Italy doubles ‘billionaires’ tax on wealthy new arrivals

Italy’s government has approved an increase in the annual flat tax applied to income earned abroad by new fiscal residents in Italy.

The annual fixed fee will jump to €200,000, from the current total of €100,000.

Unpopular among locals, the tax arrangement is informally known as the “billionaires” tax or “the footballers scheme” – it is credited with attracting thousands of multi-millionaires to Italy.

One high-profile individual who benefited from the system was Portuguese football player Cristiano Ronaldo, who moved to Turin in 2018.

By paying the flat tax, residents are exempt from other levies on overseas earnings, gifts and inheritance for 15 years.

When it was introduced in 2017, Italian officials hoped that this tax incentive would benefit the economy by attracting wealthy individuals, who would then spend money in Italy.

Economy Minister Giancarlo Giorgetti nonetheless stressed on Wednesday that Italy is now opposed to the idea of competing with other countries to offer “fiscal favours” to the super-rich.

A fiscal “race to the bottom” between countries is a phenomenon notably discouraged by major organisations such as the OECD and the IMF.

Although countries can benefit from the presence of wealthy individuals and corporations on their territory, overly-beneficial tax breaks can increase inequality, undermine public services, and lead to regional imbalances. 

The doubling of the flat tax will also help Italy to tackle its budget deficit.

Giorgia Meloni’s government incurred a shortfall of 7.4% of gross domestic product last year.

That was well above the EU’s target of 3% of GDP, which has pushed the European Commission to begin a disciplinary procedure.

It’s not yet clear how much money will be gained through the tax increase.