The United Kingdom’s recent abolishment of the “non-dom” tax regime marks a significant shift in its attractiveness to foreign investors. Previously, this regime allowed UK residents, not domiciled in the country, to be taxed solely on income and capital gains from UK sources, exempting those generated abroad. However, with the latest fiscal decree dated March 6, this regime has been abolished, signaling a change that may impact the appeal of the UK for executives and professionals coming from overseas.
The Impact on Investors
The abolition of the current tax regime in the UK could significantly affect a substantial number of high-net-worth individuals, estimated to be around 55,000. This number is approximately twenty times higher than the number of individuals who used the regime to relocate to Italy since 2017. Investors and their advisors are expected to reorganize their assets and contemplate relocating to more tax-friendly jurisdictions.
Why Choose Italy?
The demand for luxury properties is growing: from Milan and Rome to Lakes Como, Maggiore and Garda, Ligurian Riviera and Tuscany, requests have recently grown by 27% thanks to the “flat tax”. Italy emerges as an attractive destination for these investors, primarily due to the stability of its tax regime for new residents. Unlike the UK, Italy’s tax policies have remained consistent since 2017, providing a sense of security for investors. With the tightening of tax benefits in the UK, an estimated 10-20% of affected individuals may consider relocating elsewhere. This presents a significant opportunity for Italy, with the potential for the number of new residents from the UK to double or even triple within a year.
What is “flat tax” in Italy?
The flat rate tax of 100.000 euros is basically a “flat tax” for foreigners who plan to settle in Italy. The scheme was introduced in 2017 as a way to encourage the movement of capital into Italy by attracting both Italian and foreign high-net-worth individuals who are residing abroad. Those who intend to transfer their tax residence to Italy are offered a substitute tax on income generated abroad with a flat rate of 100.000 euros for each annual tax period.
What are the benefits for family members?
The flat-rate regime in Italy can also be extended to one or more family members who meet the requirements. It is possible through a specific indication in the tax return relating to the tax period in which the family member transfers the tax residence to Italy. In this case, the substitute tax is equal to 25.000 euros for each family member to whom the effects of the same option are extended.
Where to buy luxury real estate in Italy?
Check out the IB International Real Estate portfolio showcasing luxury properties for sale in stunning locations throughout Italy. Real estate experts will answer any questions you might have and can schedule viewings.
