Italy has long held a special place in the hearts of travellers, retirees, and lifestyle seekers. In recent years, however, it has also become a top destination for high-net-worth individuals. Millionaires from the UK and around the world are increasingly choosing to relocate to Italy. Italy remains a highly attractive destination for the wealthy due to its unique combination of lifestyle, culture, and financial benefits. But why? Beyond the sunshine and lifestyle, Italy has introduced financial incentives that are proving highly attractive to the wealthy.

In this article, we explore the reasons millionaires are moving to Italy, how its tax regimes work, and what expats should consider before making the move. Many international millionaires are drawn to Italy for its favorable tax regimes and investment opportunities.

The Appeal of Italy for Millionaires

Italy offers an enviable combination of lifestyle benefits and financial incentives. From the rolling vineyards of Tuscany to the glamour of Milan, the country delivers culture, cuisine, and climate in abundance. Milan, in particular, is renowned for its luxury services, including exclusive clubs and high-end hotels, which attract high-net-worth individuals seeking both lifestyle and investment opportunities. Beyond its glamour, Milan has also emerged as a major player in international high finance, appealing to wealthy individuals and businesses looking for access to European markets and advantageous tax regimes. But millionaires are not just moving for the scenery.

Key drivers include:

• Favourable tax regimes such as the €100,000 flat tax for new residents.
• The 7% rule in Southern Italy, offering reduced taxation for retirees.
• Lower cost of living in some regions compared to the UK.
• Proximity to major European financial centres.
• Italy’s appeal as a safe, stable, and prestigious base.
• A robust legal network providing reliable legal and financial support for high-net-worth individuals.

Why Are UK High Net Worth Individuals Moving to Italy?

For UK millionaires, Brexit has reshaped mobility across Europe. Italy has emerged as an attractive choice, combining Mediterranean lifestyle with financial advantages. Italy now attracts not only UK millionaires but also foreign nationals, drawn by its appealing tax regimes and luxury living options.

Common reasons include:

• Tax advantages: The €100,000 flat tax regime allows wealthy individuals to shield worldwide income at a fixed annual rate.
• Lifestyle upgrades: The cost of property and luxury living can be cheaper than in parts of the UK, attracting wealthy buyers seeking luxury properties.
• Quality of life: Excellent healthcare, rich culture, and better climate.
• Location: Easy access to both Europe and the UK.

What is the €100,000 Flat Tax Regime in Italy?

Introduced in 2017, the flat tax scheme is Italy’s answer to attracting global wealth.

• New residents can opt to pay a fixed annual tax of €100,000 on all foreign income, regardless of amount.
• Family members opting for the same regime can also join the scheme, and the flat tax drops to €25,000 each for them.
• The regime can last up to 15 years.

This special tax regime offers predictability and significant savings for high earners. It has quickly become one of the most powerful incentives for millionaires relocating to Italy.

The 7% Rule in Italy

Another notable incentive is the 7% rule designed to attract new tax residents.

• Foreign pension income can be taxed at a flat rate of 7% for 10 years.
• It applies to retirees relocating to small towns in Southern Italy.
• In addition to pensions, only certain types of income produced abroad may also benefit.

Any income not covered by the 7% rule is taxed ordinarily.

This regime has made Southern Italy particularly attractive for those looking to enjoy both sunshine and tax efficiency in retirement.

Which Countries Are Millionaires Moving To?

Italy is not alone in attracting the world’s wealthy. Other countries offering appealing tax regimes include:

• Portugal with its Non-Habitual Resident scheme.
• Spain with Beckham’s Law for foreign workers.
• Switzerland with cantonal tax deals.

In the context of global tax competition, Italy stands out for its ability to attract high-net-worth individuals through favorable tax policies. The increasing global tax competition among countries is driving more attractive tax regimes to lure wealthy residents. However, this trend also brings the risk of downward tax competition, where nations may excessively lower tax rates, potentially impacting public revenues.

Italy’s fiscal attractiveness is enhanced by its special tax regimes, making it a top destination for attracting millionaires from around the world. The country’s appeal extends to foreign investors seeking stable investment opportunities and advantageous tax conditions. There has been a notable influx of international millionaires relocating to Italy, contributing to the rising demand for luxury goods and real estate.

