Italy Attracts Wealthy Expats Amid Favorable Tax Policies

ROME, Italy — A record number of wealthy individuals are moving to Italy, drawn by its favorable tax policies and robust real estate market. Many high-net-worth individuals (HNWIs) are seeking refuge in Italy as other countries tighten their tax regimes.

Italy’s flat-tax system allows foreign residents to pay a lump sum of €200,000 annually, exempting them from further taxation on foreign income for up to 15 years. This financial incentive is attracting wealthy individuals from around the globe, despite a planned increase in this tax to €200,000 in 2024.

Matteo Pella, a senior broker at Berkshire Hathaway HomeServices, commented on the appeal of the flat tax, stating, “They operate at the wealth level, which is still way above €200,000 per year flat taxation. It’s like saying: Oh, you’re paying for your coffee now. Today it’s two euros, tomorrow it’s going to be four euros. You’re not going to give up on your coffee.”

According to Henley & Partners, Italy has seen around 3,600 new high-net-worth arrivals in 2023 alone. Notable figures among these new residents include Nassef Sawiris, an Egyptian billionaire, and Richard Gnodde, vice-chairman at Goldman Sachs.

The influx of wealth has driven luxury real estate prices in cities like Milan, where property values have soared by 49% since the flat tax was introduced in 2017. Additionally, new venues catering to affluent clients, such as The Wilde and Casa Cipriani, are flourishing.

Anna Cipriani, director of membership at Casa Cipriani Milano, noted the changes in Milan’s character, stating, “Milan has evolved a lot over the years. Before, it used to be known more for its industrial character… now it has become more attractive for creatives, investors, and an international crowd.”

However, the growing presence of the ultra-wealthy in Italy is sparking debates about economic inequality. Critics argue that the tax benefits mainly serve the affluent, with limited benefits for the broader economy.

Despite concerns, many believe the economic activity brought by these new arrivals will create jobs and boost sectors like finance and hospitality. Cipriani added, “When you have a lot of investments into a city, the economy creates more job opportunities also for the people.”

Overall, Italy’s strategy of attracting wealthy expatriates through its flat-tax regime highlights the delicate balance between fostering economic growth and managing inequality.