Italy is apparently hunting down super-rich expats

Giorgia Meloni’s Italy has decided to double the tax on new millionaire expats, increasing the tax lump sum from 100,000 to 200,000 euros. It is not the only European country that wants to tax the super-rich more.

Italy no longer wants to appear as an El Dorado for the wealthiest foreigners. The country had become very attractive since 2016 and the establishment of a particularly advantageous system, nicknamed the “Scrooge McDuck’s flat fax”. A flat-rate tax capped at 100,000 euros per year to attract foreign multimillionaires wishing to settle on the other side of the Alps.

Between 1,000 and 2,500 super-rich expats have benefited from it, including footballers like Cristiano Ronaldo. But this tax has become very unpopular, accused of being unfair, of causing rents to explode in big cities, such as Milan where they have jumped by 43% in five years. The government of Giorgia Meloni therefore took a decision that went unnoticed in the middle of the summer by increasing this tax from 100,000 to 200,000 euros.

This surcharge only applies to newcomers and, above all, the Italian tax system remains largely favorable to large foreign fortunes. Of course, this additional money in the state coffers will help to reduce a deficit that exceeds 7% of GDP. But the display is above all political.

The Meloni government has no intention of scaring away billionaires. It does, however, intend to follow the lead of the G20 this summer in Brazil. The 20 richest countries in the world have committed to “cooperate”the final statement said, so that the super-rich are taxed more, without going as far as a global tax.

Italy is not the only European country to review its taxes on wealthy expats. The honeymoon between wealthy Americans and Portugal is over, for example. The policy of golden visas, those visas granted in exchange for investment, is changing. The Dutch have also reduced tax breaks for the most prosperous expats.

Finally, the new British Labour government is preparing to abolish a 225-year-old privilege, the highly controversial “non-dom”the non-domiciled, which allowed wealthy foreigners to avoid paying tax on their income earned outside the United Kingdom.

The rise of populism and political instability in Europe are forcing them to change their plans. The super-rich are thinking about other, more generous destinations and the city that is popular at the moment is Dubai, in the United Arab Emirates, where there is no tax on income, property or capital gains.

Dubai has become a haven for millionaires, with 6,700 expected to settle there this year. That’s twice as many as the United States, which remains by far the historic home of the world’s richest, with 5.5 million residents earning more than $1 million a year.