To support the economic, scientific and cultural development, Italy introduced many different measures, in the form of special investments, special financing or special tax regimes.
From a tax perspective, with the “Brain Gain Program” the Italian legislator decided to attract researcher and professors.
The specific tax incentives legislation provides that 90% of the income (income from employment or from self-employment) received by researchers and professors transferring their fiscal residence to Italy, will be excluded from Italian personal income tax (the so called “IRPEF”).
However, this relief applies only to income deriving from teaching and researching activities performed in Italy. Therefore, all the other income of the individual wherever produced, will be ordinarily subject to the Italian income tax (worldwide taxation principle).
- holding University Degree or equivalent qualification: all academic or equivalent academic qualifications are valid;
- foreign residence before moving to Italy: the law does not specify the length of the period spent abroad but merely requires that the duration of the research or teaching activity abroad must have lasted for at least two consecutive years, thus this period may be considered the minimum necessary to obtain the benefits;
- documented teaching or research activities for at least two consecutive years at public, private or university research centers or universities: the research activity can be identified as the activity dedicated to basic research, industrial research, experimental development and feasibility studies. On the other hand, teaching activity can be identified as the teaching activity carried out at universities, public and private institutions.
Nature of employer – carry out teaching and research in Italy
There are no provisions regarding the nature of the employer who must nonetheless put in place organizational structures for the purposes of conducting research and/or teaching and/or training activities.
Italian tax residence
Tax incentive is granted both whereas professors and researchers get their fiscal residence in Italy as a consequence of their moving to Italy to start their activity.
According to the Italian income tax code, an individual is deemed to be resident in Italy for tax purposes when he/she is enrolled in the registers of the resident population or has his/her domicile or residence in the territory of the Italian State for most of the tax period, namely for at least 183 days (or 184 days in the case of a leap year) taking into account the solar year.
Timing of the tax relief
Tax relief is made available from the year in which the researcher/professor has taken up Italian tax residency and it is applicable for the following 5 years, provided that he/she remains resident for tax purposes in Italy.
Extension of the tax relief
If researchers and professors fulfill further requirements and provided that they retain their residence in tax residence in Italy during the entire period, the tax relief shall apply according to following terms:
- 8 years overall if the “applicant” has:
- a minor or dependent child, including if in pre-adoptive care;
- acquires full ownership of at least one residential real estate property in Italy following their transfer to Italy or in the 12 months prior to the transfer (the real estate property may be purchased directly by the interested party or by their spouse, partner or children, also in co-ownership);
- 11 tax years overall, if the “applicant” has at least two minor or dependent children, including if in pre-adoptive care;
- 13 tax years overall, if the “applicant” has at least three minor or dependent children, including if in pre-adoptive care.
Disclosure of foreign assets and investments
Individuals who are fiscally resident in Italy must annually disclose to Italian tax authorities asset and investments they hold abroad. Moreover, they have to pay a Wealth tax on real estate held abroad (IVIE) and a Wealth tax on financial investments held abroad (IVAFE). The application of this tax rule is quite complex, and the individual must be aware that omitted or wrong information raise to heavy penalties.
Human Technopole – an example of special investment in the city of Milan
One of the main special investments is the Human Technopole in Milan, Italy’s new research institute for life sciences.
Through an interdisciplinary approach based on the creation and sharing of knowledge, Human Technopole promotes innovation in the healthcare sector and aims at improving human health and well-being.
Once fully operational the institute will employ 1,500 people including over 1,000 scientists across a range of fields: biology, bioinformatics, chemistry, engineering, mathematics and computer science.
Human Technopole aims to increase public and private investments in scientific research and to be actively involved in the promotion of scientific knowledge by strengthening the message that science is a global public good.
How we can help you
RSM is the leading tax partner for the international client and is specialized in the consultancy for individuals and their families. With a deep knowledge of the main tax issues and opportunities arising from the residency relocation our international teams can help you in identifying the best tax solutions.
Edited by Giulia Sorci and Gabriele Giardina