Tax Breaks and the Good Life Draws the Mega-Rich to Italy

Like many countries, Italy is trying to get people to move to some of their picturesque towns. New residents mean more money spent on the area. This can help revive and repopulate many of the country’s dying towns.

Italy seems to be on the right track, at least when it comes to attracting millionaires. The country put in place a little-known incentive back in 2017. It’s one that had bearing only on the mega-rich.

Italy’s incentive offered individuals tax breaks on income they’ve made overseas. But they would have to pay a fee of €100,000 every year. They can also extend this privilege to other family members. This is in exchange for an annual payment of €25,000 per person.

The policy was reportedly developed to help improve big spending in the country. It didn’t matter if the money’s spent on luxury brands or property. The important thing was for the country to generate more revenue. It worked quite well. The incentive drew in 98 people in 2017. The numbers jumped to 549 in 2020. The country attracted more than double that in 2021 when 1,339 wealthy patrons arrived.

The arrival of these millionaires did reinvigorate the market for luxury homes. These buyers don’t think twice about putting down €10 million for good property. Their interest also encouraged the repair and renovation of historic landmarks. Most of these are in city centers and are victims of long neglect.

A prime example is the Palazzo Raggi. It’s an 18th-century building in the neoclassical style. This jewel of architecture is very near the Spanish Steps of Rome. It was once the abode of the Raggi family. It was also called home by a host of Italian nobles and cardinals.

The six-story building was in ruins for many years. But it has since been rebuilt and transformed into 29 luxury residences. The opulent structure will soon be home to foreign billionaires. These are moguls who’ve eschewed countries like Switzerland or the Cayman Islands. These individuals and their families are moving to Italy to live the good life. Living la dolce vita is only one reason. They’re staying for the financial advantage of Italy’s tax regime.

Realtor Diletta Giorgolo said residences for the Palazzo Raggi sold fast. It was something her company never experienced before. She said 19 of the Palazzo’s 29 opulent apartments are already sold.

It’s been a hectic few years for Giorgolo. Millionaires only started looking into Italy as a serious safe haven of sorts in 2019. Many of them had non-domicile status in the UK. It means they’re exempted from paying tax on revenue earned overseas. Their arrival in Italy was due to Brexit at first. But the pandemic left many reevaluating their lifestyle.

Giorgolo said Italy’s tax exemptions for the rich were the best thing to happen to the top realty market. The realtor has sold mansions worth millions to Chinese buyers and French nationals. She has sold properties all over the country, from Capri to Venice and Milan.

Tax lawyer Marco Cerrato has secured several billionaires as clients. These new Italian residents have tapped him to handle their financial affairs. Cerrato acknowledged that foreign nationals are leading this particular charge.

These nationals had non-domicile status in the UK before. But Brexit has made London feel less welcoming. He said these people are also afraid of a Labour Party win. He said the party winning in the next election might result in their losing their tax incentives.

There’s also a contingent of super-rich from Switzerland. They opted to change their residency to Italy. The former also has a good tax regime but the cost of living is cheaper in the latter. Italy also has a warmer climate and a beautiful environment. There are also many millionaires coming from South America or Asia.

They’re also a mixed bag of individuals. Italy’s new wealthy residents range from investment bankers to asset managers. There are also entrepreneurs and tech people. Many generate their income via trusts or dividends.

Cerrato said the flat-tax regime targeted those who had passive income. That was the initial plan. But the regime then started drawing in those who are working but found the system appealing. They also don’t mind paying taxes on income made in the country.

The tax initiative netted Italy €108 million in 2021. Many luxury brands are also making more investments in places where millionaires live. Most of the uber-rich have homes in Florence, Milan, and Rome. Liguria, Lombardy, and Tuscany are also popular areas. So is the south of Italy.

Giorgolo said that many wealthy buyers love Noto. The area is in Sicily and lies south of Catania. She said there are good flight connections in Catania. It has made the area more interesting and easier to get to. She added that many of the well-to-do prefer to live in beautiful regions, like Sicily. Although some live in the city because they need to.

Palazzo Raggi’s showroom is always busy. The properties for sale have been attracting prospective buyers every day. Work on the building is now expected to wrap up in 2024. Interested buyers only see what the building will look like through brochures. The realtor also provides promo videos. These seem to be convincing enough. The videos do a good job highlighting terraces showing Rome’s amazing views. Meanwhile, the photos document the building’s restoration at different stages.