Italian Tax: Fringe Benefits & Foreign Work – Revenue Agency Clarification
The Italian Revenue Agency, *Agenzia delle Entrate*, has clarified the tax treatment of benefits in kind and deferred compensation earned during tax periods when income from employed work was determined based on conventional remuneration, according to a ruling issued February 12, 2026 (Response to Interpello No. 37). The agency stated that such benefits and deferred compensation are not subject to separate taxation because they are absorbed by the flat-rate tax regime for conventional remuneration.
The ruling addresses the situation of taxpayers fiscally resident in Italy who work abroad continuously and exclusively as employees, spending more than 183 days in the foreign state within a twelve-month period. According to a report by Fisco Oggi, the clarification came in response to an inquiry from a taxpayer who worked abroad from December 2016 to December 2022, initially for a company in one foreign country and subsequently for a company controlled by the first, in another country.
The taxpayer in question accrued rights to “in kind” and deferred compensation in the form of stock options, granted in 2016 and maturing between June 2016 and June 2019, and a performance share plan approved in 2022, with a performance period between July 2022 and June 2025. The taxability of these instruments materialized in 2024 for the exercise of stock options and in 2025 for the allocation of free shares linked to performance shares. Despite working abroad, the taxpayer maintained fiscal residence in Italy, based on Article 2 of the Italian Tax Code (*Testo Unico delle Imposte sui Redditi* – TUIR) and the double taxation treaties with both foreign states involved.
The Revenue Agency’s response, as reported by Finanza e Fisco, confirms that compensation in kind and deferred compensation accrued during periods of employment abroad exceeding 183 days, under a conventional remuneration scheme, are not taxed separately. This clarification aims to provide certainty regarding the tax treatment of these types of benefits for Italian residents working abroad. Ipsa.it notes the ruling concerns direct taxes and employee compensation.
The agency’s ruling, number 37/2026, builds on Article 51, paragraph 8bis, of the TUIR, concerning conventional remuneration. The agency has not indicated whether further guidance on the application of this ruling is forthcoming.