How Italy’s flat tax system caused an ultra-rich boom in Milan

Italy is a perennial favourite of rich and famous people, attracting a new wave of ultra-rich arrivals looking to take advantage of investor-friendly environments, a prosperous real estate market and low tax systems.

Italy is bumping into trends, as many other countries round out the ultra-rich people. Its adjustable flat tax regime attracted a horde of large spenders attracted by the luxurious life and the increasingly bustling business scene of Milan.

And despite doubling the one-time bill paid by a leading individual to foreign income in 2024 to 200,000 euros ($233,000), this rarely undermined the demand for Radl Sevita.

“They operate at a level of wealth well above 200,000 a year,” Matte Opera, a senior broker at the real estate company at Berkshire Hathaway Homes Services, told CNBC.

“It’s like I’m saying. Ah, you’re paying for coffee right now. It’s 2 euros today and 4 euros tomorrow. I’m not going to give up on coffee.”

Henry & Partner has been the top relocation destination for wealthy people in Europe this year, according to Henry & Partner, who sells citizenship and residency-by-residency schemes.

The billionaire immigration figures raise some questions and are notoriously difficult to track the world’s wealth flow, but many well-known figures have moved to Italy in recent months. These include Egypt’s wealthiest man and co-owner of Aston Villa Football Club Nassev Sosiris and vice-chairman Richard Gnodo of Goldman Sachs.

Henley & Partners estimates that the total number of new high-funded arrivals in Italy so far this year could reach 3,600.

Italy’s flat tax regime was introduced in 2017 as part of a broader push by the then Central Left government to attract foreign investors, encouraging its talent to return to the country following the eurozone debt crisis.

It sparked a new wave of businesses seeking to accommodate a fresh influx of wealth, especially in the country’s financial and fashion hub, Milan. Among them are the newly opened member club The Wilde and previously Casa Cipriani.

“I really thought it was a good time to return to Italy,” Anna Cipriani, Membership Director for Casacy Priani Milan, told CNBC about the group’s 2022 opening.

“Milan has evolved a lot over the years,” she said. “Previously known for its industrial character and fashion houses, it has become more appealing to both creatives and investors and international crowds over the last few years.”

Meanwhile, the wealthy arrivals in Italy have skyrocketed real estate prices in some of the most desirable places in the country, from Tuscany and the Italian Riviera to cities such as Rome, Venice and Florence. However, Milan and the surrounding lake areas have emerged as solid favourites.

“We’re at the highest price ever right now,” said Pera, based at BHHS’ Lake Como office.

“In five years, the double-digit percentage has increased. We will see a steady 3% to 4% increase in Lake Como over the next few years.”

Real estate prices in Milan have risen 49% since the introduction of the country’s flat tax system in 2017, but 10.9% was introduced in the remaining Italian metropolitan cities in 2017, according to real estate group Tecnocasa. Global property consultancy Knight Frank hopes the city’s major real estate market will record an additional 3.5% price growth in 2025.

“It’s about those who can afford it, because prices don’t necessarily depend on the logic of their street market as an investment,” Pera said.

“They like brave assets, and then they do a bit of math, of course, but they just use it and are ready to over-expend.

Billionaires are moving to new housing in large numbers to provide options for those who are willing to pay by more jurisdictions.

Over the past decade, the number of high net rich individuals moving abroad has almost tripled, reaching record highs in 2024.

This trend appears to continue in 2025 and 2026. This is to deepen the gap between countries where ubers try to attract rich people and countries where they are tightening to combat perceived inequality.

France is deliberating on expanding its wealth tax, while Switzerland is weighing new changes to inheritance tax.

Meanwhile, in April, the UK abolished the non-dom tax system for over 200 years, exempting wealthy foreigners living in the UK from paying UK taxes on their overseas income and profits. This follows the outflow of London-based banks and investors to other European capitals such as Milan, following the 2016 Brexit vote.

This makes other countries try to fill the gap.

“Literally, they’re coming to us all around the world and saying, “I want a British billionaire and a billionaire. What should I do? How can I take you to our country?”

While these citizenship and residency regimes can vary widely and include stringent investment requirements, part of the appeal of the Italian system is its simplicity. One-time payments provide foreigners or citizens who have lived abroad for at least nine years and are exempt from a wide range of taxes on income and assets for up to 15 years.

Nevertheless, a new surge in Italian arrivals nevertheless raises questions about their wider economic impact.

Some have warned that it is exacerbating wealth inequality, minimizing taxes from the regime compared to the national deficit and many of the newly generated wealth concentrated in certain regions.

Meanwhile, critics suggest that attempting to emulate schemes elsewhere could lead to competition to the bottom and erosion of the tax-based.

Still, companies say they hope that increased activities and new job creation in industries ranging from finance and private equity to hospitality and services will ultimately benefit Milan and the wider country as a whole.

“It’s a kind of wheel, you know. You’re moving all the people, you’re opening all the hotels, you think more about it, so you’ve decided that more people will come to town.”

“If you invest a lot in cities, the economy creates more employment opportunities for people too.”

– Gaelle Legrand of CNBC contributed to this report.