Furthermore, in a post-Brexit world, Italy is now one of the most attractive relocation options in Europe for wealthy Europeans and Europeans. High-net-worth individuals are visiting Italy in droves. This boom is largely credited to the flat-tax regime adopted in 2017, aimed at luring foreign investors and coaxing local talent to return home. Wealthy Europeans are retreating to places like Milan and their beautiful lakes region. Clearly, they are ready to soak up all the flamboyance of the luxury lifestyle and cutting-edge business scene that Italy has to offer.
The one-off payment for high-net-worth individuals on their foreign income in Italy is set at 200,000 euros ($233,000) for the year 2024. This cash payment effectively provides recipients an exemption from any more extensive income or even wealth taxes. They can reap this benefit for an incredible 15 years. These carrots have brought a flood of federal and state entrants. They’ve raised some fundamental questions about whether this shock should be used to improve Italy’s long-term productive capacity.
This year, Italy may only allow a maximum of 3,600 new arrivals. This historic influx will be felt acutely in local markets, creating both incredible opportunities and tremendous local pressure. The demand for luxury properties in Italy’s fashion capital has Milanese property prices surging at extraordinary rates. During the three years the flat-tax regime has been in place, Milan property prices have shot up an incredible 49%. This dramatic increase is in sharp relief to the 10.9% decrease observed in other large cities in Italy.
Matteo Pella, a senior broker with nationally known Berkshire Hathaway HomeServices, has made a successful career buying and selling high-end properties. He points out many of his clients are way over the income limit for the short flat tax.
“They operate at the wealth level, which is still way above 200,000 per year flat taxation.” – Matteo Pella
Pella emphasizes that wealthy buyers often make decisions based on their emotional connection to properties rather than purely financial considerations.
“They like a property with their guts. Then they do a little bit of math, of course, but they’re ready to spend and sometimes to overspend just to secure a one-of-a-kind view or a one-of-a-kind position.” – Matteo Pella
With new luxury accommodations, attractions and amenities popping up around Milan, it’s hard not to see the city as an increasingly compelling destination for today’s discerning buyers. Anna Cipriani, director of membership at Casa Cipriani Milano, which opened in 2022, emphasizes the mood-changing magic of Milan.
“Milan has evolved a lot over the years,” – Anna Cipriani
While there are reams of research on the impacts of unaffordable housing on local economies, Cipriani argues that the arrival of big pockets has a positive effect.
“When you have a lot of investments into a city, the economy creates more job opportunities also for the people.” – Anna Cipriani
The effect of such high demand meeting such limited supply has sent prices skyrocketing to unprecedented levels in Milan’s booming real estate market.
“We are at all-time high prices at the moment,” – Matteo Pella
With this rapid expansion has come no small amount of handwringing over the potential impact of so many new arrivals on the overall economic tide. Analysts agree these strategic investments will generate more jobs and spurn additional economic activity. They caution that this kind of growth can increase living costs and deepen socio-economic divides.
Its no-neck, flat-tax regime has done a remarkable job luring wealthy individuals from around Europe. It has just as importantly turned the heads of international investors. Other countries around the world, we’re told, are already trying to copy Italy’s basic approach in order to lure their own rich emigrants.
“It’s kind of a wheel, you know, that keeps rolling. You have all these people moving in and you have all these hotels opening and you have more and more people that then decide to come to town because now that they think about it more,” – Anna Cipriani
Stuart Wakeling highlights the competitive landscape of attracting millionaires and billionaires:
As Italy continues to solidify its status as a premier relocation destination for wealthy individuals, stakeholders remain vigilant about balancing economic growth with social equity. This trend has a major effect on local communities and housing markets. Yet it raises some really important questions about the sustainability and inclusivity of such a future.
“There are countries literally around the world coming to us and saying: ‘We want the U.K.’s millionaires and billionaires. What can we do? How can we bring them to our country?’” – Stuart Wakeling
As Italy continues to solidify its status as a premier relocation destination for wealthy individuals, stakeholders remain vigilant about balancing economic growth with social equity. The impact of this trend on local communities and housing markets raises important questions about sustainability and inclusivity moving forward.