Italy's doubling of the flat tax on foreign income could reduce the country's appeal as a tax haven, tax advisers quoted by Reuters say. They add that the wealthy will still be attracted by favorable inheritance rules.
On Wednesday Italy sublime flat tax on foreign income wealthy residents up to €200,000 per year. Previously, the rate was half that.
Beneficial regulations for the richest
Famous footballers have benefited from the tax regulations that have been in force since 2017, including Cristiano Ronaldoas well as finance specialists who decided to withdraw from London after “Brexit”.
The mechanism has been met with much criticism for increasing social divisions and demand for housing. The Italian regulations have also come under scrutiny due to the UK’s decision to abolish next year the rules that exempted residents with permanent foreign residence from taxation.
The area around Portofino tempts the wealthiestnebilegumusalan/Shutterstock
Higher taxes for the rich
– A flat tax of €200,000 could reasonably limit the number of people using the system, said Marto Cerrato of the Maisto e Associati Tax Office. He added that “due to inflation, the previous rate of €100,000 has come to be perceived as low.”
According to the forecasts of the British consulting company Henley&Partners Italy will be the most popular destination for millionaires this year from all over the world, thus overtaking Switzerland, Greeceand also Portugal.
“This year, 2,200 people with assets worth at least $1 million will move to Italy. By the end of 2022, tax incentives had led to 1,136 relocations,” Henley & Partners calculates.
The rich will stay in Italy
Marco Palanca of international law firm Simmons & Simmons said the changes could prompt some people to reconsider Italy as a tax destination. However, the new rules will have little impact on those with a net worth of more than €7 million.
As the expert explains, attractive prices are responsible for this. inheritance taxesranging from 4 to 8 percent. In the case of Great Britain, they can reach up to 40 percent, if the threshold exceeds £325,000.
Palanca said Italy was attracting new ultra-rich residents not only from Britain but also from Switzerland, where a 50 percent inheritance tax on assets worth more than 50 million Swiss francs is planned. The money, which will go to the budget, is intended to cover the costs of the country's green transformation.
Main image source: nebilegumusalan/Shutterstock