“But then came those who were actively working – they do have to pay tax on income produced in Italy – but still found the regime appealing.” “At the beginning, the flat-tax regime was especially targeted at those who had passive income,” said Cerrato. They are investment bankers, asset managers, entrepreneurs, people who work in technology, or those who have income generated through dividends or trusts. Others have come from Asia or South America. “But a big factor is the fear that a possible win for the Labour party in the next election could lead to such tax incentives being abolished.”Īmong the contingent of super-rich are those who have switched residency from Switzerland, which also has a favourable tax regime, as they are attracted by Italy’s cheaper living costs, beauty and warmer climate. “Brexit is one aspect, as the UK, especially London, started to feel less hospitable,” he said. He said foreign nationals who once had non-domicile status in the UK had been leading the way. Marco Cerrato, a tax lawyer and partner at Maisto e Associati in Milan, has handled the financial affairs of several new billionaire residents in Italy. It has definitely been one of the best things to have happened for the top-level real estate market.” “Some rented top properties during their first year in Italy before buying. “Some of them bought properties that had just come on to the market, others bought properties that needed renovation,” said Giorgolo. More recent flat-tax clients include a Dutch couple who bought a home in Rome for more than €10m and another who paid €11m for a place in Milan. Giorgolo has sold a property on the island of Capri to a French couple who transformed it into a boutique hotel a €20m mansion in Venice to a Chinese buyer and a mansion worth €10m in Laglio, the Lake Como town where George Clooney has a home, to a couple from Switzerland. Then came the coronavirus pandemic, an experience that left many reconsidering their lifestyle choices.
The influx of the super-rich began in earnest in 2019 and was partly driven by people in the UK with non-domicile status – a regime similar to Italy’s whereby they are exempt from paying tax on income or capital gains earned overseas – fleeing as a result of looming Brexit. “People want a slice of an 18th-century house, but with an interior that has been completely modernised.” “We have never sold so quickly in Rome,” said Diletta Giorgolo, head of residential property at Italy Sotheby’s International Realty.
Nineteen of the 29 opulent apartments under development in the swish Palazzo Raggi have been snapped up since going on sale less than a year ago, and several have been bought by those exploiting the flat-tax. Their arrival has revitalised the market for luxury homes – buyers rarely put down less than €10m – and spurred the redevelopment of long-neglected historic landmarks in city centres.
The measure, which was intended to boost big spending in Italy, whether it be on property or luxury brands, enticed 98 people in its first year before jumping to 549 by 2020 and more than doubling to 1,339 in 2021. The initiative also extends to family members for a yearly payment of €25,000 per person. In exchange for paying an annual fee of €100,000 (£87,000), those who take up residency in the country are entirely exempt from paying tax on income generated overseas.
Italy rolled out the little-known incentive, which applies to the super-rich of all nationalities, in 2017.
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