Italy’s government has written a new “exit tax” into the 2027 budget proposal it submitted to parliament, charging a 26 percent levy on unrealized capital gains for wealthy residents who relocate abroad, The Herald Business reported Saturday, citing the Financial Times.
Under the draft measure, the tax would apply to individuals holding assets worth more than €800,000 (about $898,000) who were tax residents of Italy for at least six of the ten years before emigrating. Unrealized gains — increases in the value of unsold assets such as shares or bonds — would be taxed at the moment a person changes their country of residence, even without a sale. The proposal includes a refund mechanism if the person does not sell the relevant financial assets for a set period after leaving.
The move marks a reversal for a government that has spent roughly a decade using tax incentives to draw wealthy foreigners to cities such as Milan. Italy’s flat-tax regime, introduced in 2017 at €100,000 a year for up to 15 years, has already been raised twice amid public pushback over the influx of ultra-wealthy arrivals — the annual flat payment for newer arrivals now stands at €300,000.
Tax lawyers quoted by the Financial Times said the plan adds a fresh layer of uncertainty for people who have already relocated or are weighing a move. Charlie Sosna, head of private client and tax at Mishcon de Reya, said the measure would “cause considerable anxiety for many clients who have already moved to Italy,” on top of what he described as an already unpredictable tax environment following repeated changes to the flat-tax scheme. Tim Stovold of Moore Kingston Smith said the exit tax could paradoxically push some residents to leave early, before they complete the six-year threshold that triggers the levy.
Lawyers also flagged open questions in the draft text. Maurizio Fresca of Chiomenti said it remains unclear how the exit tax would interact with the existing flat-tax regime, including whether it would reach only Italian-held assets or foreign assets too. Marco Cerrato of Maisto e Associati said a reading of the current draft suggests foreign assets already under the flat-tax regime appear to be excluded from the new exit tax, though he said the plan could still deter people who were considering a move to Italy specifically for the tax benefits.
References
The Herald Business – Italy’s exit tax plan rattles wealthy residents lured by tax breaks / la Repubblica – Exit tax: government raises threshold. Only millionaires targeted
