A contested flat tax on overseas revenue for top earners relocating to Italy might enhance by 50 p.c subsequent 12 months as a part of measures to fund the nation’s finances plan.
Often dubbed the ‘CR7 rule’ after former Juventus footballer Cristiano Ronaldo, the fiscal regime at present permits rich overseas nationals transferring to Italy to pay a set annual tax of €200,000 on revenue generated overseas.
This usually grants excessive earners financial savings of tens and even a whole lot of 1000’s of euros, because it excludes all of their overseas revenue from Italy’s commonplace revenue tax IRPEF, which applies a price of 43 p.c to earnings over €50,000.
Italy’s hottest tax break for high-net-worth people, nevertheless, might quickly turn out to be much less beneficiant, as Giorgia Meloni’s authorities intends to extend the annual levy to €300,000 as a part of measures to fund its 2026 finances plan.
If authorised by parliament, the transfer would mark the second hike in two years, after Rome doubled the levy from an preliminary €100,000 in August 2024.
According to Italian media reviews, the deliberate enhance would come into pressure on January 1st, 2026 and don’t have any retroactive impact, that means it might solely apply to new arrivals and to not individuals who claimed the flat tax regime in earlier years.
The authorities’s plan to lift the flat tax for top earners comes amid long-standing considerations that the scheme could have fallen in need of its supposed financial influence.
The fiscal regime was first launched by Matteo Renzi’s centre-left authorities in 2017 in a bid to draw overseas expertise and capital to Italy and encourage funding in Italian actual property, companies, and monetary markets.
But Italian Economy Minister Giancarlo Giorgetti stated final 12 months it was “very tough to guage” how a lot folks benefiting from the tax break had truly invested within the nation.
The scheme has additionally lengthy been blamed for steep will increase in property costs and residing prices in main Italian cities, particularly in Milan, which has just lately seen an inflow of millionaires following the abolition of the UK’s ‘non-dom’ tax standing.
READ ALSO: Why are so many millionaires now transferring to Italy?
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Besides home opposition, Italy’s flat tax for rich foreigners has sparked harsh criticism from neighbouring international locations in latest months.
In September, then-French Prime Minister François Bayrou accused Italy of “pursuing a coverage of fiscal dumping’’ at France’s expense – a declare which Meloni’s workplace slammed as “completely unfounded”.
Italy isn’t the one European nation at present providing an advantageous tax break for top earners relocating from overseas.
Greece has a flat annual tax of €100,000 on abroad revenue for qualifying overseas residents, supplied they make investments a minimal of €500,000 within the nation.
Meanwhile, Portugal affords a 20 p.c flat tax on Portuguese-sourced revenue and tax exemptions on sure overseas earnings for extremely certified professionals in science, innovation, and training.
