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Prime Minister Giorgia Meloni's cabinet has approved an increase of the annual tax on foreign income for expatriate multimillionaires, up from the previous €100,000 to €200,000.
This measure will apply only to new tax residents of Italy and Italians planning to return after living abroad for at least nine years. They will need to pay this tax on any foreign income or assets for 15 years. The tax does not apply to those who have already moved to the country and hold Italian citizenship.
The current €100,000 tax incentive had been controversial among Italians, who blamed wealthy expatriates for significantly increasing the cost of living. In Milan, the ultra-rich have been accused of driving real estate prices up by 43% over the last five years, with rent increasing nearly 20% since March 2022.
Prime Minister Giorgia Meloni defended the decision on social media, saying the government ‘’considered it right” to double the tax on wealthy foreigners, as it wanted to ‘“mitigate a measure that seemed extremely generous”.
Public opinion on the tax has divided. Some believe the tax will deter people from moving to Italy, while others disagree. For instance, experts at the British accounting firm Moore Kingston Smith believe that anyone with a net worth over £7 million will still find these terms "attractive."
Wealthy foreigners often chose Italy for investment and immigration, largely attracted by a favorable tax system, which was relaxed in 2016 in an attempt to prevent long-term brain drain from the country.
Experts anticipate an increase in the influx of wealthy individuals from the UK and France, associating this with a sense of uncertainty following elections in these countries, which might prompt the affluent to relocate.
Source: Financial Times
Photo by Bjorn Snelders on Unsplash
