1. Tax benefits for teachers and researchers returning to Italy
The statement of practice no. 8 issued by the Italian Tax Authorities on 23 February 2026 provides important clarifications on the fiscal incentives for individuals returning to Italy, with a dedicated section on the special tax regime for teachers and researchers coming from abroad.
Under Article 44 of the Law Decree 78/2010, teachers and researchers who transfer their tax residence to Italy may benefit from a 90% exemption on employment or self‑employment income derived from teaching or research performed in Italy.
The statement of practice confirms that:
• a taxpayer who returns to Italy without minor children and benefits from the regime for the ordinary six‑year period may extend the eligibility period to eight, eleven, or thirteen years if, within the first six years, he/she has one, two, or three children, respectively;
• a taxpayer who returns to Italy with one child, or who has a child within the first six years, may extend the benefit period to eleven years if a second child is born by the end of the eighth year;
• the same taxpayer may extend the regime to a total of thirteen years if a third child is born by the end of the eleventh year.
2.Clarification on how EoR links extend in-bound workers requirements
The Italian Tax Authorities’ ruling no. 54 issued on 27 February 2026 provides important clarifications on the tax incentive regime for inbound workers regime introduced under Legislative Decree no. 209/2023.
The ruling addresses how to determine the required minimum period of foreign residence (three vs. six or seven years) when the worker returning to Italy is employed through an Employer of Record (EoR) belonging to the same corporate group as the foreign EoR.
If a worker returns to Italy continuing to operate through an EoR that belongs to the same group as the EoR used abroad, this continuity is considered relevant for the purposes of applying the extended minimum foreign‑residence requirement.
As a result, the ordinary requirement of three years of foreign residence does not apply.
Instead, the Tax Authority held that, due to the continuity at the level of the formal employer (EoR), the worker must satisfy the “strengthened” requirement, meaning:
• six years of foreign residence; or
• seven years, where the worker also had previous employment in Italy with the same employer or group.
3.Taxation of accessory or deferred compensation under the conventional wages regime
With ruling no. 37 of 12 February 2026, the Italian Tax Authorities confirm that, when an employee is taxed in Italy under the conventional wages regime for work performed abroad, any additional remuneration (fringe benefits, stock options, performance shares, bonuses, allowances, etc.) is absorbed into the conventional amount and is not subject to separate taxation, provided the compensation relates to the same foreign work activity covered by that regime.
The ruling reiterates existing guidance (e.g., Circular Letter 11/E/2013 and previous rulings) stating that, once conventional remuneration applies, no analytical taxation of accessory or deferred compensation is permitted; the conventional base fully replaces the ordinary calculation of taxable income for the relevant periods.
4.Tax treatment of San Marino pensions for former frontier workers
The parliamentary question time reply no. 5‑04972 of 3 February 2026 addressed the issue of conflicting tax qualifications regarding pensions paid under the San Marino social security system to former Italian frontier workers.
The issue stems from several interpretative circulars issued in San Marino concerning the application of Article 18 of the Italy-San Marino tax treaty. According to these interpretations, pensions paid by the San Marino Social Security Institute (ISS, equivalent to the Italian INPS) to residents of Italy should be taxed exclusively in San Marino, as the State of source (under Art. 18(3) of the above-mentioned treaty).
Italy, however, does not classify these pensions as “social security pensions” under its domestic rules. As a result, the general rule would apply, and pensions paid to individuals who have become Italian tax residents should be taxed only in Italy (Art. 18(1)).
One of the potential solutions mentioned is the possibility of amending the bilateral tax treaty through a Protocol. Such an amendment could resolve the conflict by allowing shared (concurrent) taxation of these pensions in both jurisdictions.
5.Court ruling on cross‑border pension taxation
With its decision no. 4314 of 26 February 2026, the Italian Supreme Court held that Italian pensions paid to individuals residing in Portugal following the termination of private employment are subject to exclusive taxation in Portugal, pursuant to Art. 18 of the Italy–Portugal tax treaty.
For this purpose, it is irrelevant whether the pension income is subject to reduced taxation or even exempt in Portugal (as occurred in the years under dispute, due to incentives then available under Portuguese law). The treaty rule in Art. 18 alone is sufficient to exclude Italy’s taxing rights over such pensions.
6.Securities brokerage firms are not required to report for FATCA/CRS purposes
In ruling no. 43 of 20 February 2026, the Italian Tax Authorities clarified that securities brokerage firms (“Società di Intermediazione Mobiliare” or SIMs) which exclusively provide investment advisory services (i.e., personalised recommendations relating to assets held with authorised third‑party intermediaries) are not subject to FATCA or CRS reporting obligations.
