Res non-dom and in-bound workers regime cannot be applied simultaneously.

The scope of the Italian regime for foreign pensioners has been broadened.

Ordinance with the form for the IRAP reimbursement on dividend has been published.

Costs of employees working abroad are deductible for IRAP purposes.

No participation exemption for the start-up whose activity cannot be immediately carried out.

Participations to be sold shortly after their acquisition cannot benefit from the participation exemption.

Operative instructions have been published regarding the Global Information Return.

EU institutions and Members States to make explicit reference to start-up and scale-up in their activities.

Res non-dom and in-bound workers regime cannot be applied simultaneously

With reference to individuals transferring their tax residence to Italy as of 2027, Art. 2 of Law Decree no. 38 of 27 March 2026 established that the benefits of the Italian res non-dom regime (whose discipline is contained in Art. 24-bis of the TUIR) and of the in-bound workers regime (Art. 5 of Legislative Decree no. 209/2023) cannot be cumulatively granted.

Therefore, the treatment of the individuals who benefit from the “old” in-bound workers regime (referred to in Art. 16 of Legislative Decree 147/2015) and those who benefits from the new version of such regime (referred to in Art. 5 of Legislative Decree 209/2023) is aligned, given that in both cases it is provided that it is impossible to benefit from such regime and the Italian res non-dom regime at the same time.

The scope of the Italian regime for foreign pensioners has been broadened

Art. 26(1) of Law no. 34 of 11 March 2026 amended Art. 24-ter of the TUIR, which disciplines the 7% substitute tax for pensioners who transfer their residence to CentralSouthern Italy.

The benefit applies to the extent that the relevant individual transfers his/her residence to one of the municipalities belonging to the territory of the Regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, or to one of the municipalities included among those affected by certain seismic events of significant magnitude, having in any case a population not exceeding a threshold that was set at 20,000 inhabitants.

As a result of the amendments referred into above, this threshold has been raised to 30,000 inhabitants, thus expanding the pool of municipalities concerned.

There is no effective rule for the changes made, so it could be assumed that the new threshold will be adopted for transfers of tax residence made as of 2026 (being the fiscal year in which the amendments have become effective).

Ordinance with the form for the IRAP reimbursement on dividend has been published

With the Ordinance no. 123184 of 22 April 2026, the Italian Tax Authorities approved the form, with the relevant instructions, which must be used to request reimbursement of the portion of IRAP referring to EU dividends which, in fiscal years prior to 2025, have been taxed for IRAP purposes by banks and other financial intermediaries, as well as insurance companies.

The right to the reimbursement follows the European Court of Justice decision of 1 August 2025 on the joined cases C-92/24 – C-94/24 (Banca Mediolanum), according to which the taxation, for IRAP purposes, of parts of the dividends received by banks and other financial intermediaries is contrary to Art. 4 of the ParentSubsidiary Directive (Directive 2011/96/EU). The request for reimbursement must be submitted within:

• 48 months from the payment date, should this term fall after 21 June 2026 (60 days after 22 April 2026, the date of publication of the ordinance);
• the 21 June 2026 (60 days from publication of the ordinance), when the 48 months term, if still pending on 1 January 2026, falls before that date.

Costs of employees working abroad are deductible for IRAP purposes

With the ruling no. 95 of 1 April 2026, the Italian Tax Authorities clarified that costs related to employees working abroad where no permanent establishment exists are deductible for IRAP purposes. First of all, the ruling reply recalls that, for companies operating abroad without a permanent establishment in the other State, all the relevant income and costs are to be taken into account for IRAP purposes. Accordingly, costs related to employees working abroad can be deducted from the IRAP tax base, provided that these costs are connected to the activity carried out abroad.

No participation exemption for the start-up whose activity cannot be immediately carried out

According to the Italian Tax Authorities ruling no. 97 of 1 April 2026, a company that has built electricity production plants which are not operational yet does not carry out a commercial activity in the meaning of Article 87(1)d) of the TUIR and, therefore, the sale of the interest in such company does not benefit from the Italian participation exemption regime.

According to the Italian Tax Authorities, the requirement according to which the sold company must exercise a commercial activity can be considered to exist already in the start-up phase, but only to the extent that the investee company, after completing the preparatory phases and having equipped itself with an autonomous organizational apparatus, subsequently begins to carry out the activity for which it was established, or at least has an operational structure potentially suitable for starting the production process in a reasonable time.

Participations to be sold shortly after their acquisition cannot benefit from the participation exemption

The decision no. 11695 of 29 April 2026 of the Italian Supreme Court analysed the requirement – provided for by the Italian participation exemption regime – according to which the participation sold must have been registered as a fixed financial asset in the first financial statements closed following the acquisition of its ownership.

The Supreme Court ruled that, if the shareholding in another company is motivated by mere speculative intentions, or is in any case intended for disinvestment in the short term, the shareholding must be recorded as a current assets, with the consequent denial of the benefits of the participation exemption regime at the time of its sale; conversely, the allocation to fixed assets presupposes a strategy aimed at a lasting holding of the shareholding.

Operative instructions have been published regarding the Global Information Return

The ordinance no. 112451 dated 9 April 2026 has defined the procedures for submitting the “Global Information Return” (or GIR) for the purposes of the Global minimum tax. The ordinance regulates, in particular:

• the entities required to file make the GIR, as well as the cases of exemption and exclusion;
• what is to be reported;
• the source of the data and the currency to be used for the purpose of indicating the amounts to be reported;
• the methods of electronic transmission to the Italian Tax Authorities;
• when the GIR need to be amended;
• the exchange of information carried out pursuant to Directive 2025/872/EU (DAC 9) and any MCAA signed by Italy;
• how the information reported in the GIR are disclosed and used by the Tax Authorities.

EU institutions and Members States to make explicit reference to start-up and scale-up in their activities

With Recommendation (EU) no. 720 of 18 March 2026, the European Commission recommended that Member States, the European Investment Bank (EIB) and the European Investment Fund (EIF) use the definitions of innovative start-up or scale-up companies (included in the Annex to the same Recommendation) when adopting legislative, policy or financial support measures or when implementing programmes aimed at companies.

The Recommendation aims at reducing disparities in treatment and facilitate the operation (including crossborder and in relation to transfers between Member States) of the above-mentioned companies, which are considered to be of central relevance in economic models based on innovation, for the competitiveness and growth.

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Fazzini Holzmiller & Partners