Italy Tightens Tax Rules for Recent Migrants

Italy is following Portugal in worsening the tax conditions for those who have recently moved to the country. It seems that the Italian government intends to tighten the current tax regime for the so-called “Lavoratori Impatriati” (Repatriated Workers). According to information from the Italian Corriere Della Sera, a new draft law was introduced in October, which could change the taxation for this category of migrants. Currently, this special tax regime allows both Italians who have returned to the country and foreign expatriates who have moved here permanently to pay taxes only on part of their income for five years (or ten if they have children), if they have previously spent two years outside Italy.

According to the new proposal, taxes will be levied at 50% of income, and this will apply in any region of the country. To qualify for benefits, it will be necessary to live outside Italy for three years, and the period during which you cannot leave Italy to maintain benefits will be extended from two to five years. Also, the presence of children will no longer help extend the preferential period, which will be no more than five years in any case. Additionally, the preferential regime will not apply to income above €600,000.

This draft law has been criticized within the country, mainly because the preferential regime was originally aimed at “bringing back brains” – that is, attracting qualified Italians back to the country. However, the new rules may make returning less attractive for this category of people.

This context is also related to Portugal’s decision to abolish the preferential tax regime for new tax residents from 2024. This has led to an influx of digital nomads hoping to qualify as tax residents before the preferential regime is abolished.

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