Italy considers 26% exit tax for wealthy taxpayers

The Italian government, led by Prime Minister Giorgia Meloni, is considering a new tax proposal that would impose a 26% levy on unrealized capital gains for wealthy individuals who move their tax residency abroad. The provision, currently under discussion in the Italian Parliament as part of the budget plan, targets taxpayers holding financial assets worth more than 800,000 euros, provided they have resided in Italy for at least six of the previous ten years.

This legislative shift marks a potential departure from Italy's decade-long strategy of incentivizing high-net-worth individuals and professionals to settle in the country, particularly in Milan. Wealth managers warn that the measure could backfire by discouraging international investors who were attracted by Italy's previously favorable tax regime. Observers suggest that this policy could lead capital to flow toward other European nations with more competitive tax systems, such as Cyprus, which does not currently impose an exit tax on individuals ceasing to be tax residents.

The proposal remains subject to parliamentary debate, and its final implementation could significantly alter Italy's appeal as a global financial hub.