Skip to content With Ruling No. 37/2026, the Italian Revenue Agency has once again addressed the tax treatment, in the hands of an individual tax resident in Italy, of in-kind and deferred compensation (stock options and performance shares) accrued in connection with employment carried out abroad and already subject to the “conventional remuneration” regime pursuant to Article 51, paragraph 8-bis, of the Italian Income Tax Code (TUIR).
The ruling concerns a matter of particular relevance for expatriate employees who, while working abroad on a continuous basis, maintain their Italian tax residence and receive variable remuneration components with multi-year vesting periods.
The case
The applicant, an Italian citizen tax resident in Italy, carried out employment activities in Foreign Country X from December 2016 to December 2022 for a company resident therein. Within the framework of that employment relationship, he accrued entitlement to “in-kind and deferred” compensation in the form of stock options and performance shares.
The taxable events occurred in 2024 (exercise of the stock options) and in 2025 (free allocation of shares upon achievement of the targets set out in the incentive plan), respectively.
As of 1 January 2023, the taxpayer was hired by a company resident in Foreign Country Y, controlled by the company in Country X, while retaining the right to receive the deferred compensation accrued under the previous employment relationship.
During the periods of employment abroad, the taxpayer remained tax resident in Italy pursuant to Article 2 of the TUIR and Article 4 of the applicable Double Taxation Conventions, and reported his employment income under the “conventional remuneration” regime set out in Article 51, paragraph 8-bis, of the TUIR.
The taxpayer’s request
The taxpayer asked the Revenue Agency whether the fringe benefits received in 2024 and 2025 should be deemed already “absorbed” within the conventional remuneration taxed in Italy in the years of accrual.
Alternatively, he sought clarification as to whether such income components should be subject to ordinary IRPEF taxation at the time of exercise of the stock options or allocation of the shares.
According to the solution proposed by the taxpayer, such income should be regarded as included in the lump-sum taxable base determined pursuant to Article 51, paragraph 8-bis, of the TUIR, without any further taxation upon actual receipt.
The conclusions of the Revenue Agency
The Agency first reconstructs the relevant statutory framework, referring to:
- Article 3 of the TUIR, under which Italian tax residents are taxed on their worldwide income;
- Article 49 of the TUIR, which classifies employment income as income deriving from subordinate employment relationships;
- Article 51, paragraph 1, which includes in the taxable base “all amounts and values in general, received on any account,” including in-kind compensation such as stock options and performance shares, valued at their “normal value” pursuant to Article 9 of the TUIR.
The Agency notes that paragraph 8-bis of Article 51 introduces a derogation from the ordinary analytical criterion.
Under such provision, income is determined on a lump-sum basis for individuals who are tax resident in Italy and carry out their employment activity abroad on a continuous and exclusive basis, staying in the foreign State for more than 183 days within a twelve-month period.
In such cases, the taxable base is not calculated on the remuneration actually received, but on the “conventional remuneration” amounts annually determined by Ministerial Decree (most recently, Ministerial Decree of 16 January 2025).
In the present case, the Agency distinguishes between:
- stock options accrued between December 2016 and June 2019 and performance shares accrued during the period of employment abroad, where the requirements for application of the conventional regime were met;
- stock options accrued between June and November 2016, a period for which, based on the information provided, the regime under paragraph 8-bis did not apply.
With respect to compensation accrued during the period in which employment income was determined on the basis of conventional remuneration, the Agency holds that the related fringe benefits must be considered “absorbed” within the lump-sum taxable base already taxed in Italy.
Accordingly:
- no further taxation applies to the income deriving from the exercise, in 2024, of the stock options accrued between December 2016 and June 2019;
- nor to the income deriving, in 2025, from the free allocation of shares relating to the performance period July 2022 – June 2025, to the extent accrued during the application of the conventional remuneration regime.
Conversely, stock options accrued during a period not covered by the conventional remuneration regime must be subject to ordinary taxation at the time of exercise.
Final remarks
The ruling confirms a significant principle (see Circular No. 207 of 16 November 2000 and Circular No. 20 of 13 May 2011): where the statutory requirements are met, the conventional remuneration regime encompasses all components of employment income attributable to the period of activity carried out abroad, including deferred or in-kind elements, even if received in subsequent tax years.
The correct identification of the accrual period of incentive plans is therefore crucial, as it determines the applicable tax regime at the time of exercise or allocation.
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