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As the United Kingdom dismantles its century-old non-domiciled (non-dom) tax regime, global high-net-worth individuals (HNWIs) are discreetly but decisively toward more favorable jurisdictions. Once viewed as fiscally hostile to wealth, Italy has emerged as an unlikely haven thanks to its flat tax regime, which was introduced in 2017. What began as a niche offering under Article 24-bis of the Italian Income Tax Code has become a serious contender in the battle for global tax residency.
The End of the Non-Dom Era
Effective April 6, 2025, new UK tax legislation marks the end of the long-standing non-dom regime. This framework allowed foreign nationals residing in Britain to shelter overseas income from UK taxation temporarily, provided it was not remitted to the UK. The reform introduces a residence-based system with a strict four-year tax exemption window for new arrivals. Beyond that, all worldwide income becomes fully taxable.
According to HM Revenue & Customs, the UK was home to over 68,000 non-doms as recently as 2017, contributing £6 billion annually in tax revenue. Critics of the reform warn that rather than raising funds, it may trigger an exodus of wealth. Private client advisers report a noticeable uptick in inquiries about alternatives across the EU and beyond.
Italy’s Quiet Ascent
Italy’s flat tax regime, often overshadowed by Portugal’s now-phased-out Non-Habitual Resident program or Monaco’s long-standing tax-free appeal, is gaining traction among discerning expatriates. The offer is deceptively simple. Individuals pay a fixed €100,000 annual flat tax on foreign income, or €200,000 for the principal applicant under the “new resident” regime, plus €25,000 per dependent. In return, they receive an exemption from:
- Reporting foreign financial assets
- Taxation of foreign capital gains and investment income
- Italian inheritance and gift tax on non-Italian assets
The scheme is valid for up to 15 years and requires no renewal process. Importantly, there are no caps on the amount of foreign income or capital held. Italy, often stereotyped for bureaucratic inefficiency and aggressive tax audits, has found new favor among legal and tax professionals for the regime’s predictability and discretion.
“Clients are no longer looking only at traditional tax shelters. They want jurisdictions with legal stability, robust healthcare systems, and cultural capital,” says Luca Castellani, a Milan-based tax partner at an international law firm. “Italy now ticks all those boxes.”
Numbers Tell the Story
According to the Italian Ministry of Economy and Finance, more than 1,186 individuals enrolled in the flat tax regime between 2018 and 2022, contributing upwards of €254 million in direct tax payments. This figure excludes secondary economic activity such as property purchases, luxury consumption, and business investment.
Observers note that the actual number may be considerably higher, as the tax authority does not publish disaggregated data for every fiscal year, and the regime’s confidentiality provisions prevent public disclosure of individual enrollees.
Most applicants come from the UK, Switzerland, Russia, and increasingly from the United States, particularly in response to growing IRS scrutiny and FATCA-related compliance burdens.
Strategic Considerations and Pitfalls
Despite its appeal, Italy’s flat tax regime requires careful structuring. The benefits apply solely to income generated outside Italy. If a foreign company is effectively managed from within Italian territory through decision-making, strategic direction, or executive control, it risks being deemed an Italian tax resident. In such cases, global profits may become subject to Italian corporate tax at 24 percent.
Similarly, income that qualifies as Italian-sourced, such as rental income from a Tuscan villa or profits from consulting services rendered locally, falls outside the flat tax protection and must be reported under ordinary tax rules.
Experts advise a tailored approach. “We always recommend a preliminary interpello with the Italian tax authority,” says Dr. Alessandra Trivelli, a Rome-based tax counsel. “It provides legal certainty, especially where asset origin or residency history is ambiguous.”
Furthermore, individuals with complex global structures may face anti-avoidance scrutiny in light of OECD Base Erosion and Profit Shifting (BEPS) standards. Italy’s participation in international data-sharing agreements means opaque structures are unlikely to go unnoticed.
Who Should Consider the Move?
The regime is open to individuals of any nationality, including non-EU citizens, provided they have not been Italian tax residents in at least nine of the past ten years. Ideal candidates include:
- Global entrepreneurs with passive foreign income or dividends
- Retirees drawing pensions from abroad
- Investors with diversified international portfolios
- Family offices engaged in multi-generational tax planning
- Former UK non-doms seeking long-term tax stability
A Wider European Recalibration
Italy is not alone in its bid to attract affluent residents. Greece offers a similar €100,000 flat tax, while Spain, despite tightening its “Beckham Law,” still retains limited tax privileges for new residents. However, Italy’s combination of tax leniency, cultural appeal, and Mediterranean lifestyle proves particularly compelling.
“This is no longer about tax avoidance. It’s about tax efficiency within the law,” argues James Hutchinson, a London-based tax migration consultant. “Italy’s offering is not a loophole. It’s a policy.”
As geopolitical uncertainty, rising regulatory burdens, and shifting fiscal policies redefine global wealth mobility, Italy’s transformation into a tax domicile of choice reshapes the European wealth landscape. For many, the allure lies not just in what Italy exempts but in the lifestyle it promises.
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