Italy flat tax regime draws global millionaires amid tightening policies elsewhere

Overview of Italy's flat tax regime

Italy has positioned itself as a beacon for high-net-worth individuals seeking favorable tax environments, particularly through its flat tax regime introduced in 2017. This policy allows qualifying foreigners or returning Italians who have lived abroad for at least nine years to pay a fixed annual tax of €200,000 on their foreign-sourced income, exempting it from standard progressive taxation for up to 15 years. Family members can be included for an additional €25,000 each, making it appealing for wealthy households. The regime was designed to stimulate economic recovery after the eurozone debt crisis by attracting investment, talent, and spending power.

Despite a recent adjustment that doubled the flat tax from €100,000 to €200,000 starting in 2024, demand remains robust. Experts argue that for ultra-wealthy individuals, this increase is negligible compared to potential tax savings elsewhere. The policy covers income from investments, dividends, and other foreign assets, while Italian-sourced earnings are taxed normally. This hybrid approach encourages participants to engage in local business activities without full tax exposure on global wealth.

The regime's simplicity stands out: no stringent investment requirements beyond residency, unlike golden visa programs in other nations. Applicants must demonstrate tax residency in Italy, typically by spending over 183 days annually or establishing a primary home. Anti-abuse measures ensure transparency, requiring disclosure of foreign assets to prevent evasion.

Global trends in millionaire migration

In 2025, a record 142,000 millionaires are projected to relocate internationally, up from 134,000 in 2024, driven by shifting tax policies, geopolitical stability, and lifestyle preferences. Italy ranks among the top destinations in Europe, expected to welcome around 3,600 high-net-worth arrivals this year, according to Henley & Partners' Private Wealth Migration Report. This influx reflects a broader "great wealth migration," where affluent individuals seek jurisdictions that balance fiscal incentives with quality of life.

Factors fueling this movement include remote work flexibility, family education opportunities, and access to cultural hubs. Italy's appeal extends beyond taxes to its Mediterranean climate, historic cities, and vibrant food scene. Milan, in particular, has transformed from an industrial center into a global finance and fashion powerhouse, drawing creatives and investors alike.

High-profile relocations to Italy

Several prominent figures have chosen Italy as their new base, highlighting the regime's draw. Nassef Sawiris, Egypt's richest man and co-owner of Aston Villa Football Club, relocated part of his operations to Italy, citing its business environment and tax benefits. Richard Gnodde, vice-chairman of Goldman Sachs, moved to Milan, joining a wave of finance executives fleeing stricter regulations elsewhere.

Other notable migrants include Elio Leoni-Sceti, a private equity investor, and Bart Becht, former CEO of Reckitt Benckiser. These individuals often settle in upscale areas like Lake Como or Milan's Quadrilatero della Moda, investing in luxury properties and local ventures. Their presence boosts sectors such as private banking, yachting, and high-end hospitality.

Real estate surge in key Italian regions

The influx of wealthy residents has significantly impacted Italy's property market, with prime real estate experiencing sustained growth. In Milan, house prices have risen 49% since the flat tax's introduction, far outpacing the 10.9% average in other major cities. Knight Frank forecasts a further 3.5% increase in Milan's luxury segment for 2025, driven by demand for high-end apartments and villas.

Nationally, residential property prices grew 2.73% year-on-year as of mid-2025, with northern regions like Lombardy leading the charge. Lake Como has seen double-digit price hikes over the past five years, with expectations of 3-4% annual growth ahead. Tuscany, the Italian Riviera, Rome, Venice, and Florence also report elevated values, though Milan's urban appeal - bolstered by new developments and international connectivity - remains dominant.

This boom has spurred related industries:

However, rising prices have sparked concerns about affordability for locals, potentially exacerbating urban gentrification.

Contrasting policies in other European countries

While Italy embraces tax leniency, several neighbors are tightening rules on the wealthy. The United Kingdom abolished its longstanding non-domiciled (non-dom) regime in April 2025, ending exemptions on overseas income for foreign residents. This shift, combined with post-Brexit uncertainties, has prompted an exodus of up to 16,500 millionaires in 2025, many heading to Italy.

France has debated expanding its wealth tax, with proposals for a levy on ultra-rich households adopted in early 2025. Temporary hikes on high earners aim to cut deficits, but they risk driving relocations. In Switzerland, a November 2025 referendum on a 50% inheritance tax for estates over CHF 50 million has alarmed the super-rich, potentially undermining its status as a wealth haven.

These contrasts highlight a divide: nations like Italy prioritize attraction to fuel growth, while others focus on equity and revenue.

Economic benefits and criticisms

Proponents argue the flat tax stimulates Italy's economy through direct investments and job creation. Since 2017, over 1,100 individuals have opted in, generating revenue while boosting sectors like finance, tourism, and services. In Milan, new businesses and hospitality ventures create a "rolling wheel" of economic activity, with increased spending benefiting local communities.

Critics, however, point to widening inequality. The regime's tax take is minimal relative to Italy's deficit, and benefits concentrate in affluent areas. Studies show Italy's overall tax system favors the top 7%, with the richest paying proportionally less than middle-income earners. There's debate on whether such policies erode the broader tax base, potentially leading to a "race to the bottom" among countries.

Despite these concerns, the regime's net positive impact on GDP and labor supply is noted in economic analyses, though tempered by regressive elements. As global wealth flows evolve, Italy's approach may inspire similar strategies elsewhere.