Impatriati
It is a tax relief scheme that reduces the taxation on employment and self-employment income for individuals who transfer their tax residence to Italy after a period spent abroad.
The objective is to encourage the return of qualified workers and professionals to Italy.
The current regime is governed by Article 5 of Legislative Decree No. 209 of 27 December 2023.
Eligible individuals include:
- Employees or self-employed workers who transfer their tax residence to Italy;
- Those who have not been tax residents in Italy during the previous three years;
- And who commit to remaining tax residents in Italy for at least four consecutive years.
A person is considered tax resident in Italy if, for more than 183 days per year, they:
- Are registered in the registry of the resident population in Italy, or
- Have their domicile or habitual abode in Italy (Article 2, paragraph 2, of the Italian Income Tax Code – TUIR).
The following income categories are eligible:
- Employment income and equivalent income;
- Self-employment income derived from artistic or professional activities carried out mainly in Italy.
- Employees must submit a written request to their employer, who will apply the reduction directly through payroll.
- Self-employed workers must opt for the regime in their annual income tax return (“Modello Redditi PF”) and notify the Italian Revenue Agency accordingly.
Under the new regime, only part of the income is subject to IRPEF (personal income tax):
Situation | Taxable portion | Exempt portion |
General rule | 50% | 50% |
Worker with at least one minor child resident in Italy | 40% | 60% |
The relief applies to a maximum of EUR 600,000 of eligible annual income.
The benefit applies for five consecutive tax years, starting from the year in which the taxpayer acquires tax residence in Italy.
The worker must:
- Transfer tax residence to Italy (pursuant to Article 2 of the TUIR);
- Maintain such residence for at least four years;
- Carry out their working activity mainly in Italy.
Failure to meet the minimum permanence requirement results in the loss of the benefit and recovery of the unpaid taxes, plus penalties and interest.
No. The Impatriate Workers Regime cannot be combined with the forfait regime or with any other personal income tax relief schemes.
Private Pension System
It is a voluntary, capital-funded system that allows workers to build an additional pension to complement the public (state) pension.
It operates through pension funds and individual pension plans (PIPs), which invest the contributions paid by the employee, the employer and/or the severance pay (TFR) in financial markets.
Because the public pension is expected to provide in the future a replacement rate (pension-to-salary ratio) of only 50–60%.
Supplementary pension schemes make it possible to increase retirement income while also benefiting from tax advantages.
An employee can:
- Allocate their accruing TFR (severance pay) to a pension fund;
- Pay additional voluntary contributions;
- Receive an employer’s contribution, if provided by the collective labour agreement.
Yes. Both employee and employer contributions are deductible from taxable income (IRPEF) up to €5,164.57 per year.
No. Participation is voluntary.
However, supplementary pension provision is strongly recommended to ensure an adequate income after retirement — especially for younger workers.
The workers can:
- Transfer their pension position to the new employer’s fund;
- Continue paying voluntary contributions; or
- Suspend contributions, keeping the amount accrued to date.
The final benefit (paid as a lump sum or annuity) is subject to a reduced tax rate of 15%, which decreases by 0.30% for each year of participation beyond the 15th, down to a minimum of 9%.
Yes, in three main cases:
- Serious medical expenses → up to 75%, at any time.
- Purchase or renovation of first home → up to 75%, after 8 years of participation.
- Other personal needs → up to 30%, after 8 years.
Aspect | TFR kept with employer | Pension fund |
Return | 1.5% + 75% of inflation | Market-based return (potentially higher) |
Final taxation | 23% | 15% decreasing to 9% |
Employer contribution | No | Yes, if provided by collective agreement |
Tax deduction | No | Yes, up to €5,164.57/year |
Early withdrawal | Limited / at employer’s discretion (subject to legal conditions) | More flexible (medical expenses, housing, etc.) |
Public Pension System in Italy
The mandatory pension system is based on compulsory contributions: a portion of the employee’s salary and a contribution from the employer are paid to INPS (National Social Security Institute), which manages social security benefits (old-age, early retirement, disability, survivors’ pensions, etc.). It operates on a pay-as-you-go basis: contributions paid by active workers finance the pensions of those who are already retired.
All employees, both in the public and private sectors, are automatically registered with INPS. The employer is required to pay social security and welfare contributions each month and to report salaries and contributions through the Uniemens electronic declaration.
Since 2012, pension benefits have been entirely calculated under the contribution-based system (metodo contributivo): the pension amount depends on the total contributions paid throughout the working life and on the conversion coefficients determined by the worker’s age and year of retirement.
