Italian Revenue Agency: special regime for impatriate workers and payment for access to the extension

In ruling No 223/2023, the Italian Revenue Agency provided some clarification on the applicability of the ‘tax amnesty’ (remissione in bonis) regime – under Article 2, paragraph 1 of Italian Decree-Law No 16/2012 – in the event of failure to pay under Article 5, paragraph 2-bis of Italian Decree-Law No 34/2019, for the extension of the special regime for impatriate workers.

Reference legislation

Article 16 of Italian Decree-Law No 147/2015 provides that only a maximum of 30% of employment income and self-employment income produced in Italy by workers who transfer their residence to Italy contributes to the calculation of their total income for five tax periods when the following conditions are met:

• the worker has not been resident in Italy during the two tax periods preceding the transfer;
• the worker undertakes to reside in Italy for at least two years;
• the work activity is mainly performed within the Italian territory.

Moreover, as a result of Article 5 of Italian Decree-Law No 34/2019, subsequently converted into law, with amendments, by Italian Law No 58/2019, which introduced paragraph 3-bis to Article 16 of Italian Decree-Law No 147/2015, the special tax regime may be applied for a further five tax periods when it is established that the subjective requirements of the rule are met, namely:

• the worker has at least one dependent minor child, including in pre-adoptive foster care;
• the worker becomes the owner of at least one residential property unit in Italy after moving to Italy – and in any case within the fifth tax period from the transfer of tax residence in Italy – or within the 12 months preceding the transfer. The real estate unit may be purchased directly by the worker or by the worker’s spouse, cohabitee or children, including in co-ownership.

In both cases, during the extension period of the preferential tax regime, a maximum of 50% of the income generated contributes to the formation of the overall income.

Applicant’s case

In the request to the Italian Revenue Agency for a ruling, the applicant pointed out that he had returned to Italy in September 2016, together with his entire household and had benefited, from the 2017 tax period, from the provisions set out in Article 16 of Italian Legislative Decree No 147/2015, in the version of the text in force pro tempore, which provided that employee income would be included in the calculation total income up to a maximum of 50% of its amount.

After the applicant’s repatriation, the legislation was subject to substantial amendments and Article 5, paragraph 1 of Italian Decree-Law no 34/2019 – converted into Italian Law No 58/2019, the so-called “Growth Decree” (Decreto Crescita) – amended certain subjective and objective requirements of the impatriate scheme, increased the percentage reduction of taxable income and provided for the possible extension of the preferential tax treatment for a further five years under certain conditions.

The possible extension originally applied only to persons who had transferred their tax residence to Italy on or after 30 April 2019. Subsequently, however, the Italian Budget Law 2021 – Italian Law No 178/2020 – allowed the application of the extension to those registered with the Registry of Italians residing abroad (Anagrafe degli italiani residenti all’estero) and to citizens of European Union Member States who had transferred their residence before the year 2020 and who, as of 3 December 2019, were beneficiaries of the scheme.

The extension option required the payment of an amount equal to 10%, or 5% under certain conditions, of the taxable employment and self-employment income produced in Italy, relating to the tax period preceding that in which the option is exercised.

Although the applicant met the requirements to exercise the option to extend the impatriate scheme for a further five years, ‘due to a mere oversight (forgetfulness) […] he did not pay the amount by 30 June 2022’.

Faced with this oversight, the applicant requested the Italian Revenue Agency to apply the ‘tax amnesty’ regime (remissione in bonis) – governed by Article 2, paragraph 1 of Italian Decree-Law No 16/2012 – to regularise the non-payment of the above-mentioned amount, which was a prerequisite to the extension of the preferential tax regime.

Italian Revenue Agency’s Opinion

In response to the request made by the applicant, the Italian Revenue Agency recalled that, following the entry into force of Italian Budget Law 2021, taxpayers participating in the special regime for ‘impatriate’ workers could benefit from the extension for a further five tax periods on payment of 10% or 5% of the taxable employment and self-employment income in Italy relating to the tax period preceding that in which the option is exercised.

By director’s order published by the Italian Revenue Agency protocol No 60353/2021, the Agency identified the procedures for exercising the option, from which it follows that the option must be exercised by paying a lump sum of:

• an amount equal to 10% of the employment and self-employment income produced in Italy subject to the preferential treatment if the person, at the time of exercising the option, has at least one minor child, including in pre-adoptive foster care, or has become the owner of at least one residential property unit in Italy. The property unit may be acquired directly by the worker or by the worker’s spouse, cohabitee or children, including in co-ownership;
• an amount equal to 5% of the employment and self-employment income produced in Italy that is subject to the preferential treatment if the person, at the time of exercising the option:
  • has at least three minor children, including in pre-adoptive foster care, and
  • becomes or has become the owner of at least one residential property unit in Italy after the transfer to Italy or within the 12 months preceding the transfer or becomes the owner within 18 months of the date on which the payment is made, on penalty of nullity.

The amount must be paid by means of an F24 form no later than 30 June of the year following the year in which the first period of the use of the preferential treatment ends and there is no possibility of offsetting.

The Italian Revenue Agency, in its ruling on the application in question, referred to a previous ruling published in July 2022 – No 383 – in which it specified that ‘the extension for a further five years of the special regime […] is subject to the exercise of the option on payment of the amounts due within the indicated deadline’. Therefore, the Agency considers that, ‘where the payment of the amounts due is omitted or deficient, non-compliance precludes the application of the benefit in question’.

In light of the foregoing, the Italian Revenue Agency reiterated that recourse to the voluntary correction of tax return (ravvedimento operoso) regime is not permitted, nor as suggested by the applicant, is recourse to the ‘tax amnesty’ regime under Article 2, paragraph 1, of Italian Decree-Law No 16/2012.

That article, in fact, provides that ‘the enjoyment of tax benefits or access to optional tax regimes, which are subject to the obligation of prior notification or to formal compliance promptly performed, is not precluded, provided that the breach has not been established or access, inspections, audits […] of which the taxpayer has had formal knowledge have not commenced, where the taxpayer:

• meets the substantive requirements of the relevant legislation;
• makes the disclosure or satisfies the prerequisite by the deadline for submitting the first valid declaration;
• pays, at the same time, the minimum amount of the sanction laid down in Article 11, paragraph 1 of Italian Legislative Decree No 471/1997”.

According to the Italian Revenue Agency, the failure to pay the sums due by the deadline of 30 June 2022 is clearly not attributable to ‘formal’ compliance and therefore the taxpayer will not be able to regularise this compliance by means of the tax ‘amnesty’ regime.