These reporting obligations apply to depositary institutions, custodial institutions, insurance companies, and investment entities. The latter are required to report when they conduct investment activities on behalf of clients, or when they are managed by a depositary institution, custodial institution, insurance company, or another investment entity and their gross income derives primarily from investing, reinvesting, or trading in financial assets or crypto‑assets.
Since none of these conditions are met in the case of SIMs that solely provide investment advice, FATCA and CRS reporting is not required.
7.Annual Pillar 2 tax return form published by the Italian Tax Authorities
The Italian Tax Authorities’ Ordinance no. 46523 of 6 February 2026 approved the annual tax return form relating to the Pillar Two top-up taxes, including the components of the Income Inclusion Rule (IIR), the Undertaxed Profits Rule (UTPR), and the Qualified Domestic Minimum Top-up Tax (QDMTT) referred to in Art. 53 of Legislative Decree 209/2023, together with the related instructions.
The form consists of a cover page – containing the personal details of the taxpayer submitting the return and of the signatory representative – and the following sections:
• Section A – Group data and simplified or exclusion regimes
• Section B – Calculation of the top-up tax
• Section C – IIR
• Section D – UTPR
• Section E – QDMTT
• Section F – Tax payments
The form must be submitted electronically to the Italian Tax Authority within the fifteenth month following the last day of the financial year to which it refers (or within the eighteenth month for “transition year”, which in several cases is 2024). The first filing deadline, regardless of the start or duration of the financial year, may not fall before 30 June 2026.
8.Italian Supreme Court clarifies criteria for determining corporate tax residence
According to the Italian Supreme Court decision no. 3591 of 17 February 2026, when assessing the tax residence of companies, the evaluation of the connecting factors set out in Art. 73(3) of the TUIR (registered office, place of management, and main object of the activity, given that the case concerns fiscal years prior to 2024, before the criteria to establish Italian tax residence were amended) must be carried out regardless of whether the foreign‑law company is real or fictitious; for these purposes, the relevant inquiry is not whether the foreign entity is fictitious, but rather the determination of the actual place where the company’s administrative functions are performed. This includes identifying where management activities are effectively carried out, where directors reside and meet, and where strategic and operational business decisions are made.
Applying this criterion, the Court confirmed the Italian tax residence of a company incorporated under foreign law (which although genuine and not fictitious in its State of incorporation, being San Marino) was effectively managed and directed from Italy.
9.EU Council updates the list of non‑cooperative Tax Jurisdictions
At its meeting on 17 February 2026, the Council of the European Union updated the EU list of non‑cooperative tax jurisdictions, adding the Turks and Caicos Islands and Vietnam, and removing Fiji, Samoa, and Trinidad and Tobago.
Following this update, the list now includes 10 jurisdictions: Anguilla, the Russian Federation, Guam, Turks and Caicos Islands, U.S. Virgin Islands, Palau, Panama, American Samoa, Vanuatu, and Vietnam.
The Turks and Caicos Islands were added because they facilitate the establishment of offshore structures lacking real economic substance.
Vietnam’s inclusion stems from deficiencies in the exchange of tax information, despite its commitment to implementing the recommended country‑by‑country reporting measures.
Under Italian law, this EU list is used to identify foreign counterparties to which the rules set out in Article 110(9‑bis) et seq. of the TUIR apply. According to these rules, costs arising from transactions with enterprises resident or located in such “non‑cooperative” jurisdictions, where they exceed arm’s‑length value, are deductible only to the extent of the excess if the taxpayer can demonstrate an actual economic interest.
Even where such costs are fully aligned with market value, they must nonetheless be separately disclosed in the Italian income tax return.
10.Update of OECD’s Manual on Effective Mutual Agreement Procedures
On 2 February 2026, the OECD released the updated Manual on Effective Mutual Agreement Procedures (MEMAP), which provides practical guidance on how mutual agreement procedures (MAPs) under tax treaties should operate.
This new edition represents the first comprehensive revision since 2007 and reflects developments arising from the BEPS Action 14 minimum standard and more than a decade of practical experience.
The key topics addressed in the updated manual include:
• eligibility criteria for accessing MAP, with the aim of ensuring consistent and treaty‑aligned access for taxpayers;
• procedures for submitting MAP requests, with specific emphasis on avoiding unnecessary administrative barriers;
• unilateral remedies, where available, that may be applied by jurisdictions as an alternative to bilateral negotiations.
The updated MEMAP also introduces best practices and provides detailed guidance on dispute prevention, competent authority organisation, and – new in this edition – MAP arbitration.