The standard pension contribution rate for private sector employees is 33% of the gross salary:
- 23.81% paid by the employer
• 9.19% paid by the employee
In 2025, the requirements are:
• 67 years of age, and
• At least 20 years of contributions.
The pension starts from the first day of the month following the one in which both requirements are met.
It allows workers to retire before the statutory age of 67, provided they have accumulated:
• 42 years and 10 months of contributions (men);
• 41 years and 10 months (women).
It depends on three main factors:
- The length of contribution period in Italy;
- The citizenship (EU or non-EU);
- The existence of a social security agreement between Italy and the EE’s country of origin.
For citizens of EU countries
Italy applies Regulations (EC) No. 883/2004 and No. 987/2009 on the coordination of social security systems and the totalization of contribution periods. This means that even if Employee worked in Italy for a short time (e.g. 1 or 2 years), the contributions are not lost; contributions paid in Italy are added to those accrued in other EU/EEA countries or Switzerland to calculate a single proportional pension.
Example:
A worker who spent 2 years in Italy and 30 years in Germany will receive a German pension plus a small Italian pension quota, calculated based on the 2 years of Italian contributions.
For citizens of non-EU countries with a bilateral social security agreement
Italy has signed bilateral social security agreements with many countries, including: the United States, Canada, Argentina, Brazil, Mexico, Uruguay, Tunisia, Morocco, India, the Philippines, South Korea, Australia, Turkey, Serbia, Bosnia, Switzerland, and others. These agreements allow workers to combine contribution periods accrued in Italy and in the partner country, avoid losing contributions, and receive a pro-rata pension, meaning each country pays a share corresponding to the contributions accrued under its system.
Each country pays its portion of the pension according to its own legislation.
For citizens of non-EU countries without a social security agreement
In this case, totalization is not possible. If the worker has at least 20 years of contributions in Italy, he/she may qualify for an old-age pension at 67. If they have less than 20 years, he/she are not normally entitled to an Italian standalone pension.
Representative office in Italy
A Representative Office is not considered a permanent establishment (“stabile organizzazione”) of a foreign company in Italy.
It carries out preparatory or auxiliary activities and does not engage in direct business or commercial operations.
What a Representative Office can do:
- collect market information and conduct promotional or marketing activities;
- act as a liaison with clients and suppliers;
- coordinate or provide support to the parent company;
- host staff representing the company in Italy.
Example:
A Japanese company opens an office in Rome to manage relationships with Italian clients and promote its products, but it does not sell or invoice in Italy.
What a Representative Office cannot do:
- sell goods or services in Italy;
- issue invoices or enter commercial contracts on its own behalf;
- hold a VAT number or have economic autonomy.
If the foreign company intends to operate commercially in Italy (e.g. sell, invoice, or sign contracts), it must establish either a branch (sede secondaria) or a company incorporated under Italian law.
Feature | Representative Office | Branch (Sede Secondaria) |
Activity | Only preparatory or promotional functions (marketing, contacts, market research). | Full commercial activity (sales, contracts, invoicing). |
Legal personality | None – part of the parent company. | No separate legal personality, but operational autonomy in Italy. |
VAT number | No | Yes – must register for an Italian VAT number. |
Registration with Companies Register | Informative filing only (Form R, REA number). | Mandatory registration in the ordinary section as “secondary office of a foreign company.” |
Tax code | Yes (for fiscal identification). | Yes (in addition to VAT number). |
Accounting and tax obligations | None in Italy (costs are borne by the parent company). | Must keep separate accounts for Italian operations. |
Hiring of employees | Allowed only for representative purposes (requires INPS/INAIL registration). | Allowed, same as any operational business in Italy. |
Example | A U.S. company opens an office in Milan for marketing and promotion → Representative Office. | A German company opens a branch in Rome that sells and invoices in Italy → Branch. |
Yes.
Even if the office performs only liaison or marketing activities, it may hire employees in Italy.
To do so, the company must comply with INPS, INAIL, and mandatory employment notifications (UNILAV) requirements via the Ministry of Labour portal.
Example:
A U.S. company opens a Representative Office in Milan with one administrative employee.
It must:
- open an INPS registration number (employer code);
- file an INAIL registration (“denuncia di iscrizione”);
- submit the UNILAV communication before the employee’s first working day.
The foreign employer — if equipped with an Italian digital identity (SPID or CNS) — or an authorised Labour Consultant / Intermediary, can complete all formalities online via the INPS, INAIL, and Ministry of Labour portals.
LABORALIA, through its certified labour consultants, can assist foreign companies with the setup of Representative Offices in Italy and with the completion of all the required administrative and employment procedures.