From green light to red light: no more combination of “new impatriate regime” and “neo resident regime” from 2027

Decree-Law no. 38/2026, published in the Italian Official Gazette on 27 March 2026 and in force since 28 March 2026, introduced an important change to Italy’s inbound tax incentives for individuals.

Article 2 of the Decree expressly provides for the non cumulation of the “neo resident regime” under art. 24-bis TUIR and the new impatriate regime under art. 5 of Legislative Decree no. 209/2023.

This is a clear legislative U-turn compared to the position taken by the Italian Tax Authorities in a recent unpublished ruling, where – in the absence of an explicit statutory prohibition – the concurrent application of the two regimes had been allowed. That ruling relied on the fact that the pre-existing non cumulation rule in art. 1, paragraph 154, Law no. 232/2016 expressly referred only to the old impatriate regime under art. 16 of Legislative Decree no. 147/2015, which has been repealed.

The new prohibition will apply to taxpayers who transfer their tax residence to Italy as from the 2027. For those who move their tax residence to Italy by the end of 2026, the previous framework will instead remain applicable, under which – also in light of the above ruling – such combination was not expressly prohibited.

This development is expected to have a material impact on relocation and investment planning, particularly for executives and High Net Worth Individuals who were considering a coordinated use of the neo resident regime for foreign-source income and the new impatriate regime for Italian-source employment income.

For tailored advice on how these changes may affect your relocation or incentive plans, please get in touch with Osborne Clarke’s tax team.