We bought a £64k four-bed Italian home – and pay tax on just 10% of our income

A London couple in their forties who recently moved to Italy now pay tax on just 10 per cent of their income, thanks to a special scheme that was in place for just four years.

In October Martin and Joanne Bell (not their real names) sold their two-bedroom flat in London and relocated to Trapani, a fishing village in western Sicily renowned for its strong red wines, salt flats and powder-fine sand.

They purchased a four-bedroom cottage in the surrounding countryside for €75,000 (£64,000) and after applying for the Italian tax scheme in November, they were accepted in January.

The special regime, approved in 2019 by Rome’s government, is called the “impatriate scheme”. Aimed at luring qualified and skilled foreign workers, it’s for both employed and self-employed who become fiscal residents and reside in Italy at least 183 days per year.

“We were really lucky,” Ms Bell tells i. “Up to 2023 it entailed 10 per cent taxable income, but then following changes made by parliament last year, taxable income was upped to 50 per cent as of this year. We succeeded in being granted the old taxation because we applied just in time at the end of 2023.”

She is an interior designer who works remotely for several UK and European clients, while her husband is a broker. He uses a laptop and seven clocks hanging on the wall showing the time across the world to monitor the stock exchanges.

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With the help of a good immigration legal expert in Milan, the Bells were able to exploit a transitional period for those who obtained residency before 31 December, 2023, when it entailed tax on 10 per cent of income in Italy’s south and tax on 30 per cent in the richer north.

The taxation is lower, and therefore more appealing, in the poorer south to push foreigners to relocate and revive depopulated small towns. The Bells will benefit from the lower tax rate for five years, which can then be extended for another five.

“You really need to have a legal expert on the ground who knows how to navigate the Italian system and use it to his clients’ advantage,” says Mr Bell.

Paying tax on just 10 per cent of income is the lowest any Italian could pay. Ms Bell says they will be saving a large amount of money compared with the UK. With the extra money, the couple would like to buy a holiday home on the stunning island of Marettimo, just off Trapani’s coast.

“I earn approximately £70,000 (€81,600) per year, which means only £7,000 will be taxed and, as per the lowest tax band, tax is €1,725. My husband earns £150,000 yearly, give or take, amounting to roughly €6,500 (£5,600) in tax (the highest band). That’s simply fab,” she adds.

The Bells decided to leave the UK because of soaring costs of living following Brexit (they voted Remain), and because they wanted a simpler lifestyle. The tax regime was the major lure, however.

“We were really looking for some change, for a place where we could be at the same time both holidaymakers and workers, paying the least possible in taxes,” says Mr Bell.

“We were fed up of remote working in the UK, where we had lost the pleasure of life due to the usual rat race and the crazy inflation. Here in Trapani, everything is so cheap it’s unbelievable.”

Dinner for two at seafront restaurants is around €40 (£34), while they say fresh fish at the market is practically free. “With €10 (£8.60) we cook a huge dish of frittata mista (mixed fried seafood), which in London had always been a bit above our budget, we could afford it once a week. But here in Trapani nearly every morning I jog down to the harbour to buy the best fresh fish from the fishermen’s net,” says Ms Bell.

“We’re living the dream, at such a low cost and knowing how lucky we were to have been among the last beneficiaries of the 10 per cent taxable income scheme.

“Now, foreigners who apply for the scheme will pay taxes on 50 per cent of their income – and that makes a huge difference.”