Italy benefits from a generally favourable market environment, which supports wealth accumulation and investment growth. Nonetheless, periods of less favourable market environment can impact total investable wealth and investor optimism. Compared to Dubai’s dynamic capital market, which offers a vibrant and adaptable financial landscape, Italy competes by offering a unique combination of lifestyle and fiscal incentives.

Some competing destinations offer zero taxation to further entice high-net-worth individuals, but Italy’s comprehensive citizenship and residency programmes also play a significant role in its attractiveness. According to Henley & Partners, Italy has seen a substantial increase in millionaire migration, with their reports highlighting the country’s strategic position in the global race for wealth relocation. Henley Partners’ research underscores Italy’s success in attracting millionaires through its innovative tax regimes and investment programs.

However, Italy’s blend of lifestyle and incentives is positioning it as a leader in Europe for millionaire migration.

Is It Easy for Millionaires to Move to Italy?

The process of relocating to Italy depends on nationality and residency status. For UK nationals post-Brexit, moving involves more planning than before. Residence permits, visas, and tax registrations must all be addressed. The Italian government has introduced policies such as the flat tax scheme and investment migration programs to attract high-net-worth individuals, making Italy an appealing destination.

Working with professional advisers is essential. International law firms play a key role in assisting wealthy individuals with the legal complexities of relocation, especially in cities like Milan. Financial advisers coordinate wealth planning, while tax advisers manage compliance with both Italian and home-country rules. Understanding available tax breaks is crucial, as these incentives can significantly enhance the financial benefits of relocating to Italy. The influx of wealthy individuals not only benefits the newcomers but also contributes to Italy’s economic development, as millionaires encourages consumption, stimulates investment, and drives new business creation.

FAQs: Why Are Millionaires Moving To Italy?

Is it cheaper to live in Italy or the UK? In many parts of Italy, especially outside major cities, the cost of living is lower than in the UK.

Do UK pensions get taxed in Italy? Yes, but under the 7% rule in Southern Italy, retirees can benefit from highly reduced rates. Income generated abroad, including overseas income such as foreign pensions, may be subject to favorable tax treatment depending on the regime chosen.

What are the disadvantages of living in Italy? While the lifestyle is appealing, bureaucracy can be challenging, and tax systems require careful management. Gift taxes may apply to certain asset transfers, and understanding the inheritance tax and the italian inheritance tax rate is important for estate planning, as Italy offers relatively low inheritance tax rates compared to other countries.

Who pays more tax, the UK or Italy? For high earners, Italy’s flat tax regime often results in lower taxes compared to the UK. The flat tax can exempt overseas income and capital gains from foreign assets, which can be advantageous for international investors. This regime can also impact tax revenue, as it attracts wealthy residents seeking tax efficiency.

Is healthcare free in Italy? Italy’s healthcare system is highly regarded and largely state-funded, though private healthcare is also available.

Planning Your Move to Italy: Navigating the Real Estate Market

For millionaires considering Italy, the financial opportunities are clear. But such a move requires expert guidance to avoid pitfalls and ensure compliance, especially when planning for foreign sourced income and managing financial assets under Italy’s tax regimes.

At Harrison Brook, we specialise in advising international clients on cross-border financial planning. As financial advisers, we work alongside tax specialists to deliver tailored solutions for clients relocating to Italy and other parts of Europe.

Whether you are exploring the €100,000 flat tax, taking advantage of the CR7 rule as a key tax regime for new residents, retiring under the 7% regime, or simply seeking to structure your investments effectively, professional advice is key.

Conclusion

Millionaires are moving to Italy not only for its lifestyle but also for the attractive financial opportunities it offers. With favourable tax regimes, lower costs in certain regions, and a world-class lifestyle, Italy has become one of Europe’s most desirable destinations for the wealthy.

If you are considering a move, make sure to seek expert guidance. A well-structured plan ensures you enjoy the benefits without unexpected surprises.

Get in touch

If you are thinking about relocating to Italy, speak with Harrison Brook today. Our advisers can help structure your wealth and connect you with specialist tax partners to make your transition smooth and efficient.