Impatriate Tax Regime (Regime impatriati)
The popular Impatriate Tax Scheme provides a 50% income tax exemption (increasing to 60% if you have a dependent child under 18) for up to 5 years for employees and self-employed individuals who move their tax residence to Italy. Under the Regime impatriati, only half of your income is subject to Italian taxation, with a maximum annual income cap of 600,000 € eligible for the tax benefit.
Unlike the Regime Forfettario, another simplified tax scheme popular with expats, digital nomads, and self-employed professionals relocating to Italy, which is capped at an annual revenue of 85,000 € and does not allow the individual deduction of business costs or Input VAT, the Impatriate Tax Regime has a much higher upper limit (600,000 €). In addition, it allows for tax credits on expenses such as healthcare, home renovations, and other eligible deductions.
Eligibility Criteria
To apply for the Regime impatriati, you must meet the following requirements:
- Must become a tax resident in Italy and commit to remaining one for at least four consecutive years; if you leave Italy earlier, the Italian tax authority (Agenzia delle Entrate) will reclaim any previously granted benefits, plus interest
- Must not have been a tax resident in Italy in the 3 tax years preceding your relocation
- For intra-group transfers (i.e., moving for the same employer or a company in the same corporate group), the minimum non-residence requirement is increased to 6 (7) years
- You must have a high-skill occupation; you hold at least a Bachelor’s degree, a post-secondary professional qualification of at least three years, or five years of high-level, relevant professional experience
- You must work for an Italian employer or carry out your self-employed activity in Italy. This rule also applies to professional athletes
- If you are self-employed, you must register a sole proprietorship (Partita IVA) in Italy
- If you are an Italian citizen returning from abroad, you also qualify if you were registered with AIRE (the Registry of Italians Residing Abroad) or can prove tax residency in another country for the three years before your return
Key Benefits
Here’s what makes the Impatriate Tax Regime attractive:
I. 50% Income Tax Exemption for 5 Years
- You only pay income tax on 50% of your employment or self-employment income (up to an annual income cap of 600,000 €)
- If you have a dependent underage child, the exemption increases to 60% of your income
II. Both Employees and Self-Employed Workers Qualify
- Highly qualified salaried workers relocating to Italy
- Self-employed individuals, freelancers, and digital nomads who set up as a sole proprietorship (partita IVA) in Italy
- Professional athletes
III. Access to Tax Credits and Itemized Deductions
- You can claim Italian tax credits, such as dependent family deductions, renovation bonuses, healthcare, and mortgage interest deductions
- You can deduct actual business expenses (if self-employed)
Example:
Michael, a software engineer from the U.S., moves to Rome with his spouse and 12-year-old daughter, and becomes an Italian tax resident. He continues contributing to the U.S. Social Security system at a rate of 15.3%.
- His self-employed income is 300,000 € a year, after deducting actual business costs
- Only 40% (120,000 €) of his income is subject to Italian income tax, taxed at progressive rates
- Michael pays 23% on the first 28,000 €, 35% on income between 28,001 € and 50,000 €, and 43% on income above 50,000 €
- The total tax owed is: 6,440 € + 7,699 € + 30,100 € = 44,239 €.
- Michael pays an effective income tax rate of 14.7% (not including social security contributions)
- He also has to pay 300,000 € × 15.3% = 45,900 € to the U.S. as self-employment tax
Social Security Contributions
The Regime impatriati lets you choose between contributing to Italy’s INPS system or remaining insured under a foreign social security system, provided a totalization agreement (such as the U.S.-Italy agreement) allows it. Unlike income tax, social security contributions are calculated on your full annual income, not on a reduced 50% taxable base.
If you are self-employed (partita IVA) and cannot claim an exemption through a social security agreement, you must pay INPS contributions. The applicable rate is approximately 26% for professionals enrolled in the Gestione Separata, or the fixed + percentage contributions for craftsmen and merchants (artigiani e commercianti), which typically result in a similar effective rate.
Employees under the Regime impatriati are automatically enrolled in ordinary INPS employee contributions unless they hold an A1 certificate or are covered by a totalization agreement with a foreign country. INPS contributions are shared between the employer and employee, while your Italian employer applies the Impatriate Regime tax reduction directly through your monthly payslips.