Italy Introduces Exit Tax on Wealthy Residents in New Budget Proposal
Italy's proposed budget introduces a 26% exit tax on unrealized gains for wealthy residents holding assets over €800,000, risking a flight of millionaires who previously relocated to Milan and Rome.
Italy's proposed state budget introduces a controversial exit tax on unrealized gains, signaling a major shift in the country's tax policy toward ultra-wealthy foreign residents. Under the new regulation, individuals with assets exceeding €800,000 who decide to leave Italy will face a 26% tax on unrealized business profits. The measure is designed to take effect on January 1, 2027, applying specifically to individuals who have maintained tax residency in Italy for six of the past ten years.
In recent years, Italy has emerged as a premier destination for wealthy Europeans fleeing stringent tax environments in nations like France and the United Kingdom. Giorgia Meloni's business-friendly administration initially attracted roughly 3,600 millionaires last year alone, according to Henley & Partners data, by offering a flat annual tax of €100,000 on foreign-sourced income for a 15-year period. Although that flat fee gradually escalated to €300,000, the influx significantly revitalized luxury real estate markets across Italian cities and Mediterranean coastal towns.
Faced with sluggish economic growth forecasts and the urgent need to identify new revenue streams, the Italian government expects the new exit tax to generate approximately €3.4 billion in 2027 and €6.7 billion annually between 2028 and 2031. Tax experts warn that introducing such a levy abruptly undermines long-term confidence among international investors and high-net-worth individuals, potentially driving them toward alternative jurisdictions like Portugal, which currently imposes no exit tax.
