What to expect from the tax breaks announced for those who move to Sicily Is it time to move to the island?

Last year in Germany, the governing majority presented a proposal that sparked much debate: introducing tax incentives for foreign workers in an attempt to address the labor shortage in many sectors crucial to the country’s economy, due to an aging population. However, the initiative was immediately considered fiscally discriminatory against German citizens, as well as an opportunity for right-wing movements to push their propaganda and rhetoric—especially at a time when the radical wing of reactionary parties has gained significant support, in Germany and beyond. The issue of a shortage of labor force in certain sectors is a very serious problem, not only for Germany but for most European countries. In fact, many other states on the continent—including France, Spain, the Netherlands, the United Kingdom, and Belgium—have previously tried to introduce measures similar to the one proposed in 2024 (though unsuccessfully) by the German government. Even in Portugal, until last year, there was a tax break that offered extensive fiscal benefits to certain segments of the population—particularly to foreigners who chose to relocate there. The initiative aimed, in its small way, to mitigate the effects of the 2008 economic crisis, which had hit Portugal quite hard. It is estimated that over the approximately 15 years it was in place, these tax breaks involved nearly 90,000 people. But there’s a catch. Over the years, the program also led to an increase in real estate prices, and for more and more Portuguese citizens it became difficult to find affordable housing, especially in major cities—one of the main reasons why the program was discontinued.

More recently, Sicily has announced it will introduce a series of tax breaks based precisely on the Portuguese model. These include exemptions, deductions, and write-offs for people who move to the island and for companies that, under certain conditions, relocate their headquarters to the region, with the goal of encouraging investment in the area. In recent years, Sicily’s economy has shown promising signs: the regional GDP has grown more than the national average, employment has increased significantly, and tax revenues have risen by nearly 15%. Even tourism, driven mainly by international arrivals, is experiencing a very positive period, with more visitors across the territory and steadily growing air traffic. However, despite this progress, Sicily continues to exhibit several structural weaknesses. The agricultural sector, always a central part of the island’s economy, is suffering due to the water crisis affecting many areas, reducing production and causing the loss of thousands of jobs. Added to this is the difficulty young people face in finding employment: although there has been improvement in recent years, the youth employment rate is still among the lowest in Italy, while the gender pay gap remains quite high.

It is not yet clear how much the tax breaks planned by Sicily will amount to or when they will officially come into effect. Nevertheless, the initiative adds to a whole series of tax incentives already in place in Italy, at various levels and in different regions. In the country, there are so many and such varied tax benefits that even the government struggles to quantify them precisely. It is currently estimated that there are around 600 tax breaks active, which together weigh on the public budget by more than 100 billion euros per year. The problem is that, once introduced, these measures are politically difficult to eliminate—as they effectively reduce tax revenues, draining valuable resources from public coffers. In Italy, the first tax breaks date back to the 1970s, but it was in the second half of the 1990s that their number and economic impact significantly increased, multiplying over the past fifteen years. Unlike in other European countries, where such measures are adopted more cautiously, in Italy each new government tends to add new ones—without removing the old ones. The sector that benefits the most is employment, followed by social and family policies. Among all of them, the “Superbonus”, which is related to the construction sector, stands out as the most expensive initiative ever adopted: according to various estimates, it could have very heavy effects on the State’s budget in the coming years.