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Italy Confirms Compatibility Between the Lump-Sum Regime and the Inbound Workers Regime

Can you use two Italian tax breaks simultaneously? Federico Salmoiraghi unpacks the ruling that removes years of uncertainty.

Federico Salmoiraghi

OFF ITALY CONSULTING
• Milan

A recent ruling, not yet published but anticipated by the press, issued by the Italian tax authorities has clarified a point that had long remained uncertain in practice: The lump-sum tax regime for new residents and the inbound workers (Impatriati) regime may coexist within the same tax year, provided that each applies to different categories of income and all statutory requirements are met.

The underlying message is relevant for internationally mobile individuals planning a relocation to Italy.

This is not a policy shift enacted by Parliament, but rather a confirmatory interpretation that aligns existing regimes within a coherent tax framework.

What the Interpello Actually Confirms

The interpello addresses a practical question that a taxpayer raised while intending to relocate to Italy:

  • Deriving foreign-source income from investments abroad, and
  • Generating Italian-source employment income after the move.

The Italian tax authorities confirmed that:

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  • Foreign income may fall under the lump-sum tax regime for new residents, and
  • Italian employment income may simultaneously benefit from the Impatriati regime, without any structural incompatibility between the two, as long as the same income is not subject to overlapping benefits.

The ruling rests on a straightforward but often overlooked principle: the two regimes apply to different taxable bases and pursue distinct policy objectives.

Why This Matters in Practice

For years, many advisors and taxpayers assumed, sometimes conservatively, that Italy’s preferential regimes had to be applied sequentially or selectively. Older versions of the regimes, which included more explicit limitations, partly drove this assumption, along with general caution in the absence of clear guidance.

The recent interpello removes much of that uncertainty.

Italy is effectively confirming that:

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  • The lump-sum regime remains a tool to attract foreign capital and wealth, while
  • The Impatriati regime remains a tool to attract human capital and economic activity.

When these two objectives coexist in the same individual, the tax system does not require an artificial choice.

A Planning Opportunity, Not a Shortcut

It is important to emphasize what this clarification does not do.

The interpello does not create an automatic entitlement to double benefits, nor does it dilute the substantive requirements of either regime. Tax residency must be genuine, income sourcing must be defensible, and minimum duration requirements must be respected.

In addition, opting into the lump-sum regime can still have consequences, such as the loss of foreign tax credits or treaty relief, that must be carefully evaluated on a case-by-case basis.

In short, this is a planning opportunity, not a loophole.

A Broader Signal from the Italian Tax System

Beyond its immediate technical implications, the ruling sends a broader signal about Italy’s approach to inbound taxation.

Italy is currently discussing a potential increase of the lump-sum tax from €200,000 to €300,000, a change that could make the regime less attractive for certain individuals, particularly those with moderate levels of foreign income.

Against this backdrop, the ruling does not expand the lump-sum regime itself, but it highlights a different dimension of competitiveness: structural flexibility.

Rather than treating preferential regimes as isolated incentives, the tax authorities appear willing to coordinate them, provided that their respective boundaries are respected. This reflects a more mature and internationally aligned view of tax competition, one focused on clarity and segmentation, rather than blanket exclusions.

For globally mobile executives, entrepreneurs, and investors, this reinforces Italy’s position as a jurisdiction that rewards both capital allocation and economic participation.

As with all preferential regimes, the value lies not in the headline, but in the structure.

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