A practical reading of Italian Revenue Agency Ruling No. 10/2026 (Article 5(5), Law 88/2001)
Reference: Italian Revenue Agency (Agenzia delle Entrate) – Ruling (Risposta a interpello) No. 10/2026 – Subject: “Taxation of income earned by seafarers boarding foreign-flag vessels – Article 5(5) of Law 16 March 2001, No. 88”.
A foreign flag does not automatically place wages outside Italian taxation. Ruling No. 10/2026 highlights that the exemption is driven by a measurable time test (the 183-day rule) and by how that test must be applied to the relevant calendar year.
The case (at a glance)
Generally, individuals resident in Italy for personal income tax purposes are taxed on their worldwide income (“worldwide taxation principle”). However, Article 5, paragraph 5 of Law No. 88 of March 16, 2001, provides a significant exemption for Italian seafarers embarked on foreign-flagged vessel.
Income derived from this activity is excluded from taxation in Italy if the work is performed for a period exceeding 183 days within a twelve-month period. When this time requirement is met, the obligation to declare such income in Italy is also waived
In this regard, in the Ruling in question, the Revenue Agency responds to a query from an Italian seafarer regarding how the 183 days should be calculated for the purposes of applying the tax exemption.
The taxpayer (Italian tax resident) declared three foreign-flag boarding periods:
- 23/09/2022 – 31/01/2023
- 14/06/2023 – 28/11/2023
- 04/05/2024 – 26/10/2024
The question
Can the income earned in 2024 from work on a foreign-flag vessel benefit from the exclusion from Italian taxation under Article 5(5) of Law 88/2001?
The taxpayer’s proposed approach
He argued he exceeded 183 days abroad across two different calendar years and therefore built a ‘foreign-flag tax year’ (23 Sep-22 Sep), computed as:
- 23/09/2022 – 22/09/2023
- 23/09/2023 – 22/09/2024
Proposed outcome: tax exemption up to 22/09/2024
The 183-day rule
The exclusion applies only if activity on foreign-flag vessels is carried out for more than 183 days within a 12-month window. As a general principle, the count may include leave, public holidays and weekly rest days when applicable and supportable.
The Revenue Agency’s answer (the correct test)
The Agency states that a self-defined ‘flag tax year’ is not allowed. The assessment is performed for each tax period (calendar year), looking at the employment contracts that fall, even partially, within that year, and checking whether one or more contracts (including contracts spanning years) allow the ‘more than 183 days’ threshold to be met.
Figure 1 – Boarding timeline declared by the taxpayer (focus 2024).
Visual summary (focus: 2024)
| Foreign-flag period | Length (days) | Year(s) | Relevant to 2024 test? |
| 23/09/2022 – 31/01/2023 | 131 | 2022-2023 | No |
| 14/06/2023 – 28/11/2023 | 168 | 2023 | No |
| 04/05/2024 – 26/10/2024 | 176 | 2024 | Yes |
Applied to the facts: why 2024 is a “NO”
In 2024 the taxpayer had only one foreign-flag contract from 04/05/2024 to 26/10/2024 (176 days). To meet a ‘more than 183’ test, at least 184 days would be required: the threshold is not met. He also stated he had no leave/rest/public holidays to add. Conclusion: the 2024 wages do not qualify for the exclusion and are taxable in Italy under ordinary rules.