Italy's Proposed Exit Tax Will Backfire, Weaken Residency Incentive, Says Utmost

Editorial Staff

3 November 2026

Italy is considering hitting HNW people who are considering leaving the country with an exit tax, a suggestion that has drawn scorn for undermining a nine-year-old residency regime that is designed to encourage wealthy foreigners to live in Italy.

Giorgia Meloni’s government which, like its European neighbours, is wrestling with high debt and strains on public finances, could impose a 26 per cent capital gains levy for individuals who move their tax residence abroad and have assets of more than €800,000 ($892,400), various media reports (Daily Telegraph, 1 November, others) said.

Since 2017, wealth advisors have been used to a new residency system aimed at wealthy people who are considering moving to Italy. Under its system, a flat tax system applies, with an annual fee of €300,000. (The fee was originally €100,000, but has been increased.) There is no capital gains tax on foreign asset disposals, no tax on foreign dividend income, and no wealth or inheritance tax on foreign-sited assets.

Tax hikes in jurisdictions such as the UK, have attracted people. According to figures from , an international firm advising people on residency and citizenship, about 3,600 millionaires moved to Italy last year. This publication noted in an editorial in August 2024 that such residency schemes come with potential risks. If media reports are true, one risk is that if a person who has moved to Italy later changes their mind and wants to relocate, it will be expensive. A broad point is that governments, keen to raise revenues and respond to concerns about wealth inequality and social frictions, also face the economic reality that HNW individuals can move if they think tax burdens are becoming too painful.

Furthermore, governments are arguably competing to attract capital and boost economic growth.

“If an exit tax is introduced, it would represent a significant change and could have a major impact on Italy’s attractiveness to internationally-mobile wealthy individuals and families,” Marc Acheson, global wealth specialist at Utmost, which provides insurance-based wealth solutions, said in a statement. “Wealthy families and individuals value stability and predictability, so changing the rules after they have relocated risks undermining the confidence that has made Italy such a draw for global wealth.”

“Having attracted so many through its attractive flat tax regimes, consequently introducing a tax on those seeking to leave could be perceived as an unfair change to the rules, effectively penalising individuals who relocated to Italy in good faith on the understanding that they would benefit from a favourable and predictable tax regime,” he said.

Italian Prime Minister Giorgia Meloni faces an election in 2027 after gaining power in 2022.

Acheson said it is not clear whether an exit tax covers people who relocated to Italy under the flat tax regimes. “The measure is included in Article 17 of the draft Budget, so it is not yet law and remains subject to a vote in December,” he said.

Several other countries impose an exit tax on capital gains. France, for example, taxes departing people who have a net worth of more than €800,000, levied at 31.4 per cent. A US exit tax hits those worth more than $2 million when they give up their citizenship or green card. See more about exit tax systems here.

Media articles noted that about 66,000 Britons live in Italy. Most of them, at about 60 per cent, are 55 or older, according to data from the British embassy in Rome (source: Europe Says, 1 November.)

Earlier this year, the UK’s former Chancellor of the Exchequer, Rachel Reeves, was considered to have introduced an exit tax in the UK, but the idea was abandoned because of worries that it would encourage wealthy people to flee the country, undermining the point of it. A number of UK residents using the old "non-domicile" system have moved, in some cases to Italy. (See this article.)