Prepared by Carlo Romano, Marco Longobardi and Giulia Faustini
By responding to tax ruling no. 447 of June 25th, 2021 Italian Revenue Agency clarified that the special regime for workers who have returned to Italy, provided by the Legislative Decree no. 147/2015 (so called “decreto internazionalizzazione”) applies to sportsmen regardless of their nationality if they meet the requirements of the provision at stake.
The special regime and its extension to professional sportsmen
The Legislative Decree no. 147/2015 introduced the regime at stake (pursuant to article 16), by providing for a preferential tax regime for workers who (according to paragraph 1) transfer their tax residence to Italy, have not been resident in Italy in the two tax periods preceding the transfer, undertake to be resident in Italy for at least two years and work mainly in Italy.
Paragraph 2 of the aforementioned provision provides that the above-mentioned tax benefit is extended to EU citizens or non-EU citizens with whom a Double Taxation Convention or an agreement on the exchange of information on tax matters is in force, who: a) hold a university degree and have been “continuously” employed, self-employed or engaged in business outside Italy for the last 24 months or more, or b) have been “continuously” engaged in studies outside Italy for the last 24 months or more, obtaining a university degree or a postgraduate qualification. Following some amendments of article 5 of the Decree No. 34/2019, paragraph 5-quater of Article 16 of the Legislative Decree no. 147/2015 was introduced, which extended the range of beneficiaries of the tax benefit at stake also to professional sportsmen, providing that “regarding the relationships referred to in Law No. 91 of 23 March 1981, without prejudice to the conditions set forth in this Article, the income referred to in paragraph 1 shall contribute to the generation of the overall income limited to 50 per cent of their amount“. This amendment (as all the others introduced during the conversion process) applies “starting from the current tax period, to persons who, starting from 30 April 2019, transfer their residence to Italy pursuant to Article 2 of the Presidential Decree no. 917 of 22 December 1986, and are beneficiaries of the tax regime set out in Article 2 of Presidential Decree no. 917/1986, and are beneficiaries of the regime provided for in Article 16 of Legislative Decree No 147 of 14 September 2015” pursuant to paragraph 2 of the aforementioned Article 5 of Decree Law no. 34/2019 (as amended by Article 13-ter, paragraph 1, of Decree Law no. 124 of 26 October 2019, converted by Law no. 157 of 19 December 2019).
The case analyzed by the tax ruling no. 447/2021
In the case brought to the attention of the Italian Revenue Agency, the latter was interviewed about the subjective conditions and requirements that professional sportsmen must meet in order to have access to the favorable regime at stake. In particular, the applicant (an Italian football club which engages professional sportsmen pursuant to Law no. 91 of 23 March 1981, acting as withholding agent) has asked whether it is possible to apply the tax regime at stake to a professional sportsman who has become a tax resident in Italy since 2020 following his transfer from a non-EU country by following the provisions of Article 16 (1) or whether the requirements set out in Article 16 (2) (e.g. the existence of a double taxation convention or the existence of an agreement on the exchange of tax information between Italy and the non-EU country).
Italian Revenue Agency’s reply
Italian Revenue Agency has clarified that professional football players (e.g. professional sportsmen) from a non-EU country who have transferred their tax residence to Italy pursuant to Article 2 of the Presidential Decree no. 917/1986 may benefit from the relief provided for by Article 16 paragraph 5-quater of the Legislative Decree no. 147/2015 for employment income produced in Italy starting from the tax year 2020 and for the four subsequent periods only if the requirements set forth in paragraph 1 are met.
Deadlines to pay the contribution to access to the special regime
In order to benefit from the special regime at stake (50% taxation of income) professional sportsmen (pursuant to Article 2 of Law 91/1991 – e.g. athlete, coach, technical sports director, athletic trainer) must pay a contribution (equal to 0.5% of the taxable base), aimed at strengthening the youth sports sectors (Article 16, paragraph 5-quinquies of the Legislative Decree no. 147/2015).
The Decree of January 26th, 2021 – setting out “definition of the criteria and technical procedures for the payment and use of the contribution provided for in Article 16, paragraph 5-quinquies of Legislative Decree No. 147 of 14 September 2015” – provided, inter alia, that for the tax period 2020 and thereafter, the aforementioned contribution must be paid annually, within the deadline for payment regarding personal income taxes relating to the relevant tax period.
In this regard, Italian Revenue Agency with Resolution no. 17/E of March 10th, 2021 has established the tax code 1900, providing the operating instructions related to the payment of the contribution at stake through F24 model.
The answer of the Italian Revenue Agency according to which the special regime at stake is also applicable to non-EU professional sportsmen regardless of the requirements of paragraph 2 of Article 16 of the Legislative Decree no. 147/2015 (e.g. the existence of double taxation conventions or agreements on exchange of information with the non-EU country) applies in accordance with the regulatory provisions (Art. 16 paragraph 5-quater) which refers to the exclusive assessment of the requirements set forth in the aforementioned paragraph (non-residence in Italy in the two tax periods preceding the transfer; commitment to maintain residence in Italy for at least two years; work activity performed mainly in Italy).
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