1.New clarification on the in-bound workers regime
The Italian Tax Authorities has issued some clarifications on the in-bound workers regime.
With ruling no. 2 of 12 January 2026, the Italian Tax Authorities confirmed that an individual who returns to Italy to work from home for a foreign employer can benefit from the regime provided that, in the relevant fiscal year, the job activity is mainly performed in Italy.
According to the subsequent ruling no. 12 of 20 January 2026, the former frontier worker who, after working from abroad for an Italian company, acquires his/her tax residence in Italy while continuing to work for the same Italian company, can benefit from the regime.
2.Social security amounts paid abroad are deductible from the overall income
With ruling no. 5 of 15 January 2026, the Italian Tax Authorities confirmed that, for individuals who are resident in Italy while working abroad and whose employment income is subject to taxation in Italy under the conventional wages regime, social security amounts paid in the foreign State in are not deductible from the employment income but from the overall income.
The answer is in line with what the Italian Supreme Court maintained in its decision no. 17747 of 27 June 2024.
3.Indemnities in lieu of notice are taxable in the work State under tax treaty law
According to ruling no. 1 of 12 January 2026, the indemnity in lieu of notice paid by an Italian company to a non-resident individual is also taxable in Italy (with the consequent obligation for the company to act as a withholding agent) to the extent that it refers to work physically performed in Italy. This is because:
• the indemnity is considered to be derived from Italy pursuant to Art. 23(1)a) of the TUIR, as it is paid by a person resident in Italy for tax purposes;
• it falls within the scope of Art. 15 of the OECD Model Convention (whose letter is faithfully replicated by the tax treaty between Italy and Finland, the residence State of the recipient), which grants the work State the right to tax income deriving from the employment activities carried out therein, including forms of deferred remuneration.
4.Shares assigned to an Italian tax resident are always taxable therein
According to ruling no. 8 of 16 January 2026, where shares are assigned to a beneficiary who is resident for tax purposes in Italy at the time of assignment:
• the beneficiary is required to subject to taxation in Italy (State of residence at the time of assignment) the entire value of the shares received, even if they refer to the work carried out abroad at the time when he was also resident abroad;
• the double taxation that arises as a result of the potential taxation in any other State on the same income is mitigated with the credit that Italy is required to recognize pursuant to Art. 165 of the TUIR.
This statement of practice is in line with the position held with ruling no. 199 of 4 August 2025.
5.Individuals working on foreign ships for more than half of a fiscal year are not taxable in Italy
Ruling no. 10 of 20 January 2026 states that income derived from the work activities carried out by seafarers of Italian nationality on ships flying a foreign flag is not subject to taxation in Italy if the activity is carried out on such ships for a period exceeding 183 days over a 12 month period.
For the purposes of this exemption, it is necessary to assess if the time threshold above is met, also by taking into account the existence of one or more employment contracts that can have a duration straddling several calendar years which, analysed together, ensure that the worker stays abroad for more than 183 days per fiscal year.
6.The Italian Supreme Court rules again on beneficial ownership
The Italian Supreme Court issued two decisions concerning the tax regime of interest and royalties paid to non-residents.
Decision no. 1635 of 25 January 2026 confirmed that the beneficial owner status for the purposes of applying the 5% withholding tax provided for by the Italy-Germany tax treaty on royalties paid by an Italian company to its German subsidiary needs to be ascertained by applying a three-step test:
• the “substantive business activity test”, aimed at verifying that the receiving company carries out an effective economic activity and does not represent an artificial arrangement;
• the “dominion test”, which assesses the company’s ability to freely dispose of the income received, without being obliged to remit the income to a third party;
• the “business purpose test”, which verifies the economic reasons for the interposition of the receiving company in the income flow.
With decision no. 1849 of 27 January 2026, on the other hand, the Italian Supreme Court stated that the reimbursement of the withholding tax on interest paid by an Italian company to its Swedish parent company, due under the Interest&Royalty Directive, also applies in the event that the withholding tax has been paid to the Italian Treasury by the subsidiary but subsequently reimbursed to the latter by the Swedish parent company following an internal agreement.
7.Foreign tax credit should be granted even if not correctly reported in the tax return
According to the Italian Supreme Court decision no. 1651 25 January 2026, the foreign tax credit is to be granted if a company has not reported the relevant foreign income in its tax return for the purpose of transferring such credit to the tax unit and, similarly, has omitted to indicate in the same return the tax surpluses that gave rise to the credit.
According to the Supreme Court:
• the wording of Art. 165 of the TUIR does not sanction reporting errors with the loss of the right to offset the foreign tax credit;
• even if so, this would be superseded by the applicable tax treaty, which does not provide for constraints related to reporting obligations;
• the request for reimbursement of the credit submitted to the Italian Tax Authorities should present them with all the elements to assess whether the credit exist and its amount.
8.Foreign governmental bodies exemption from the inheritance and gift tax
The Italian Tax Authorities’ ruling no. 16 of 22 January 2026 clarified that the exemption from inheritance and gift tax for transfers in favour of the State, Regions, Provinces and Municipalities, cannot be applied with respect to the shares in a company based in Italy received by a Swiss public body in the Canton of Ticino.
In this case, in fact, the “reciprocity requirement” provided for by the law is not met.
9.Clarifications on the new 2 Euros contribution due on low value shipments
With its Circular Letter no. 1 of 7 January 2026, Customs and Monopolies Agency have provided for new clarification regarding the transitional period of application of the 2 Euros contribution on shipments of modest value from non EU countries.
In particular, periodic accounting registrations and payments can be used both for transactions declared in simplified form (H7) and for those in ordinary form (H1).
The contributions on the shipments due for imports made from 1 January 2026 to 28 February 2026 will be accounted for and paid on the basis of the declaration drawn up according to the form attached to the previous Circular Letter 37/2025, to be submitted by 15 March 2026.
10.The Italian Supreme Court describes the VAT exemption on brokerage insurance requirements
The Italian Supreme Court, with its decision no. 1425 of 23 January 2026, identified the requirements that need to be met for the VAT exemption regime for brokerage activities in the insurance sector to apply.
The exemption applies if the service provider is in a direct or indirect relationship (where the provider is a subcontractor of the broker or intermediary) with the insurer and the insured and if the services provided are typical of an insurance intermediary activity (such as finding and connecting potential customers with the insurer and assisting in post conclusion of the service including policy renewals).
The services described differ from those of a consultancy nature, for which the ordinary VAT taxation regime would apply.
11.New Protocol between Italy and Switzerland on frontier workers about to enter into force
Law no. 217 of 29 December 2025, concerning the ratification of the Protocol amending the Italy-Switzerland Agreement of 23 December 2020 relating to the taxation of frontier workers, was published in the Italian Official Gazette on 19 January 2026.
The Protocol will enter into force once the exchange of instruments of ratification between the two States will be completed.
The text of the Protocol contains a provision that allows frontier workers to carry out up to 25% of their activity in remote working without losing their cross-border status.
12.The Side-by-Side Package on Pillar Two has been issued by the OECD
The “Side-by-Side Package”, published by the OECD/G20 Inclusive Framework on 5 January 2026, redefines the interpretative guidelines necessary for the coordinated operation of the Global minimum tax.
The most significant element of the package is represented by the so-called Side-by-Side System, which aims at eliminating the potential Pillar Two top-up taxes (whether calculated with the IIR or UTPR mechanisms) when the group’s UPE is located in a jurisdiction with a “Qualified Side-by-Side Regime”.
Currently the United States of America have been recognized as having such a regime