Italy's "Return of the Brains" Tax Scheme Boosts Immigration of High Earners

Strategic Insights -

Italy's "impatriati" scheme, a tax incentive designed to lure highly skilled workers to the country, has seen ten-fold more professionals move to Italy compared to the flat-tax regime, effectively "emptying" London of its top talent. The scheme offers lower income tax rates, with those moving to the south paying 10pc and those in the north 30pc. The once generous tax rates were reduced in December 2023 to 50pc, but the scheme remains popular, attracting 50pc of its applicants from the UK, particularly after the abolition of the non-dom regime.

Key Takeaways:

  • The "impatriati" scheme has attracted around 50,000 people to Italy, with 50pc of applicants being either returning Italians or new non-Italian residents.
  • The average salary of those using the regime was €112,443, compared to the national average of around €32,000.
  • To qualify for the scheme, applicants must have higher education qualifications, an EU Blue Card, or an employer-sponsored work visa, and must stay in Italy for four consecutive tax years.
  • The scheme is only available to people who have the right to live and work in Italy, including EU citizens and those with work visas that allow non-EU workers to reside in the country.
  • The only exception to the 50pc tax exemption is for those who have adopted a child while on the scheme, in which case the tax exemption discount is 60pc.
  • The scheme has brought human capital primarily to the big cities of the north of Italy, and Rome, but has also reversed the migration trend and brought a high number of professionals to the south of Italy.
  • The scheme has seen an increase in requests from the UK since the abolition of the non-dom regime.
  • Most of the people on the regiment are employees, mostly working in the business and industrial hubs of the north, such as Padua, Milan, and Rome.

Statistics:

  • Around 50,000 people were on the "impatriati" scheme by 2023.
  • The scheme has seen an increase in requests from the UK since the abolition of the non-dom regime.
  • The average salary of those using the regime was €112,443.
  • The national average salary in Italy is around €32,000.
  • The most popular locations for those on the scheme include big cities in the north of Italy, and Rome.
  • The scheme has a 50pc tax exemption for up to five years for new residents in Italy.
  • Social security contributions for those on the scheme are 9pc of gross salary, capped at €120,000.

Sources:

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