Italy's "Return of the Brains" Tax Scheme Booms, Attracting High-Skilled Workers Despite Changes

Strategic Insights -

Italy's Rientro dei Cervelli, or "return of the brains" tax scheme, has been a significant draw for high-skilled workers, despite making less generous in December 2023. The scheme, also known as the lavoratori impatriati or "inbound workers" tax regime, offers lower income tax rates for those moving to the south of Italy, with a maximum tax rate of 10pc, and 30pc for those going north. According to tax experts and relocation advisers, the scheme remains in high demand, particularly from the UK since the abolition of the non-dom regime.

Key Takeaways:

  • The Rientro dei Cervelli scheme has attracted around 50,000 people by 2023, with 50pc split between returning Italians and new non-Italian residents.
  • The majority of people using the scheme work in Italy's industrial and business heartlands in the north, including Milan, with 95pc being employees.
  • The average salary of those using the scheme is €112,443, compared to the national average of around €32,000.
  • The scheme is only available to people who have the right to live and work in Italy, including EU citizens, or people with visas that allow work.
  • Applicants must not have been resident in Italy for three years (six to seven years if transferring with the same company), and they have to stay in the country for four years - or they'll pay some of the benefit back.
  • The scheme is not popular with self-employed people due to red tape and paperwork requirements.

Statistics:

  • Average salary of people taking advantage of the five-year scheme: €112,443
  • Maximum tax rate in the south of Italy: 10pc
  • Maximum tax rate in the north of Italy: 30pc
  • Social security contributions added tax: 9%
  • Gross salary cap for social security contributions: €120,000

Sources:

  • Withers, the private client law firm
  • University of Nottingham, talent migration expert Giuseppe Ippedico
  • Italian ministry of finance
  • D&G Property Advice, relocation expert Daniel Shillito
  • Mitos Relocation Solutions, consultancy Federica Grazi
  • Off Italy Consulting, Federico Salmoiraghi

As the scheme continues to attract high-skilled workers, it remains to be seen how long the incentives will last and what impact they will have on Italy's economy and society.