Tax breaks lure bankers to Milan

Italy uses generous tax incentives to attract high earners from London, reshaping where top professionals live and work.

Italy Courts Wealthy Bankers with Generous Tax Breaks

Italy is using two tax incentives to draw high earners from London and other capitals. The long standing return of the brains scheme offers a large tax break to skilled workers who move to Italy. In 2023 the rules changed to apply a uniform approach across regions and to limit benefits. The new framework provides a 50 percent tax relief for five years with income caps and residency requirements. Data from the ministry of finance show about 50 000 people joined the scheme by 2023, roughly half returning Italians and half new residents from outside the country. Beneficiaries have moved to major cities such as Milan and to southern towns like Bari and others in the north.

Yet critics say the program could raise public spending and widen regional differences. A few participants have returned to the United Kingdom after finding the process heavy or the language barrier challenging. The flat tax option remains in place with far fewer applicants, reflecting a tighter cap of 200 000 euros and stricter eligibility. The changes show the policy is evolving and subject to political timing.

The policy mix reflects a clear push to attract talent while managing the cost to the state. The upside is a potential boost to innovation and urban renewal in neglected regions. The downside is a higher price tag for taxpayers and the risk that benefits stay concentrated among a small group of earners. The evolution of rules signals political sensitivity and questions about how sustainable such incentives are over time. If the system relies on short term gains, it may need ongoing adjustments to keep the economy open without harming public finances.

Highlights

The balance between lure and cost will test Italy as it weighs talent against public spending.