How footballers transferring to Italy can benefit from the country’s new income tax regime for sportspersons

Italy has recently introduced attractive tax measures aimed at fostering professional sports. In particular, the so called “Decreto Crescita”1 (the Decree) has reshaped existing rules for inbound workers, introducing a specific regime for professional sportspersons (which in Italy means participants in football, cycling, golf and basketball2) who are willing to work and transfer their tax residence to Italy from 2020 onwards (the Regime).

The Regime should help foster the inbound transfers of players. Italian clubs negotiating players’ remuneration on a net basis are also taking advantage of a cost saving as a consequence of the reduced tax burden. Because of the Regime, clubs will be able to offer a lower gross salary and are thus incentivized to acquire foreign players rather than players who are tax resident in Italy or those who are not eligible for the application of the regime.

This article takes a closer look at the practical application of the Regime within the context of an overseas footballer signing for an Italian club. Specifically, it looks at:

• When and how the Regime applies;

• Why “tax residency” is a crucial element and how it is determined;

• The three key conditions for applying the Regime; and

• What happens if the conditions are not met (if, for example, the player’s contract is terminated early).

For readers wanting a general introduction to the new Regime for inbound workers (and the corresponding regime for high net worth individuals willing to relocate to Italy) please read this article first: How Italy’s favourable new tax regimes can benefit the sports industry3.