Tax incentives for attracting human capital in italy. Tax benefits for researchers and professors.
Professors and researchers who move their residence for tax purposes to Italy can benefit from reduced taxation on income from employment and self-employment generated in Italy for teaching and research. In particular, these items of income contribute to the formation of total taxable income by 10% (90% exemption) and are excluded from the value of net production for IRAP (the regional tax on productive activities) purposes. For employees, the IRAP benefit is granted to withholding agents who pay salaries for teaching or research, while for self-employed workers it is directly granted to the professor or researcher who perform the activity. The benefit applies starting from the tax year in which the professor or researcher becomes fiscally resident in the territory of the Italian State and in the following 5 periods. Therefore, the benefit applies for a total of 6 years. If, during this period, the professor or researcher moves the residence abroad, the tax benefit ceases from the tax year in which s/he is no longer fiscally resident in Italy.
The incentives are granted to professors and researchers who carry out their activities in Italy and meet the following conditions:
- HOLDING UNIVERSITY DEGREE OR EQUIVALENT QUALIFICATION:
All academic or equivalent academic qualifications are valid. The qualifications obtained abroad are not automatically recognized in Italy. Therefore, the interested party must request the “declaration of value” from the competent consular authority, namely a document certifying the value of the qualification in the country where it was obtained. The declaration must be written in Italian and issued by the Italian Diplomatic Representatives Abroad (Embassies/Consulates).
- HAVE BEEN RESIDENT ABROAD, NOT OCCASIONALLY:
The law does not specify the length of the period spent abroad but merely requires a permanent and not occasional stay. Bearing in mind that, the duration of the research or teaching activity abroad must have lasted for at least two consecutive years, this period may be considered the minimum necessary to obtain the benefits.
- HAVE CARRIED OUT DOCUMENTED RESEARCH AND TEACHING ACTIVITIES ABROAD FOR AT LEAST TWO CONSECUTIVE YEARS, AT PUBLIC OR PRIVATE RESEARCH CENTERS OR UNIVERSITIES:
The research activity can be identified as the activity dedicated to basic research, industrial research, experimental development and feasibility studies. On the other hand, teaching activity can be identified as the teaching activity carried out at universities, public and private institutions. The actual research or teaching carried out abroad must be proven by appropriate documentation issued by the research centers or by the universities where the activity was carried out. The teaching and research activity must not necessarily have been carried out in the two years immediately preceding the return. To calculate the two-year activity it is possible to combine periods of teaching and of research (for example, research activity may have been carried out for one year and teaching activity in the following academic year).
- CARRY OUT TEACHNG AND RESEARCH IN ITALY:
The nature of the employer or of the client is not relevant: for the research activity, it can be a public or private university, or a public or private research center or a company or an entity which, because of the peculiarity of the economic sector in which it operates, it has organizational structures aimed at research. As far as teaching is concerned, all the activities aimed at teaching and those aimed at training at universities, schools, offices or companies, public or private entities, can access the incentive.
- ACQUIRE THE RESIDENCE FOR TAX PURPOSES IN ITALY:
The benefit is granted where the professor or the researcher has started to carry out the activity in Italy before moving the residence and in the case he moved the residence to Italy and then started to carry out the activity.