Applicant

The question was submitted by a trading company, part of a multinational group, concerning the possible applicability of the conventional regime provided for in Article 51(8bis) of the Consolidated Income Tax Act (Tuir) to one of its employees seconded from 1 January 2022 until 31 December 2023 to a German subsidiary.

The Applicant provides further details in relation to its posted worker, clarifying that:

  1. He has managerial functions and has previously accepted a secondment to the subsidiary in Germany;
  2. He qualifies as a tax resident in Italy for 2022 because he has maintained the seat of his vital interests (i.e., his family) in the territory of the Italian State;
  3. His work is carried out continuously and exclusively at the foreign subsidiary, with occasional business trips to other countries, including Italy.

Revenue Agency’s Response to Ruling 428/2023

The Administration recalls that Article 51, paragraph 8bis, of the Tuir provides that:

“Notwithstanding the provisions of paragraphs 1 to 8, the income from work carried out abroad on a continuous basis and as the sole object of the relationship by employees who spend more than 183 days in the foreign State in a twelve-month period shall be determined on the basis of the conventional remuneration established annually by the decree of the Minister of Labor and Social Security referred to in Article 4, paragraph 1, of Legislative Decree No. 317 of 31 July 1987, converted with amendments by Legislative Decree No. 398 of 3 October 1987.”

Therefore, in the presence of the conditions set forth in paragraph 8bis, the income from employment produced abroad is determined, by way of derogation from the provisions of the preceding paragraphs of Article 51, not by considering the sums actually received by the worker, but on the basis of the conventional remuneration identified, by 31 January of each year, by a decree issued by the Minister of Labor and Social Policies in agreement with the Minister of Economy and Finance.

This compensation, which is determined considering the employee’s level of work, sector of activity and basic salary, is capped without regard to the actual income received by the employee and is an “all-inclusive” compensation, i.e., it includes all compensation items, including fringe benefits, related to the employment relationship.

Based on what is required by the aforementioned provision, the tax discipline of Article 51, paragraph 8bis, of the Tuir is applicable provided that:

  1. The posted employee remains a tax resident in Italy;
  2. The employee working abroad is classified in one of the categories for which the decree of the Ministry mentioned above establishes the conventional remuneration;
  3. The work activity is carried out abroad with a character of permanence or sufficient stability;
  4. The work activity performed abroad is the exclusive subject of the employment relationship. Therefore, the work performance is achieved entirely abroad;
  5. The employee stays in the foreign state for over 183 days within twelve months.

The worker abroad is still an Italian tax resident

The taxation on the “notional remuneration” (retribuzione convenzionale) is therefore applicable to those employees who, while working abroad, continue to be considered as tax residents in Italy according to article 2, paragraph 2, of the Tuir, which, as it is recalled, considers individuals as tax residents in Italy for income tax purposes:

“persons who, for the greater part of the tax period, are registered in the Anagrafe or have their domicile or residence in the territory of the State”.

Category of worker must be in those included in agreements on conventional remuneration

About the second condition, the individual carrying out his activity abroad must be in one of the categories for which the decree of the Minister of Labour and Social Security, in agreement with the Minister of Economy and Finance, defines the conventional remuneration. As stated by the Italian Revenue Agency in response to Ruling No. 54 of January 31, 2022, the absence of provisions in the ministerial decree for the economic sector in which the employee’s activity is carried out does not allow the application of the specific regime.

Exclusivity of work activity abroad

The third condition is that the work activity must be performed abroad as the exclusive subject of the employment relationship. As stated in the Circular of the Ministry of Finance dated November 16, 2000, No. 207, for the above criterion to be applied, it is necessary to conclude a specific agreement providing for work to be performed exclusively abroad and for the employee to be placed in a specific position abroad. Placement is not required if the employment relationship is established directly with a foreign company.

Given the need to comply with the above conditions, and as clarified with ruling no. 245/E of September 11, 2007, the performed activity shall be carried out of Italy on permanent basis.

The goal is to avoid that the more favorable tax treatment is applied to an activity performed abroad on an occasionally basis (i.e., business trips).

Continuity and actual presence abroad

About the continuity requirement and the calculation of the days of actual presence abroad, Circular no. 207/2000 clarifies that the period to be taken into account does not necessarily have to be continuous and that, with the expression “within twelve months”, the legislator

“did not intend to refer to the tax period, but to the employee’s stay abroad as defined in the specific employment contract, which may also provide for two calendar years”.

It has also been clarified that the calculation includes holidays, weekends and sick leave, counted as time spent abroad to reach the required minimum period, regardless of where they are spent.

In case of stay abroad longer than 183 days

Finally, in Circular 7/E of January 26, 2001, it was stated that if the contract provides for a stay abroad of more than 183 days, the withholding agent will apply the taxation provided for in article 51, paragraph 8bis of the Tuir, starting from the first remuneration paid, with a review to take into account if the conditions for the application of the “notional remuneration” (retribuzione convenzionale) are no longer met.


In the case at hand, the Italian Revenue Agency clarifies that occasional business trips to countries other than Germany (the country where the employee is posted), including Italy, for the company’s needs and in the exclusive interest of the foreign subsidiary do not seem to undermine the exclusivity and continuity of the employment relationship.

Consequently, provided that the work is carried out abroad for more than 183 days in a 12-month period, and provided that all the other conditions of the above provision are met, the Italian Revenue Agency considers that the income can be determined in accordance with article 51, paragraph 8bis, of the Tuir.

Regulatory Framework

Article 51 Consolidated Income Tax Act of December 22, 1986, no. 917

Reference (Italian only)

Decree-law of July 31, 1987, no. 317

Reference (Italian only)

Article 2 Consolidated Income Tax Act of December 22, 1986, no. 917

Reference (Italian only)

Circular of November 16, 2000, no. 207 - Ministry of Finance - Department of Revenue Legal Affairs Office of the Central Directorate

Reference (Italian only)

Circular of May 13, 2011, no. 20 – Italian Revenue Agency

Reference (Italian only)

Circular of January 26, 2001, no. 7 - Italian Revenue Agency

Reference (Italian only)

Italian Revenue Agency, response to inquiry of September 12, 2023, no. 428

Reference (Italian only)

Italian Revenue Agency, response to inquiry of January 31, 2022, no. 54

Reference (Italian only)

Italian Revenue Agency, response to inquiry of September 11, 2007, no. 245

Reference (Italian only)

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