"Details on relocating to Italy, with a tax burden on half of one's earnings"
Moving to Italy? Here's How the Impatriate Tax Scheme Saves You Big Bucks
Italy's tantalizing impatriate tax scheme has caught the eyes of many globetrotters planning to call Italy their new home. And who better to share their experience than John and Linda Baker, a dup from Brighton, England, who've cashed in on this opportunity?
As digital nomads, John's a web designer catering to UK clients, and Linda's a freelance copywriter. In November, they swapped their seaside abode in Brighton for a rustic, two-bed cottage in Amantea, Calabria, Italy, for just €59,000.
Intrigued by a life free from the 9-to-5 grind and a slower-paced existence, the Bakers jumped at the impatriate tax scheme bandwagon. Paying taxes on only half of their income is like finding a gold mine for these savvy expats.
This tax haven for foreign workers was established in 2015, aimed at qualified individuals plotting to reset in Italy. It caters to both employed and self-employed folks who become fiscal residents and reside in Italy for at least 183 days per year.
Interested in finding out more about Italy's impatriate tax rule and its changes? Click here.
The 50% tax break on earnings applies over a period of five years, extendable for another five. But don't forget, there's a salary cap of €600,000 per annum beyond which there's no tax relief. An additional child under 18 bumps the non-taxed portion up to 60%.
Although the scheme's appeal has waned slightly over the years, it continues to garner interest. Italians abroad can also reap the rewards of this fantastic opportunity.
The Italian government launched the scheme predominantly to woo back its skilled workers who had left the country. However, many beneficiaries of the scheme are foreigners enamored by the prospect of living la dolce vita in Italy.
The Bakers sought the assistance of a legal immigration expert stationed in Rome, who streamlined their paperwork and presented their application to the Italian authorities.
"We could have applied directly from the UK, but hiring an Italian professional with deep knowledge of Italian bureaucracy was our preferred choice," Linda shares.
With the lowest tax band rate in Italy at 23%, and the highest at 43%, the Bakers are confident that they'll be saving a substantial sum, considering their take-home pay would be slashed around 40% in the UK. The couple estimates that they could save up to €30,000 in taxes yearly.
With their tax savings, the couple is eyeing a holiday home in Naples, closer to Rome.
They abandoned the UK due to skyrocketing living costs and a burning ambition to live their dream Italian life while they're still in their prime.
"Typically, when couples retire, they start contemplating a new beginning, but we didn't want to wait until we were 60 or 70 to make the leap and relocate to Italy," says John.
Amantea is a relatively affordable locale. A dinner for two costs around €35, while utilities are among the most affordable in Italy, Linda reveals.
"There are gourmet delicacies like Tropea's red onions, world-famous Calabrian chili peppers, and mouthwatering pasta dishes we never could've imagined back in England," John adds.
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- John and Linda Baker, who moved from Brighton, England to Amantea, Calabria, Italy, are savvy expats taking advantage of Italy's immigrant tax scheme, which allows them to pay taxes on only half of their income for five years, extendable for another five.
- The Bakers sought the assistance of a legal immigration expert stationed in Rome to streamline their paperwork and present their application to the Italian authorities.
- With taxes starting at 23% and rising to 43%, the Bakers believe they will be saving a substantial sum, potentially up to €30,000 yearly, compared to the 40% they would pay in the UK.
- John and Linda are considering using their tax savings to purchase a holiday home in Naples, closer to Rome.
- Italians living abroad and foreigners alike are eligible for this Italian tax benefit, aimed at attracting skilled workers back to Italy, although there's a salary cap of €600,000 per annum beyond which there's no tax relief.
