Sicily Tax Incentives for New Residents: Up to 60% Income Tax Tefund

A New Opportunity to Save on Income Taxes in Italy

Italy continues to attract individuals seeking lifestyle, stability, and tax efficiency. A newly approved measure by the Region of Sicily introduces a powerful tax incentive for individuals relocating to Sicily, offering a 50% refund of Italian personal income tax (IRPEF) for three tax years. And the refund gets to 60% in certain cases.

This tax incentive might apply in addition to other tax incentives and beneficial tax regimes.

For those interested in tax efficient strategies, this program represents one of the most interesting regional tax opportunities currently available.

What Is the Sicily Tax Incentive for New Residents?

The actual legislation has not been officially published by the Sicilian government yet. However, below you can find a summary of the key elements based on official interviews with the political representatives who promoted and signed off on the new law.

The tax program allows individuals who establish residency in Sicily to recover a substantial portion of the income taxes paid.

The incentive applies to individuals who transfer their residency to Sicily between January 1, 2026 and December 31, 2028.

It is designed to attract any individual who is subject to ordinary personal income tax (IRPEF). A list of potential beneficiaries is below:

• employees, self-employed workers and executives, including digital nomads;
• retirees;
• individuals relocating to Italy for lifestyle or tax planning reasons who earn;
• property owners who earn rental income not subject to the 21%-26% flat tax “cedolare secca”.

Key Requirements to Qualify

To access the incentive, the following conditions must be met:

1. Establish Tax Residency in Sicily

You must:

• register legal residency (with the Anagrafe office) in Sicily;
• establish your center of interests (tax domicile) in the region.

2. Invest in Italian Real Estate

Additionally, you are required to:

• purchase a residential property in Sicily (zoned A1, A2, A3, A4, A5, A6, A7, A8, A9); or
• renovate an existing residential property.

3. Earn Eligible Income

The benefit applies to any type of income that is subject to ordinary personal income tax (IRPEF), such as, for example:

• employment income (as an employee or self-employed) that is not subject to “forfettario” small-business flat tax program;
• pension income that is not subject to 7%;
• Rental income that is not subject to 21%-26%.

This makes the regime particularly relevant for individuals relocating to Italy for work or retirement.

4. Maintain Residency

You must be registered as a resident in Sicily until December 31 of the second year following your initial registration. If you de-register earlier, the incentive is revoked and amounts received must be refunded to the government.

How Much Can You Save?

The incentive provides:

• 50% IRPEF refund, up to €100,000 per year;
• 60% IRPEF refund if you relocate and register as a resident in a municipality (Comune) with fewer than 5,000 residents.

This can result in substantially more tax savings, especially for individuals with medium to high income.

How the Tax Refund Works

The mechanism is structured as follows:

1. You pay Italian income taxes in full when due per the standard deadlines;
2. After payment, you apply for the tax refund;
3. You receive a non-transferable tax credit equal to 50%–60% of the IRPEF that you paid up to €100,000 per year.

The credit can be used to offset future tax liabilities.

Why Sicily Can Offer This Incentive

Sicily benefits from a special autonomous status, allowing it to retain a significant portion of the income tax generated in the region.

This makes the incentive unique in Italy, as other regions generally cannot replicate this type of IRPEF reimbursement.

Can This Be Combined with the Italian Impatriate Tax Regime?

A key question for many people considering moving to Italy for tax purposes is whether this incentive can be combined with the Italian impatriate tax regime or the 7% flat tax option.

The incentives are based on independent tax requirements:

• the impatriate regime reduces taxable income (only 50% of employment income is taxed, only 40% if you have a minor child);
• the 7% only applies to income sourced overseas, outside of Italy;
• the Sicilian incentive IRPEF refund only applies to income taxed in Italy under the ordinary tax brackets (23% to 43%).

Potential Combined Effect

Hypotetically, all three incentives above might apply at the same time if you meet all the necessary requirements. As a result, you could be in a scenario to which the following options might apply:

1. A 50%-60% tax exemption might apply to your employment income;
2. Your foreign sourced income might be taxed at 7%;
3. Sicily refund you 50% (or 60%) of your paid IRPEF (for example paid on employment income and/or property rental income).

The combination may still lead to a significantly reduced effective tax rate.

Important: Legal Uncertainty

The measure is new. Detailed implementing rules are pending. No official confirmation exists on the exact letter of the law nor on the full compatibility between the Sicilian refund and the impatriate regime. 

A careful legal and tax analysis is essential before relying on a combined strategy.

Talk with an expert

Connect with us to review your specific case circumstances and determine the best strategy for your goals, whether you are planning to move to Italy to work, to invest, to retire or to simply enjoy the Italian life-style.

Our approach integrates tax planning, immigration and other cross-border considerations to ensure a compliant and efficient relocation.

Frequently Asked Questions

Is Italy tax-friendly for expats?

Italy offers several tax programs designed to attract new residents, including the impatriate regime and the flat tax regime. The Sicily incentive further enhances these opportunities at a regional level.

Can I reduce my taxes by moving to Italy?

Yes, depending on your profile and income structure, relocating to Italy may allow access to favorable tax regimes. Proper planning is essential to achieve effective results.

Do I need to buy property in Italy to qualify?

Under this specific Sicilian incentive, a real estate investment is required in the form of a property purchase or property renovation.

Can U.S. citizens benefit from this incentive?

Yes, but the interaction with U.S. taxation should be carefully analyzed to determine the actual net benefit.

Considering Moving to Italy?

The Sicily tax incentive represents another compelling opportunity for individuals seeking to relocate to Italy with favorable tax treatment.