Italian employees hired by foreign companies with a local contract must carefully evaluate the social security obligations which vary according to the country where the employee is hired. In such circumstances, a distinction must be made between: EU countries, countries adopting EU legislation via specific agreements with the European Union countries with which Italy has entered into full Totalization Agreements: the employee is required to pay contributions in the host country as per the local…
Impatriates who transferred their tax residency in Italy as of January 1, 2020 need to prove their Employer by the end of December 2020 that they are entitled to 70% exemption applicable to the employment income produced in Italy by inbound workers who were not resident in Italy during the two years prior to the transfer in Italy and who are committed to remain in Italy for at least two years.
Impatriates who are still uncertain to benefit from the 70% exemption need to file a Ruling with the Italian tax authority in order to have a formal opinion regarding the entitlement to the benefit, which lasts five years as of the tax period when the Italian tax residency is transferred. Further extention of the benefit are provided to individuals who buy a real estate property or who have family dependants.
The Employer can grant 70% exemption directly in the month of December upon verification of all requirements, refunding all taxes withheld in excess during the year 2020, or can report in the annual statement of income that the employee will apply for the tax benefit directly in his return (730/Redditi Form 2021).
Feel free to contact us for any clarification.