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Italy updates special tax regime for HNWIs and Inbound individuals

Article 16 of the Law Decree n° 147 released in September 2015 (the Decree), introduced the 'special tax regime for inbound', becoming operative in January 2016. The original law provision was subject to several amendments, the last of which occurred with the budget law for 2021, Law n. 178/2020, art. 1 para 50. In consideration of the several amendments occurred, the tax authorities published many answers to official rulings filed by taxpayers and recently issued circular letter, n. 33/2020, giving further clarifications concerning the differences between the different versions of the STR introduced during the years.

Further to this special tax regime, other tax provisions were introduced in 2017 and in 2019 addressing special tax treatments for High net worth and retired individuals.

In this article:

Special tax regime for inbound workers

Individuals meeting the following requirements can benefit from the partial exemption from ordinary taxation of employment income, self-employment income and business income.

The requirements provided by the version in force starting from May 1st, 2019 are:

  1. Being non-tax resident of Italy for the 2 years before the arrival to Italy;
  2. To commit to stay and to live in Italy for at least two years;
  3. To work in Italy 183 days at least;

Individuals moving to Italy are no longer requested to have a specific qualification or a specific role, as provided by previous versions, and/or to be employed by an Italian resident employer, thus the panel of individual potentially benefitting of the STR became wider.

Measure of the exemption and duration

The STR version currently in force generally provides for the exemption of 70% of the income for five years: the first year of tax residency and the following four.

When the individual meets one of the following additional requirements, the part of income subject to tax decrease reaching 10% and/or the number of years of application increase till ten.

Individuals moving the residency in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia or Sicily will benefit from the exemption of 90% of the income, since the first year of tax residency and for the following four.

When one of the below listed is met,

  1. to have one child under the age of 18 or dependant, even in pre-adoption foster-care OR
  2. to buy a property in Italy, after the transfer to Italy or during the twelve months previous the transfer

the individual can benefit from the exemption from taxation of the income at the rate of 70% for the first five years and for the further five but applying the 50% exemption rate.

According to the Tax Bill for 2021, the extension for further 5 years could apply to individuals already benefitting from the exemption and who became tax resident until the year 2019, as better detailed below.

These individuals must pay a one off fee equal to 5% or 10% of the income produced in Italy: 10% if the individual meets requirement a) or b) above, 5% if the individual has 3 children under the age of 18 even in pre-adoption foster-care.

Special Tax Regime for professional sportsmen

In 2019, the Italian legislator introduced a special provision for professional sportsmen, granting the chance to apply the special tax regime for inbound. Subject to meeting the requirements listed into the previous paragraph (1., 2. and 3.) and subject to paying a 0,5% surcharge to the athlete’s sport federation, professional sportsmen are eligible for a five-years 50% exemption on Italian sourced income.

The qualification as professional or amateur sportsman depends on Law n° 91/1981 (Law on Professional Athletes) and not on the actual circumstances of the athlete.

Finally, it is important to underline that the partial exemption is only applicable to employment income, self-employment income and personal business income produced in Italy and that the further requirements and enhancements cannot apply to sportsmen.

Depending on the nature of the contract, sponsorship income (or other kinds) may not be eligible for the application of the special tax regime.

Novelty introduced in 2020

In order to prevent discrimination between individuals already benefitting from the previous version of the STR at December 31st, 2019 and those becoming tax resident since Jan 1st, 2020, the Tax Bill for 2021 allowed the extension for five years, after the conclusion of the first five.

This option is granted to Italian citizens registered with the AIRE (the register of the Italians living abroad) and to EU citizens.

The requirements to get the extension are the same defined above under a) and b) but in this case the exemption rate does not change and is equal to 50%.

STR for High Net Worth Individual

Individuals becoming an ordinary tax resident of Italy according to the TUIR, and never being qualified as a tax resident of Italy during nine tax years over the previous ten can opt in for the STR for HNWI.

The option grants flat taxation amounting to 100,000 euro, each year, on foreign income, regardless of the amount of foreign income produced during the tax year. The same treatment would be applicable to their family members, whose foreign income would be subject to a flat 25,000 euro tax (for each member). The regime will apply for fifteen years from the first year of tax residency.

Any other Italian sourced income, produced under the qualification of non-domiciled tax resident individual, is subject to the ordinary taxation applicable to the kind of income considered.

Capital gains realized during the first five years under the new tax regime on foreign investments and deriving from the sale of qualified shareholdings: are not subject to the flat tax but rather to the ordinary Italian taxation.

The qualification under the new tax regime gives the opportunity to avoid the following taxes and tax filing obligations for the income subject to the flat tax:

  • wealth tax on the investment held abroad, saving 0.2% per year on the value of financial investment and 0.76% per year on the original cost of the real estate properties held abroad;
  • filing of the declaration of investments held abroad;
  • current Italian Inheritance and Gift Tax (from 4% to 8% depending on the degree of kinship).

Special tax regime for retired people

Retired people moving their tax residency to South Italy and receiving pension benefit can opt in for a STR granting the following:

  • Any foreign sourced income earned by the taxpayer is subject to a 7% flat rate tax. The taxpayer cannot recover the double taxation on income subject to Italian substitutive taxation;
  • Foreign financial investments and real estate placed abroad are exempted from wealth taxes (IVAFE and IVIE) and the disclosure of such investments is not due by the taxpayer as long as the special tax regime is applied by the taxpayer.

The option can be adopted starting from the year when the taxpayer becomes tax resident of Italy and is valid for the 9 consecutive following years (10 years total).

In order to opt in, the individual should meet the following requirements:

  • Being a retired person, entitled to receive a foreign pension;
  • Being qualified as non-tax resident of Italy for the 5 years preceding the transfer to Italy;
  • To become tax resident of Italy in one of the Southern Regions (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Apulia) and into a Municipality with less than 20.000 inhabitants.

If you would like to discuss any of the insights raised in this article please contact, Lorenzo Carminati at or Paola Lova at for more guidance.

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