The measure, which is now due to expire on Dec 31, has been in place since early 2020 and is especially tailored to Italy’s Serie A top-flight football league.

Its phasing out means Italian clubs will not be able to rely on the tax breaks for foreign signings they make during the coming January transfer window.

Serie A, which had lobbied for an extension of the benefit, said the government’s decision would be counter-productive.

“Failing to extend (the measure)…will in fact make the teams less competitive, resulting in a drop in revenues, fewer resources to be allocated to young players’ academies, reduced industry volumes, and therefore less revenue for the (country’s) inland revenue,” it said in a statement.

Players’ salaries are the most important cost in the balance sheets of Serie A clubs, and backers of the incentives said they helped Italian teams attract top foreign talent and compete with richer peers like England’s Premier League.

Lazio chair Claudio Lotito, who is also a senator for the co-ruling Forza Italia party, lobbied for the tax breaks to be maintained, but was rebuffed by government coalition partners, including the League.

“Discounts to foreign footballers earning millions are immoral, clubs should invest in young Italian players and not overpay foreigners who are also often bad (players),” League lawmaker Luca Toccalini said in a statement.