Italy's fiscal decree restores the non-cumulation rule for inbound workers and the high net worth individuals regimes

Under Article 5 of Legislative Decree No. 209/2023, the current IW Regime offers a clear, time-bound incentive: a 50% reduction of Italian-source employment/self-employment income, capped at €600,000 per year, for individuals who transfer their tax residence in Italy. The benefit runs for five years from the year of relocation, subject to specific eligibility requirements. By contrast, the former IW Regime in Article 16 of Legislative Decree No. 147/2015 (now repealed), which was noticeably more generous (with higher reductions and no annual cap) though it relied on a different set of qualifying criteria, remains applicable only to individuals who relocated to Italy between 30 April 2019 and 31 December 2023.

Running in parallel, the HNWI Regime operates as a flat tax on non-Italian source income and assets. Individuals relocating from 2026 may elect to pay an annual substitute tax of €300,000 (raised from €200,000 by the 2026 Budget Law) for up to 15 years, provided they have been non-resident in Italy for at least 9 of the 10 years preceding the relocation. The option can be extended to family members for an additional €30,000 per person per year (also increased by the 2026 Budget Law from €25,000).

In structure and effect, the HNWI Regime ring-fences foreign income and assets under a predictable levy, while ordinary rules continue to govern Italian-source income, hence the practical relevance of how it interacts with the IW Regime.

Historically, Law No. 232/2016 drew a bright line: no cumulation of the HNWI Regime with the former IW Regime (or with the researchers and academics incentive). However, when Article 16 of Legislative Decree No. 147/2015 was repealed and the new IW Regime took effect on 1 January 2024, the statutory cross-reference in Law No. 232/2016 was not updated. The result was a technical misalignment since the explicit non-cumulation rule pointed to a provision that no longer existed. That drafting gap created genuine interpretative uncertainty.

It was against this backdrop that, on 19 December 2025, the Italian Revenue Agency, observing the absence of an explicit prohibition in force, concluded that taxpayers could concurrently apply the HNWI Regime and the new IW Regime, each within its respective scope.

That position, however, is now time-limited. On 27 March 20267, the Italian Government approved the Fiscal Decree (still pending conversion) that definitively closes the gap by expressly restoring the prohibition on joint use of the two regimes for relocations from Fiscal Year 2027 onward. In practice, the law reinstates the perimeter that existed under Law No. 232/2016, aligning the text with the current architecture of incentives.

Timing therefore becomes critical.

Unless any blocker is introduced by the conversion into law of the Fiscal Decree, those who have already relocated in Fiscal Years 2024 or 2025, or will accrue their Italian tax residence in 2026, remain under the framework recognized by the Revenue Agency's 2025 ruling.  

Conversely, the renewed non-cumulation rule applies to individuals transferring their tax residence to Italy with effect from Fiscal Year 2027, who will face a binary choice and must select one regime, either the IW Regime for Italian-source income or the HNWI Regime for foreign-source income and assets, according to their specific facts and planning objectives.

Update (May 2026): on 20 May 2026, the Fiscal Decree was converted into Law without introducing any amendments to the framework described above, thereby confirming that the cumulation of the IW Regime and the HNWI Regime will remain available exclusively to individuals transferring their tax residence to Italy until Fiscal Year 2026, whereas such cumulation will no longer be permitted for individuals transferring their tax residence to Italy with effect from Fiscal Year 

Authored by Serena Pietrosanti, Maria Cristina Conte, Noemi Gerbasi.