Italy: A New Location For Skilled Workers And Sports Stars (Continued)

A new tax regime will allow qualifying workers (including sports stars and celebrities) relocating to Italy from 2020 to benefit from a substantially reduced taxation of selected incomes (from their professional activity and in some cases from sponsoring/endorsement activities) derived within the Italian territory

Italy has added to earlier incentives to attract skilled individuals to the country, issuing new rules aimed at attracting human capital to Italy (the “Decree”).

The new Decree substantially improves and expands some existing tax incentives for the relocation of workers to Italy (as well as researchers). Notably, these new measures not only make the current rules more appealing (in terms of tax savings) but, most importantly, they open the door for a real boost to the relocation of sports stars to Italy (the “Regime”).

Although the Regime applies to eligible individuals who become Italian tax residents as of 1 January 2020, interesting planning opportunities will also arise for those who relocate to Italy in the second half of 2019 (and may still keep their status as non-Italian tax residents until the end of 2019 and enjoy the relevant benefits in terms of taxation).

The Regime adds to a dramatically wide range of incentives already available to individuals relocating to Italy such as:

  • the tax regime applicable to high-net-worth individuals (subject to a substitutive tax of 100,000€ on their non-Italian sourced incomes), available since 2017;
  • the tax regime applicable to pensioners/retirees (subject to a substitutive tax of 7% on their non-Italian sourced incomes), available since 2019;
  • a former edition of the tax incentives for relocation of workers and researchers (subject to a reduced taxable base for individual income tax), available since 2010;
  • one of the world’s lowest inheritance and gift tax systems.

The Regime

The Regime applies to workers and professionals who, as of 2020:

  • become an Italian tax resident (regardless of their foreign state of residence);
  • commit to remain an Italian tax resident for the following two years;
  • have not been an Italian tax resident in Italy for the past two years (the Regime also applies to Italian returnees); and
  • work mainly within the Italian territory for either an Italian or a non-Italian enterprise, regardless of their role or qualification.

Individuals who meet these criteria are subject to Italian individual income tax on only 30% of their employment / self-employment / business income (individual income tax may be reduced to approximately 13%).

Said taxable income is further reduced to only 10% for those who transfer their residence to Italy’s southern regions (individual income tax may be reduced to 4.3% approximately).

The Regime is applicable for 5 years and may be extended for another 5 years (10 years in total) subject to some additional conditions (e.g. a residential property is purchased or there is an underage child, amongst others).

Focus on sportspersons

The definition of eligible workers and professionals is broad enough to also cover professional and non-professional sportspersons, including but not limited to football/soccer clubs and individual athletes, coaches, technical area directors, sports directors and athletic trainers.

Indeed, this aspect may have a strong impact on the Italian sports industry, as the Regime could make Italian clubs more competitive at an international level in engaging sports stars. In fact, it is well known that clubs typically negotiate salaries of sports stars net of Italian income taxation.

The Regime draws an important line between “professional” sportspersons, as identified by a specific law (i.e. Article 2 of Law no. 91 of 23 March 1981 on the relationship between sportsmen and clubs) and “non-professional” sportspersons (i.e. those falling outside the aforementioned law). Specifically,

  • “non-professional” sportspersons would be fully subject to the Regime as outlined above;
  • “professional” sportspersons would enjoy the regime with some limitations since they would be subject to an individual income tax on 50% of their employment / self-employment income (individual income tax can be reduced to 22% approximately). Moreover, in such cases the law requires a contribution of 0.5% of the taxable base to support Italy’s sports’ youth sectors.

Therefore, when it comes to tax planning, a key factor is the proper identification of “professional” and “non-professional” sportsmen. For instance, in Italy, football/soccer players, basket players, cyclists and golfers (including coaches and technical staff) qualify as “professional” sportspersons, whereas all others (including tennis players, swimmers, skiers etc.) are deemed as “non-professional” sportspersons.

Focus on sportspersons’ image rights

The Regime also opens the door to planning opportunities for the exploitation of image rights belonging to sportspersons (as well as stars and celebrities) relocating to Italy. Provided that the relevant image rights are exploited within the Italian territory, the income arising from such exploitation may, in some cases, fall within the scope of the Regime (and thus benefit from more favourable taxation).

In a nutshell, depending on the circumstances, the income deriving from sportspersons’ endorsements and alike could be deemed either as “employment income” or “self-employment income” (covered by the Regime) or as “other income” (not covered by the Regime).

In order to maximise the tax benefits provided by the Regime, a number of key elements should be carefully assessed, such as:

  • “professional” vs “non-professional” status of a sportsperson;
  • areas/territories of exploitation of the sportsperson’s image rights;
  • contractual terms and conditions for both the sports performance and the exploitation of image rights (e.g. many sports clubs wish to get the hold of the image rights of their players/coaches, etc.).

Takeaways and Withers’ support

Thanks to this enriched set of tax incentives (including the brand new Regime) that ease sports stars’ relocation to Italy, the Italian sports industry has a clear opportunity to boost its competitiveness at an international level and attract sports stars.

Although the Regime is an alternative to the already-existing tax incentive system aimed at high-net-worth individuals relocating to Italy, sports stars now have another wealth planning reason to seriously consider Italy as their preferred destination. In fact:

  • the Regime could allow substantial savings on their annual salary; while
  • the new residents tax incentive could allow substantial savings on foreign sourced income (e.g. dividends, income from foreign endorsements, royalties, etc.).

In practical terms, while the new resident tax incentive targets elite sports stars with international connections and investments, the Regime constitutes a standard set of rules potentially applicable to all sportsmen moving to Italy.

Withers, with offices located in key jurisdictions worldwide, regularly advises clients on the above mentioned Regime and has a very active sports practice providing skilled and tailored advice. We can provide both individuals and corporate entities with a cross-border analysis of the relevant issues for the most effective application of the Regime, such as:

  • reviewing foreign residency status and screening Italian ties and links (if any);
  • assistance in the immigration procedures necessary for relocating to Italy (VISAs, etc.);
  • assistance in drafting employment agreements in compliance with the aforesaid regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions