Wealthy bankers and city workers in London are flocking to Italy to take advantage of hugely lucrative tax break incentives dubbed the country’s ‘best-kept secret’.
Italy has been on a relentless drive to attract high earners to up sticks and decamp from Britain and start up a new life in places like Rome, Milan or Naples.
It’s flat-tax scheme – dubbed ‘svuoate Londra’, or ’empty London’ – has already bagged a large cohort of bankers from the English capital.
However, another tax incentive, that’s been around for almost 15 years, has arguably had an even greater impact, attracting a staggering 10 times as many talented professionals.
The ‘Rientro dei Cervelli’ scheme – which literally translates to the ‘return of the brains’ – was launched to attract top employees into the country through lower income tax rates.
Despite slight fluctuations between 2019 and 2023, those moving to the south of Italy could pay tax on just 10 per cent of their income, while those in the north pay it on 30 per cent.
And Britons who have taken advantage of it say it has given them a marked increase in the quality of their life, with some taking home 80 per cent of the gross pay.
Daria, 36, had been living in Hackney, east London, for 13 years before making the shift to Italy
Many wealthy Brits are taking advantage of the tax relief scheme to move to places like Milan
Even with a slight change to the scheme after December 2023, which saw those moving to Italy now charged tax on 50 per cent of their income, the move remains hugely popular among top earners.
According to the Italian ministry of finance, by 2023 around 50,000 people were signed up to the tax break scheme – with experts saying there is a 50:50 split between returning Italians and new non-Italian residents.
Meanwhile, the nation’s flat-tax scheme has only seen around 4,000 people applying for the €200,000 (£173,000) relief initiative.
Many are still benefitting from the more generous pre-2023 version of the ‘return of the brains’ tax scheme.
Among them is 36-year-old Daria, who did not want to share her surname. She had been living in Hackney, east London, for 13 years before making the shift south.
She moved to the picturesque historic town of Bari, in the south-east Italian region of Puglia, with her partner – a commodities trader – to benefit from a 90 per cent exemption for 10 years just before the rules changed.
‘When travelling we met people who were optimising their finances. Some were going to Dubai, but my work is in Europe and we heard about the “impatriati” scheme and realised it was a bit of a well-kept secret,’ Daria told the Sunday Telegraph.
The naturalised British citizen is now living in a two-bedroom flat she rents out for €1,400 a month, with her and her partner now enjoying regular swim or paddle-board trips past the city’s historic waterfront before work.
However, since Daria moved to Italy, the rules have been tightened on tax, which has seen regional difference scrapped in favour of a 50 per cent tax exemption for up to five years.
Those applying have to meet certain criteria. For instance, they cannot benefit if their earnings are more than €600,000 per year (£520,000).
Dari moved to the picturesque town of Bari in the south east of Italy in Puglia, where she can enjoy paddle boarding past the town’s historic buildings
Applicants must not have been a resident in Italy for three years – or up to seven if transferring with the same company.
And those seeking to take advantage of the scheme must remain in the country for four years or they will be forced to pay some of the benefits back.
This is a marked increase from the length of time required for to remain in Italy for those who are on the pre-2023 arrangement, where the timeframe was just two years.
The 2023 amendment also introduced the need for applicants to have a higher education qualification or an EU Blue Card – a work permit and residence permit for non-EU residents.
Most people now living on the scheme have set up homes across Italy’s business and industrial hubs in the north, in places like Milan, Padua and the wider Lombardy region as well as in the capital or Rome.
When the five-year relief scheme comes to an end, those remaining in Italy will see their tax payments jump significantly.
For instance, those earning around €150,000, would see tax payments balloon from €24,890 a year to €57,140 – or 17 per cent take to one of 38 per cent.
Not everyone has found the scheme worthwhile, with one British citizen reportedly moving back from Tuscany to London after only two years, citing a ‘nightmare’ of paperwork and difficulties with the language barrier.
Italian native Francesca Inglima also moved back to the UK after just two years.
Investment banker and Italian native Francesca Inglima moved to Milan after working in London for more than a decade but said she did not enjoy it and returned back to Britain to start her own business
Italy’s generous tax relief schemes have reportedly attracted wealthy banker from the UK (pictured is the Bank of England’s HQ in London)
She had been working for more than a decade in London as a top-tier investment banker when she opted to move to Milan in 2021 and 2023.
‘I had a lot of European clients. The tax incentive made it a no-brainer,’ the 32-year-old told the Sunday Telegraph.
But she admitted she wanted to start her own business and said that Italy was ‘not the place’ to do this.
‘After London, returning to Italy felt like taking a step back. I missed the fast pace, the ambition, the easier bureaucracy,’ she added.
