Incompatibility of Preferential Tax Regimes: New Residents vs. Inbound Workers Regime
Italian Tax Decree No. 38 of March 27, 2026 has introduced a prohibition on the cumulation of tax benefits available under the so-called new residents regime and the inbound workers regime, thereby providing clear guidance on the interaction between the two incentive schemes—an aspect not previously regulated under Article 5 of Legislative Decree No. 209/2023.
Pre-existing Framework
Article 5 of Legislative Decree No. 209/2023 introduced the new inbound workers regime, granting a 50% exemption from taxation on employment income, employment-equivalent income, and self-employment income derived from professional activities carried out in Italy.
Paragraph 9 of the same provision repealed the “old” inbound workers regime set out under Article 16 of Legislative Decree No. 147/2015, which nonetheless continues to apply to individuals who transferred their tax residence to Italy before December 31, 2023.
With specific reference to the “old” regime, its incompatibility with the new residents regime was expressly provided for under Article 1, paragraph 154 of Law No. 232 of December 11, 2016.
Conversely, the new inbound workers regime did not—until the entry into force of the recent Tax Decree—provide for any incompatibility with the substitute tax regime for new residents governed by Article 24-bis of the Italian Income Tax Code (TUIR).
This latter regime allows qualifying individuals transferring their tax residence to Italy, pursuant to Article 2 of the TUIR, to benefit from a flat tax of €300,000 on foreign-sourced income.
The absence of an explicit prohibition on the cumulation of the new inbound workers regime with the new residents regime led the Italian Revenue Agency to adopt a favorable position on the simultaneous application of both benefits.
In this respect, the Revenue Agency expressed a positive view in a (non-published) ruling dated December 19, 2025, as well as in official ruling No. 16 of January 28, 2025.
Prohibition on Cumulation Introduced by the Tax Decree
Article 2 of the recent Tax Decree addresses the issue by introducing a clear restriction on the cumulation of the two regimes.
Specifically, it amends Article 1, paragraph 154 of Law No. 232/2016, providing that the new provisions apply to individuals transferring their tax residence to Italy pursuant to Article 2 of the TUIR starting from the 2027 tax period.
As a result, individuals transferring their tax residence to Italy by mid-2026 may, within the current regulatory gap, potentially benefit from both the new residents regime and the inbound workers regime.
It should be noted that individuals who transferred their residence to Italy by December 31, 2023—and who may still apply the “old” inbound workers regime—remain subject to the previous rules, including the prohibition on cumulation with the new residents regime.
In any case, a case-by-case assessment is strongly recommended, also taking into account the provisions on tax residence set out in applicable double taxation treaties.