Milan Attracts Ultra-High-Net-Worth Individuals with New Flat Tax Regime
milan is experiencing an influx of wealthy individuals, driven by Italy‘s recently implemented flat tax regime designed to attract foreign investment and residents. The trend is part of a larger global movement of high-net-worth individuals seeking favorable tax environments, with numbers relocating abroad nearly tripling over the past decade and reaching record highs in 2024. This is occurring as other nations, like France and Switzerland, consider increasing taxes on wealth and inheritance.
The italian scheme offers a one-off payment granting foreign individuals – or nationals who have lived abroad for at least nine years – exemption from wider taxes on income and assets for up to 15 years. Its simplicity is a key draw.
This comes as the U.K. abolished its over 200-year-old “non-dom” tax regime in April, which previously exempted wealthy foreign residents from U.K. tax on overseas income and gains. The change followed an outflow of financial institutions and personnel from London to other European cities, like Milan, after the 2016 Brexit vote.”There are countries literally around the world coming to us and saying: ‘We want the U.K.’s millionaires and billionaires. What can we do? How can we bring them to our country?'” stated stuart Wakeling, managing partner at Henley & Partners U.K.
While the influx is boosting economic activity, especially in Milan, concerns are being raised about potential wealth inequality. Critics argue the tax revenue generated by the regime is minimal compared to italy’s overall deficit, and the wealth is concentrated in specific areas. Some also fear a “race to the bottom” as other countries attempt to replicate the scheme, potentially eroding the global tax base.
Despite these concerns, businesses are optimistic about the positive economic impact. “It’s kind of a wheel, you know, that keeps rolling.You have all these people moving in and you have all these hotels opening and you have more and more people that then decide to come to town because now that they think about it more,” explained Cipriani, from private members club Casa Cipriani Milano. “When you have a lot of investments into a city, the economy creates more job opportunities also for the people.”
This report includes contributions from CNBC’s Gaelle Legrand.
