03.05.2022

FROM ABROAD TO RESIDE IN ITALY: THE TAX ADVANTAGES FOR BUSINESS START-UPS.

More and more Italian and foreign workers decide to set up their own business in Italy by opening a VAT and taking advantage of the tax regime for so-called "impatriati" (returnees or immigrants). This tax advantage consists in taxing only 30% of the income earned in Italy (10% if the residence is transferred to a region in the South). To be eligible for the benefit, the following conditions must be met: no residence in Italy in the two tax years preceding the transfer of residence; one must remain in Italy for at least two years; one must carry out the activity predominantly in Italy, i.e. more than 183 days per tax year. For persons meeting the above requirements, 70% (or 90%) of the income from employment (and equivalent), self-employment or business income earned individually in Italy is not taxed for IRPEF purposes. Previously, the tax exemption was limited to 50% and did not apply to business income. The benefit is granted for five years from the acquisition of residence in Italy and can be extended for a further five years if certain conditions are met. "Impatriati" (returnees or immigrants) who earn income from self-employment often do not take advantage of the beneficial regime until they prepare their income tax return. However, it is possible to take advantage of the tax benefit "in advance" by submitting a special application to the principals, who apply the withholding tax to the already reduced taxable income.