Italy intends to change annual flat tax rules

In a surprise move announced on 7^th August, the Italian government announced that from 10 August 2024, anyone transferring their residence to Italy for civil purposes (article 43 of the civil code) will pay a higher annual flat of tax, which has risen from €100,000 to €200,000.

Individuals who transferred their residence to Italy before 10^th August are thought not be affected by the change, whether they are already tax resident or have not yet opted for the flat rate. It is also unclear if the rules affect those who intended to move to Italy and have already bought or rented a property but have not yet acquired the status of resident for tax purposes.

As always with these changes it is important for individuals who are already a tax resident or who are considering a move to take advice relating to their own individual wealth and circumstances especially as the Italian Parliament could make further changes to the law which are still in provisional form.

At the moment, this change does not impact on other rules such as the exemption from reporting obligations of assets held abroad, exemption from wealth tax on financial assets or immovable properties held outside of Italy or the exemption from inheritance and gift tax on the transfer of assets held outside of Italy.

Whilst some UK Non-Doms have been considering a move to Italy following changes announced in the Spring Budget which take effect on 6 April 2025 and with further changes signalled by the new government and likely to be announced in the Autumn Budget, it does highlight the need to be prepared for other countries to change the rules.

Following the July elections in France and the lack of political clarity, some wealthy individuals are now considering whether to stay if a wealth tax is introduced.

Changes which were made to the Norwegian wealth tax and capital gains tax rules in 2022 saw a number of wealthy individuals leave for other jurisdictions.

According to FT.com (12 August 2024) wealthy individuals from the UK, China, India, South Korea, Russia, Brazil, South Africa, Taiwan, Vietnam and Nigeria are all considering moves and the countries that are most likely to benefit in descending order are: UAE, US, Singapore, Canada, Australia, Italy, Switzerland, Greece, Portugal and Japan.

If you are concerned about how these changes might affect your future plans, get in touch with me or a member of the private client team.