Why Italy is bucking the super-rich clampdown
Italy — a perennial favorite of the rich and famous — is attracting a new wave of ultra-wealthy arrivals looking to take advantage of its investor friendly environment, thriving real estate market and low tax regime.
As many other countries clamp down on the super-rich, Italy has been bucking the trend; its accommodative flat-tax regime has enticed hordes of big spenders drawn to luxury living and Milan’s increasingly bustling business scene.
And despite doubling the one-off charge paid by high-net-worth individuals on their foreign income to 200,000 euros ($233,000) in 2024, this has done little to detract demand for la dolce vita.
“They operate at the wealth level, which is still way above 200,000 per year flat taxation,” Matteo Pella, senior broker in Berkshire Hathaway HomeService’s real estate firm, told CNBC.
“It’s like saying: Oh, you’re paying for your coffee now. Today it’s two euros, tomorrow it’s going to be four euros. You’re not going to give up on your coffee.”
Italy has become a top relocation destination for the wealthy in Europe this year, according to Henley & Partners, which markets citizenship and residency-by-investment schemes.
Though the millionaire migration figures have raised some questions, and global wealth flows are notoriously difficult to track, a number of high-profile figures have made the move to Italy over recent months. These include Egypt’s richest man and co-owner of Aston Villa Football Club Nassef Sawiris, and the vice-chair of Goldman Sachs, Richard Gnodde.
The total number of new high-net-worth arrivals in Italy so far this year could be as high as 3,600, according to Henley & Partners estimates.
Milan’s millionaire boom
Italy’s flat-tax regime was introduced in 2017 as part of a wider push by the then center-left government to attract foreign investors while encouraging homegrown talent to return to the country following the euro zone debt crisis.
That, in turn, has sparked a new wave of businesses looking to cater to the fresh wealth influx, particularly in the country’s financial and fashion hub, Milan. Among those are newly opened members club The Wilde and, prior to that, Casa Cipriani.
Shoppers walk through the Galleria Vittorio Emanuele II shopping gallery.
Picture Alliance | Getty Images
“We really thought it was a good time to come back to Italy,” Anna Cipriani, director of membership at Casa Cipriani Milano, told CNBC of the group’s 2022 opening.
“Milan has evolved a lot over the years,” she said. “Before, it used to be known more for its industrial character and, of course, the fashion houses, while over the last few years it became more and more attractive also for creatives, for investors and for [an] international crowd.”
Italy’s wealthy arrivals, meanwhile, have led to a surge in real estate prices across some of the country’s most desirable locations, from Tuscany and the Italian Riviera to cities such as Rome, Venice and Florence. Milan, and the surrounding lakes region, however, have emerged as a firm favorite.
“We are at all-time high prices at the moment,” said Pella, who is based in BHHS’ Lake Como office.
“In five years, we had an increase [of] double-digit percentages. For the upcoming years, we’re probably going to look at a steady 3% to 4% type of increase here in Lake Como.”
Property prices in Milan have risen 49% since the country’s flat-tax regime was introduced in 2017, compared to 10.9% across the rest of Italy’s big cities, according to real estate group Tecnocasa. Global property consultancy Knight Frank now expects the city’s prime real estate market to record a further 3.5% price growth in 2025.
“It’s about those who can afford it, because prices are not necessarily down to their street market logic as an investment,” Pella said.
“They like a property with their guts. Then they do a little bit of math, of course, but they’re ready to spend and sometimes to overspend just to secure a one-of-a-kind view or a one-of-a-kind position.”
UHNW migration
Millionaires have been migrating in droves to new residences, as more and more jurisdictions offer options to those willing to pay.
Over the past decade, the number of high-net-worth individuals relocating abroad is estimated to have almost tripled, reaching record highs in 2024.
That trend looks set to continue in 2025 and 2026, as a divide deepens between countries seeking to attract the uber-rich and those clamping down in a bid to combat perceived inequality.
France has deliberated expanding its wealth tax, while Switzerland is weighing new changes to inheritance tax.
A view of Lake Como, Italy’s third-largest lake, located in the northern Lombardy region.
Anadolu | Getty Images
Meanwhile, the U.K. in April abolished its over 200-year-old non-dom tax regime, which exempted wealthy foreigners living in Britain from paying U.K. tax on their overseas income and gains. It follows an outflow of London-based banks and financiers to other European capitals, such as Milan, following the 2016 Brexit vote.
That has left other countries looking to fill the gap.
“There are countries literally around the world coming to us and saying: ‘We want the U.K.’s millionaires and billionaires. What can we do? How can we bring them to our country?'” Stuart Wakeling, managing partner at Henley & Partners U.K., said.
While such citizenship and residence regimes vary vastly, and can include stringent investment requirements, part of the appeal of Italy’s system is its simplicity. The one-off payment offers foreign individuals, or nationals who have lived overseas for at least nine years, exemption from wider taxes on income and assets for up to 15 years.
Worsening wealth divides
Italy’s new surge of arrivals has nevertheless raised questions about the impact on the wider economy.
Some have warned of worsening wealth inequalities, with the overall tax take from the regime minimal compared to the country’s overall deficit, and much of the newly generated wealth concentrated in specific areas.
Meanwhile, critics suggest that attempts to emulate the scheme elsewhere could lead to a race to the bottom and an erosion of the tax base.
Still, businesses say they are hopeful that the increased activity and new job creation in industries from finance and private equity to hospitality and services will ultimately reap benefits across Milan and the wider country.
“It’s kind of a wheel, you know, that keeps rolling. You have all these people moving in and you have all these hotels opening and you have more and more people that then decide to come to town because now that they think about it more,” Cipriani, from private members club Casa Cipriani Milano, said.
“When you have a lot of investments into a city, the economy creates more job opportunities also for the people.”
— CNBC’s Gaelle Legrand contributed to this report.
