Move to Italy, they said. There will be tax benefits, they said.
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As of Wednesday, Italian Prime Minister Giorgia Meloni approved plans to raise the country’s annual levy on overseas income in an attempt to redirect wealthy expats taking advantage of its low tax rates, Bloomberg reported. The initiative was rolled out in 2017 to attract affluent individuals to the area and boost spending. Until recently, high-net-worth individuals taking up residency in Italy had to pay a yearly fee of €100,000 ($123,000) to be exempt from paying tax on gifts, inheritance, and income generated abroad for up to 15 years. Now, that payment will double to €200,000 (roughly $219,000).
“The measure that has caused a lot of noise is the doubling of the flat tax for billionaires who decide to transfer their tax domicile to Italy,” finance minister Giancarlo Giorgetti said during a press conference in Rome on Wednesday.
Since the tax measure was introduced seven years ago, it’s resulted in approximately 4,000 relocations, the outlet reported. Though, the doubling of the flat tax will only apply to those with future plans of moving to Italy, not those who have already taken up tax residency there.
“It will definitely reduce the number of people wanting to go to Italy,” Tim Stovold, partner at accountancy firm Moore Kingston Smith, told the Financial Times . Locals, for one, are hoping that real estate prices and the cost of living return to normal as a result.
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Major hubs like Rome and Milan experienced a property boom in the wake of Brexit. For example, in 2020, prime residential sales in the Eternal City increased by 31.4 percent, its highest level since 2007. Milan, on the other hand, finds HNWIs are to blame for the whopping 43 percent rise in real estate prices over the last five years.
Other European countries like Greece have a similar tax incentive in place where wealthy expats benefit from an annual flat tax of €100,000 for 15 years. However, you’ll need to have invested at least €500,000. Elsewhere in the UAE, which is supposed to gain a record 6,700 millionaires by the end of the year, there is currently no individual income tax.
“Like we said at G20 and G7 meetings, we’re against engaging in a competition with other countries to create tax havens for people or companies,” Giorgetti told Reuters. “A country such as Italy, with limited fiscal room, can only lose such a competition.”
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