Tax incentive regimes for new residents in Italy: Recent developments and practical impacts

These regimes can offer significant tax benefits; however, in some cases, the existing legislation does not explicitly clarify how the incentives should be applied in practice. Please find below a summary of the most recent clarifications published on these matters.

In an unpublished ruling dated 19 December 2025, the Italian Tax Authority confirmed that the Inpatriate Regime may be applied cumulatively with the New Resident Regime under Article 24 bis of the Italian Income Tax Code (TUIR).

This confirmation is particularly relevant as it allows qualifying new residents to optimise their tax planning by benefiting, within the same tax year, from the 50 per cent exemption on Italian employment or self employment income, while also applying the flat tax on foreign source income (raised to EUR 300,000 for relocations made as of 2026).

Ruling No. 317/2025 clarified that access to the Inpatriate Regime is not precluded when an individual returns to Italy after a period of unpaid leave abroad.

The case of the Ruling concerned an employee of an Italian bank who, after working in Italy, took unpaid leave starting in 2018 to take up a position abroad. In 2024, she returned to Italy and resumed work with her original Italian employer.

The Tax Authority clarified the following:

The tax incentive for inpatriates is also available where the employer is a foreign entity when the employee relocates to Italy and works from Italy in smart working.

This was confirmed in Ruling No. 2 of 12 January 2026. In this case, the individual returned to Italy in 2025 following employment in the United Kingdom starting March 2021. After relocating to Italy, she began working for a German company based in Berlin — unrelated to her previous UK employer — under an Italian employment contract, with workplace located in Italy (Milan office) and the possibility of working remotely.

If all requirements provided by Law are met, the individual may benefit from the Inpatriate Regime, since the activity is performed in Italy even though the employer is a foreign entity.

Ruling No. 12 of 20 January 2026 addressed the case of a worker who, despite transferring residence abroad, continued to perform employment activities in Italy as a cross border commuter and later returned permanently to Italy.

The Tax Authority explained that the benefit requires the fulfilment of clearly defined subjective and objective conditions, including the actual transfer of tax residence and compliance with the minimum period of residence abroad.

It was clarified that the law does not provide restrictions based on where the work activity was performed during the period of tax residence abroad, if the individual meets the required period of non residence in Italy.

This interpretation confirms that access to the regime is also available to cross border workers, as long as all other statutory requirements are met, including those relating to professional qualifications and the minimum period of residence abroad.​