Tax Benefits in Italy : “Lavoratori Impatriati”

As more and more companies embrace remote work, there has been a growing trend toward hiring international employees. This presents an exciting opportunity for businesses looking to expand their operations globally and tap into a wider pool of skilled workers.

If you are ready to take your business global and hire top talent in Italy, it's important to be aware of the "lavoratori impatriati" tax scheme. This program offers tax incentives to qualified individuals to encourage the movement of "human capital" to Italy. In this article, we'll explain everything you need to know about the "lavoratori impatriati" tax scheme, including who is eligible and what the requirements are.

What is the "Lavoratori Impatriati" Tax Scheme?

Under the "lavoratori impatriati" tax scheme a significant portion of qualifying income from employment in Italy is exempt from income tax. Specifically, 70% of gross salary or net profit is exempt from income tax, while the remaining 30% is taxable. However, it is important to note that 100% of salary is subject to social security contributions under standard rules.

In some areas of Italy, such as Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, and Sicily, the exempt portion is even higher at 90%. The "lavoratori impatriati" tax scheme applies for 5 consecutive accounting periods unless revoked or the eligibility requirements are no longer met. It may also be extended for an additional 5 years if certain conditions are satisfied.

Who is Eligible for the "Lavoratori Impatriati" Tax Scheme?

You must meet specific requirements to take advantage of the "lavoratori impatriati" tax scheme. These include:

Being a non-Italian resident: To qualify for the tax scheme, you must be a non-Italian resident. This means you must have lived in Italy for only 183 days in the past year.
Having a high level of professional skills: You must have a high level of professional skills or qualifications to qualify for the tax scheme. This could include a University degree or highly specialized professional certification.
Being recruited or starting a business in Italy: You must either be recruited by an Italian company or start your own business in Italy to qualify for the tax scheme. Your work must also be performed prevalently in Italy — meaning you must spend more time in Italy than anywhere else in the tax year.
Having a sufficient income: You must earn a sufficient income to qualify for the tax scheme. This income threshold may vary depending on your circumstances, but it is generally higher for those who are self-employed or own a business.

How Does the "Lavoratori Impatriati" Tax Scheme Work?

If you meet the eligibility requirements and are considering taking advantage of Italy's "lavoratori impatriati" tax scheme, here are the steps you need to take:

Meet with a tax advisor or lawyer to discuss your eligibility and the specific requirements for the tax scheme. They can help you understand the details of the program and determine whether it's right for you.
If you are eligible, you will need to file a special tax return in Italy to apply for the tax scheme. You will need to provide documentation to prove your eligibility, including proof of your recruitment or business in Italy and proof of your income.
If your application is approved, you will receive a certificate of eligibility from the Italian tax authorities. This certificate will allow you to pay the flat tax rate on certain types of income for five years.
After five years, you will need to reapply for the tax scheme to continue benefiting from the flat tax rate.

Benefits of the "Lavoratori Impatriati" Tax Scheme

There are several benefits to taking advantage of Italy's "lavoratori impatriati" tax scheme, including:

A lower tax burden: The tax break can be much lower than the standard progressive tax rates that apply in Italy, saving you money on your taxes.
Greater predictability: With the tax break, you will know exactly how much you need to pay in taxes each year, making budgeting and planning easier.
A more attractive tax environment: The "lavoratori impatriati" tax scheme can make Italy a more attractive location for foreign talent, which can help your business attract and retain top employees.

Summary

The growing remote work trend is making it easier for businesses to open up in other countries without having to set up multiple legal organizations. Italy's "lavoratori impatriati" tax scheme is an excellent opportunity for businesses looking to expand their operations and hire international employees. By taking advantage of this program, you can attract top talent and save money on taxes. However, navigating the country's tax laws and regulations can take time and effort.

If you're looking to hire remote employees in Italy, Remofirst’s team of expert consultants has extensive knowledge and experience in international employment laws that can help you understand the "lavoratori impatriati" tax scheme and other preferential tax programs in Italy.

Grow Your Business Globally with Remofirst

As an Employer of Record (EOR), Remofirst handles all the logistical and compliance aspects of hiring international employees in Italy, allowing companies to efficiently expand their workforce to other countries without the added complexity of setting up additional legal structures. This includes international payroll processing, health benefits, and more. By using Remofirst, you can focus on what you do best – running and growing your business – while we handle the rest.

Let Remofirst help you every step of the way as you expand your business globally. Contact us today to learn more about how we can help your business succeed in the global marketplace.