TAX REGIME FOR RESEARCHERS AND PROFESSORS
TAX INCENTIVES FOR ATTRACTING HUMAN CAPITAL
- TAX BENEFITS FOR RESEARCHERS AND PROFESSORS – Tailored for those engaged in research or teaching roles, offering specialized benefits to encourage their contribution to the academic landscape
- TAX BENEFITS FOR “IMPATRIATES” WORKERS – Designed to facilitate the return of Italian citizens or foreign nationals to Italy, providing advantageous tax conditions to ease the transition.
- TAX BENEFIT FOR NEW RESIDENTS – Geared towards individuals establishing residency in Italy, offering incentives to newcomers through favorable tax arrangements.
- TAX BENEFIT FOR FOREIGN PENSIONERS – Aimed at individuals with foreign pensions, providing a unique tax framework to enhance financial benefits during their residence in Italy.
TAX REGIME FOR RESEARCHERS AND PROFESSORS – WHAT IS IT?
- The regime is an incentive for Researchers and Professor who move their residence for tax purposes to Italy.
- Consists in the exclusion from the formation of tax income of employed or self-employed workers 90% of the emoluments derive from carrying out teaching activities and research – tax relief of 90% of income.
- Porpouse: to remedy to the c.d. phenomenon of “brain drain” and promote technological development science of the country.
IN SHORT WORDS
How logn does it last? 6 fiscal years. The tax regime is valid for the tax period in which the residence is transferred and for the following 5 years. As will be seen later, important possibilities for extending the duration are envisaged
Am I elegible? Subject Requirment:
- University degree or equivalent
- Resident abroad
- Documented research or teaching activity abroad for at least two continuous years
- Acquires tax residence in Italy
How much I pay? Income contributes to the formation of the taxable amount to the extent of 10% (exclusion of 90%). Therefore, ordinary taxation is applied on 10% of income. Example: in the case in which a subject perceives gross emoluments equal to 100,000 euros, taxable income is equal to 10,000 euros.
THE RESIDENCE CONCEPT
Resident in Italy are those who:
- for most of the tax period, namely for at least 183 days (also considering the fractions of day) , are enrolled in the registers of the resident population
- or have their domicile
- or residence in the territory of the Italian State
Article 43 of the Civil Code – Notions of residence and domicile
- “residence” as the place of habitual abode
- “domicile” as the main place of business and personal interests
These two conditions are alternatives.
Transfer during the year: given that for individuals the tax year coincides with the calendar year, a taxpayer who moves to Italy after 2 July (after 1 July in the case of a leap year) cannot be considered resident for tax purposes for that year, as s/he will be resident for less than most of the tax year. The criteria
SUBJECTIVE REQUIREMENTS
The subjects must have the following requirements:
- Holding university degree or equivalent qualification (for foreign qualifications it is necessary to ask for the so-called “declaration of value”)
- Have been resident abroad, not occasionally (practice considers at least 24 months)
- Have carried out documented research or teaching activities abroad for at least 2 continuous years (not necessarily carried out within two years immediately before returning), at public or private research centers or universities (To calculate the 2 year it is possible to combine periods of teaching and research).
- Carry out research or teaching activities in Italy (The nature of the employer or of the client is not relevant; therefore at university, school, company, etc.)
- Acquire tax residence in Italy, maintaining it for the entire period of use of the relief (in the event of retransfer abroad, the benefit ceases to apply from the tax period in which tax residence in Italy is lost)
RESIDENCE AND WORK ACTIVITY
The law expressly says that the teacher or the researcher acquires tax residence in the territory of the State and this happens as a consequence of carrying out work activities in Italy.
The connection between entry into Italy and the activity teaching and research, which produces subsidized income is possible be deemed to exist:
- in the event that the teacher or researcher has started carrying out the activity before transferring residence;
- in the event that he transferred his residence to Italy and then started to carry out the activity as long as there is a visible connection between the two events.
ITALIAN TEACHERS AND RESEARCHERS
The tax regime is applicable both
- by foreign researchers and teachers
- by Italian researchers and teachers who repatriate
Italian teachers or researchers working abroad,
- even if not registered at the AIRE (Registry of Italians residing abroad)
- who have moved to Italy since 2020
they can access the benefits tax provided they are considered tax residents abroad pursuant to the Double taxation agreement for the two previous tax periods the transfer.
DURATION
6 fiscal years. The tax regime is valid for the tax period in which the residence is transferred and for the following 5.
The possibility of extending the duration
- to 8 tax periods, in the case of taxpayers with a minor or “fiscal dependent child” or who have become owners of at least one residential real estate unit in Italy after the transfer or in the previous 12 months
- to 11 tax periods, in the case of taxpayers with at least two minor or “fiscal dependent children”
- to 13 tax periods, in the case of taxpayers with at least three minor or “fiscal dependent children”
Forfeiture of the regime: In the event that the teacher or researcher relocates during the subsidized period residence abroad, the tax benefit ceases from tax period in which he is no longer tax resident in Italy. However, the right to benefits already enjoyed remains unchanged (unlike other regimes)
INCOME SUBJECT TO TAX REGIME
- employee income
- income assimilated to that of employed work
- income from self-employment
- business income
The tax regime applies only to income deriving from teaching and research activities carried out in Italy, and not to any other income than the employee/self employed worker obtains in our State.
This means that if a person with teaching or research experience abroad returns to Italy to carry out a different activities, can apply, instead of this tax regime, the regime provided for impatriates (see dedicated slides)
The tax regime applies exclusively to incomes that are considered to be produced in Italy.
INCOME EXCLUDED
Income generated abroad
In the event that a teacher or researcher transfers his residence in Italy to carry out his activity there, but continues to carry out research activities or teaching abroad:
- can benefit from the relief in question only for income from employment or self-employed produced in Italy as a teacher or researcher;
- must ordinarily be subject to taxation in Italy, as a subject resident, also income from employment or self-employment produced abroad as a teacher or researcher, taking into account, if any, the rules relating to conventions against double taxation and benefiting from the tax credit for taxes paid abroad pursuant to Article 165, Presidential Decree 917/1986.
HOW TO OPT IT?
In case of Employment income
researchers and teachers are required to submit to their employer of work a specific written request. The employer must therefore only apply 10% withholding tax on taxable income.
In case of Self-employment income
Researchers and teachers can access the tax regime directly when submitting their tax return statement.
TAX RULING – EVIDENTIARY RULING VS ORDINARY QUESTION
In Italy there are different types of requests to be submitted to the Revenue Agency.
The “evidentiary question” can be presented only and exclusively for the “new residents regime”.
For all other types of particular regimes, it is not permitted to use this type of ruling, but the so-called. “ordinary question“
What might seem like an insignificant difference in the type of consultation envisaged for the different benefits is, in fact, important. For “new residents”, the “evidentiary question” allows the taxpayer (always) to present his complete situation to the Revenue Agency, attaching all the documentation useful to demonstrate, also using the relevant check-list, to obtain an answer which becomes binding for the Revenue Agency on the possibility of applying the relief or not.
The ordinary ruling is applicable only in the event that there is a situation of uncertainty in the application of the rule on which the Revenue Agency has not yet expressed its opinion.
CONVENIENCE ASSESMENT
It is necessary carry out a comparison between
- this regime
- and what is provided for by the Conventions against double taxation.
Most double taxation agreements stipulated by Italy provides, if certain conditions are met, the total exemption of sums received by teachers and researchers resident in Italy for the activity carried out abroad (or vice versa). However, the full exemption is generally provided for 2 years.
The choice will therefore depend on the length of stay in Italy.
