Rich UK and French taxpayers nonetheless need to relocate to Italy regardless of Rome’s latest choice to double its flat tax on the international earnings of wealthy expats to €200,000 a yr.
With the looming abolition of Britain’s historic “non-dom” tax regime, advisers declare Italy stays a highly attractive alternative.
“Folks transfer not simply due to tax, however as a result of they could just like the Italian Riviera, the Italian Alps, the structure, tradition, folks,” mentioned Miles Dean, head of worldwide tax at accountancy agency Andersen, who claimed non-doms had been seeking to leave the UK “in large numbers”.
A number of consultants within the Eurozone’s third-largest economic system say they’re receiving a gentle stream of inquiries from France, the place an unstable political local weather has fuelled considerations over larger taxes on the rich.
In August, Prime Minister Giorgia Meloni’s rightwing authorities unexpectedly doubled Italy’s annual levy on abroad earnings for brand new tax residents to €200,000 a yr.
The transfer adopted grumbles amongst Italians in regards to the equity of a flat tax charge set in 2016 as a part of a post-Brexit push to lure rich folks away from the UK. The scheme is estimated to have attracted 2,730 multimillionaires, together with oligarchs, personal fairness traders and even sportspeople, most of whom have arrange residence in Milan.
Nevertheless, Meloni mentioned her authorities had “thought-about it proper” to replace a tax incentive that had appeared “extraordinarily beneficiant”, as the unique €100,000 flat tax had not elevated for the reason that scheme’s inception.
“The rise from €100,000 to €200,000 doesn’t make an enormous distinction for multimillionaires which have giant international incomes,” mentioned Marco Cerrato, accomplice at tax agency Maisto e Associati in Milan. “People that we’ve got been advising and which have deliberate to switch to Italy after 2025 haven’t modified their plans.”
Maurizio Fresca, a global tax marketing consultant at Italian regulation agency Chiomenti, mentioned his purchasers weren’t a lot involved in regards to the larger tax however about “the politics” behind Rome’s choice, and what which may counsel in regards to the scheme’s long-term sturdiness.
“When excessive internet price people need to relocate to a different nation, €100,000 a yr is just not one thing that holds them again,” Fresca mentioned. “They need to be reassured that this regime will probably be in power sooner or later.”
Fresca mentioned Meloni’s authorities had elevated the tax quantity to defuse rising public discontent about beneficiant incentives for rich foreigners.
“The Italian authorities needs to keep away from a political dialogue in regards to the equity of the lump sum,” Fresca mentioned, including that €100,000 was seen as “low-cost” after a number of years of excessive inflation.
Consultants additionally mentioned Rome had dealt with the change deftly.
The brand new charge will solely apply to newcomers establishing tax residency in Italy after the change was accepted, whereas current contributors are grandfathered in on the previous charge. No different element has been altered, which had served to bolster a way of the scheme’s stability.
Jacopo Zamboni, government director for personal purchasers at Henley & Companions, which helps rich folks receive funding visas and international citizenships, mentioned the tax rise was “not perceived as authorized uncertainty”.
“Shoppers see it as an adaptation of the worth to the present circumstances,” he mentioned.
Zamboni mentioned inquiries about Italy from British and French residents had been up 10 per cent in August this yr in contrast with August 2023.
The rise within the flat tax is predicted to discourage some folks with out adequate international property or earnings from making an Italian transfer. However Cerrato mentioned that might assist to keep away from a scenario through which the motivation scheme is abolished because of “an extreme inflow of rich foreigners that impression the housing market”.
The contributors pay the flat tax on all abroad earnings and property for as much as 15 years, whereas shielding them from tax claims elsewhere by means of double tax treaties.
Many potential beneficiaries had been initially cautious, given Italy’s fame for fast adjustments of presidency and fast shifts in coverage. However the incentives have proved surprisingly sturdy. To this point they’ve survived 5 governments.
The abolition of the non-dom regime within the UK, alongside plans by the brand new Labour authorities to boost taxes, has led some present UK residents to contemplate transferring elsewhere.
In France, an inconclusive parliamentary election in July had prompted a flood of calls from wealthy French residents to their advisers in search of choices to shift their property, had been a leftwing alliance to take energy and reintroduce wealth taxes.
A conservative, Michel Barnier, has as a substitute been appointed prime minister since, though uncertainty over whether or not the federal government will maintain has added to incentives for folks to search for alternate options.
Italy is considered one of a number of in style locations, which additionally embrace conventional tax havens Monaco and Switzerland, in addition to Dubai, Greece, Cyprus and Malta.
Tax is just not the one issue that drives folks’s choice making, advisers say. “Lots of this stuff come right down to life-style, connectivity,” Dean mentioned. “There is no such thing as a one measurement matches all.”
Extra reporting by Sarah White in Paris
