On June 27, 2019 a bill called decreto crescita, (growth decree) passed in the Senate and became legislation in Italy. The purpose was to reinvigorate the stuttering Italian economy; but it could also have major impact on the ability of the Italian economy to attract rich foreign workers, for instance football players.
Come back or move to Italy, and you pay almost no income taxes for 5 years
The bill is being compared to the Beckham law, a decree which was signed into Spanish legislation in 2005, that enabled rich foreign workers such as footballers to benefit from a tax break. Given that David Beckham was the 1st footballer to benefit from such a tax break when he signed for real Madrid, his name is forever associated with this fiscal law. From 2005 until 2010, this major allowed Spanish soccer clubs to stipulate some of the most lucrative contracts in football. Now, Italian clubs could do the same. Thanks to Article 5 of the growth decree. The aim of this section of the bill is the return of the brains, as the Italian government is trying to stop the brain drain that has hurt they Italian economy, bringing back skilled workers who had migrated abroad. In order to do this, a 5 years tax discount has been offered to anybody who, having been resident at least 2 years abroad, comes back to Italy for a period of a minimum 2 years to work. It doesn’t matter if a person is Italian or non-Italian. It applies to all. At the beginning of 2020 the new law comes into force. Anyone who benefits from the tax discount, if leaves Italy before 2 years, will have to pay back the deduction obtained. For the general population, those benefiting from the tax reduction won’t have to pay any income tax on the 1st 70% of the income, or on the 1st 90% of their income if they move to the regions in southern Italy.
A bonanza for football clubs
However, the government amended the law for footballers. Their tax reduction is limited to 50%, no matter if they play for a club in northern Italy or in southern Italy. However this is still a significant discount for football clubs. Imagine Juventus would like to offer a player a salary of €9 million a year. Before this Beckham law, Juventus would have had to pay €17.5 million, because the entire sum would have been taxed at the highest Italian income tax rate of 43%, leaving €10 million after the 7.5 million was paid to the fiscal administration. Under the new fiscal legislation, Juventus would have to spend only €12.7 million a year, because only 50% of the 10 millions would be taxed at 43% tax rate, for a total of 2.7 million a year tax payment.