Italy's Tax Overhaul: Impact on Wealthy Residents and Inheritance Policies

Italy's decision to double its flat tax on overseas income for wealthy new residents aims to moderate its tax shelter appeal while maintaining its attractiveness with favorable inheritance tax policies. Despite concerns, the country remains a top destination for affluent individuals, driven by its advantageous tax structures.

Italy's recent decision to double its so-called flat tax on the overseas income of affluent new residents to 200,000 euros per year aims to moderate the country's tax shelter appeal, which risked becoming excessive, tax advisers have said.

This week's measure impacts wealthy individuals, including high-profile footballers like Cristiano Ronaldo, and finance professionals who moved to Italy post-Brexit, seeking favorable tax conditions. The flat tax, introduced in 2017, was designed to boost the Italian economy by drawing big spenders, but has also been criticized for exacerbating housing demand and social inequality in urban centers like Milan.

Despite the hike, Italy's tax setup continues to attract the ultra-rich, especially given the low inheritance tax rates compared to other countries. Analysts note that Italy remains a prime choice for high-net-worth individuals, with incoming numbers rising steadily. The country continues to offer advantageous conditions, particularly in light of upcoming changes to Britain's 'non-dom' regime, and as other countries like Switzerland contemplate steep inheritance taxes.

(With inputs from agencies.)