Italy's €200,000 flat tax attracts the ultra-rich, the Court of Auditors raises the alarm.

The new wave of wealthy individuals flocking to Italy has now become a given: the €200,000 flat tax isn't discouraging—in fact, it's increasingly attracting—millionaires and taxpayers with very high net worth and global fortunes. The optional regime provided for by Article 24-bis of the TUIR (Consolidated Income Tax Code), introduced in 2017, effectively offers a safe haven from tax temptations to anyone transferring their residence to Italy from abroad, avoiding automatic worldwide taxation on income earned outside Italy. And those who had bet on a reversal of the ultra-rich's interest in Italy now appear to have lost, despite the flat tax for new arrivals rising from €100,000 to €200,000. This move by the Meloni government, according to data released by the Court of Auditors, doesn't appear to have slowed the flow of new wealthy individuals to Italy in 2024.

The tax regime reserved for ultra-millionaires provides that those who have not been tax residents in Italy for at least nine of the last ten years can, by transferring their residency, obtain the application of a flat annual tax on all income earned abroad (excluding certain capital gains for the first five years), without Italy requiring knowledge of the amount of that income or requiring additional taxes on real estate or financial assets held abroad. The extension to include family members, with an additional flat rate of €25,000 per person, makes the flat tax for super-rich particularly attractive even to large and very wealthy families.

According to the figures in the equalization document, in 2023, nearly 1,500 new tax residents (approximately 1,070 principal taxpayers and 425 family members) benefited from the favorable and attractive regime, providing the Treasury with €117.6 million (€107,000 from principal taxpayers and €10.6 million from family members). The Court of Auditors' table shows how arrivals to Italy have increased over time: from 2020 to 2023, a total of 2,875 wealthy individuals entered Italy, accompanied by 1,108 family members, bringing the total to nearly 4,000 taxpayers. To these must be added the 706 taxpayers who submitted a request for a ruling from the Revenue Agency to be able to cross the Italian border. Overall, the State collected €315.3 million from these super-millionaires.

Italy's attractiveness is set to strengthen starting in 2025. The Court of Auditors (CA) explains the reason. London has definitively reined in the non-domiciled ("non-dom") regime, which for decades has guaranteed global fortunes preferential taxation on foreign-source income. Starting April 6, 2025, Great Britain will adopt the principle of worldwide taxation, effectively forcing large fortunes who have been resident until now to look elsewhere: the new British regime offers only four years of advantages to those who have not been resident for the last ten years, after which the full tax will be applied to all foreign-source income and capital gains. Hence the Court of Auditors' warning to the government: precisely at the end of the British non-dom regime, London is expecting a "fiscal migration" of wealthy individuals to the Italian coast. This influx risks increasing the number of beneficiaries of the Italian flat tax, but without ensuring a real impact in terms of productive investments or regional development. The Court itself complains that "no surveys were conducted to assess the measure's actual compliance with the stated objectives." Italy, in essence, attracts wealth, but there is no transparency or traceability of the actual benefits for the real economy.

The Court itself emphasized that "no surveys were conducted to assess the measure's actual compliance with the stated objectives." The regime's weakness, according to the accounting judges, remains that "the State does not require—or even measure—an effective connection with productive investments," according to the Court of Auditors' complaint. The flat tax appears more like a tool to personally attract professionals (including international athletes and managers) than a driver for the national economy. Without controls on the assets actually transferred or invested, the risk remains that it will encourage the arrival of wealthy individuals who bring their residence and little else to Italy.