Wealthy Britons who moved to Italy after the UK scrapped its non-dom regime could soon face a 50 per cent rise in the country’s flat tax on foreign income.
Italy is planning a big rise in the annual flat tax paid by wealthy foreigners who move to the country, increasing the charge from €200,000 to €300,000.
The change means rich new residents would pay 50 per cent more each year to avoid Italian taxes on their overseas income, gifts and inheritance for up to 15 years.
It would be the second time the tax has gone up since the scheme began in 2017. The rate was doubled last year from €100,000 as the government faced pressure to make wealthy residents pay a fairer share towards public finances.
The higher rate still needs to be approved by parliament before it comes into force.
The timing of Italy's proposed tax increase coincides with a significant influx of wealthy British residents who have departed the UK following Chancellor Rachel Reeves's sweeping changes to the non-dom tax regime.
Her policies eliminated the centuries-old system and extended inheritance tax to cover international assets, with rules preventing wealthy individuals from avoiding the levy for up to a decade after leaving Britain.
This exodus has seen numerous high-net-worth individuals relocating to destinations including Dubai, Greece, Monaco and notably Italy.
Milan has emerged as a particularly favoured destination for British non-doms seeking alternative tax arrangements.
Giorgia Meloni, the Italian PM, is planning to raise flat tax on super-rich to €300K
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Revolut founder and billionaire Nikolay Storonsky recently joined this wave of departures, establishing his residence in Dubai.
The Italian flat tax regime has experienced remarkable growth since its inception under a centre-Left government in 2017.
Initial uptake saw just 94 participants in the first year, but numbers have surged dramatically to an estimated 1,000 individuals by 2024.
The scheme's popularity peaked in 2023 with approximately 1,200 participants, according to data from Knight Frank and the Ministry of Finance.
The Italian flat tax regime has experienced remarkable growth since its inception under a centre-Left government in 2017.
| GETTYItaly's Court of Audit reports the programme has generated €315 million in tax revenues, though evidence of its impact on investment levels remains unclear.
The tax break permits foreign residents and Italians returning after nine years abroad to pay the flat fee on foreign income and assets whilst enjoying complete exemption from inheritance tax on overseas holdings during the 15-year period.
Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, warned that "tax regimes are fluid, particularly in Europe where governments are under fiscal pressure and are searching for additional tax revenues."
Italian tax professionals view the proposed increase differently.
| GETTYHe advised that "relocation decisions should not be based solely on tax considerations, but instead should be focused on a broad mix of lifestyle and long-term personal considerations."
Italian tax professionals view the proposed increase differently. Filippo Molinari, a Milan-based partner at Withers, interpreted the rise as "proof that they don't want to relinquish it, that they're committed to it."
Nicola Saccardo from Charles Russell Speechlys described Italy as "quite a stable jurisdiction for wealthy individuals," noting the regime has survived multiple governments with minimal changes.