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Telegraph
3 hours ago
- Business
- Telegraph
How Italy is luring Britain's fed-up millionaires
Italy is experiencing a profound brain drain of its educated young people. Fabio Panetta, the governor of the Bank of Italy, warned last week that it risks impacting the country's economic growth. Yet at the same time, it is attracting disenchanted multi-millionaires from overseas to embrace la dolce vita, thanks to its flat tax regime. By paying a lump sum of €200,000 (£168,000) annually on their foreign-sourced income, they could in theory save hundreds of thousands – even millions – in tax. For example, someone earning £600,000 in the UK would pay £270,000 in income tax and National Insurance; in Italy their flat-tax bill would be £168,000, and they can avoid Italian tax on overseas earnings. Family members can also be added to an individual scheme at a flat tax of £21,000, and you are also exempt from any wealth and inheritance taxes. Once you are in the scheme, you keep paying the tax at that rate or you must leave it. Even though this flat rate has doubled since the scheme began in 2017, it has become more popular than ever, according to agents and advisers. 'High net worth individuals are worried that Italy could either increase the annual amount or that they might cancel the scheme,' says Danilo Orlando of Savills. In London, the abolition of the non-dom regime and changes to inheritance tax breaks on assets held in overseas trusts have sent ultra-wealthy people fleeing. Italians describe their flat tax scheme as 'svuota Londra' or 'empty London' – such is the allure of its tax breaks. 'It is tailor-made for somebody like me' The attack on non-doms is not just persuading disillusioned Britons to depart the capital, but is also dissuading other nationalities from arriving. Jack* and his family had planned to move to London when they fell out of love with life in Australia during the pandemic. Instead, they swapped Melbourne for Florence. 'I don't think we would have moved to Italy if the flat tax regime wasn't available,' he says. 'The [regular] income tax levels and less generous capital gains concessions in Italy (on worldwide income and assets) are about 30pc to 50pc higher than in Australia, while in the UK they were roughly the same,' says Jack, 45, who runs a private management consulting business. Even though his wife is Italian, they hadn't considered moving there before. 'The flat tax regime cut my tax bill by 60pc and is tailor-made for somebody like me – a self-employed professional with all business activities and assets in foreign jurisdictions.' He says the cost of living in Florence is 35pc to 40pc cheaper than Melbourne. 'Florence worked best for logistics and education,' says Jack, whose children are 12, 14 and 18. 'But also the property prices are insanely reasonable vis-a-vis Melbourne and Sydney…and the food is crazy good.' The enviable lifestyle of Italy has long been a massive pull for second home buyers, but the flat tax is behind the shift to relocation, says Orlando. North Americans lead the way – mostly in tech, finance or crypto – followed by British people. 'Italy's low inheritance tax is another factor – it's among the lowest in Europe,' he adds. Inheritance tax is only 4pc for a spouse and children – and 8pc for unrelated beneficiaries – way below the UK's 40pc. From 2027, pensions will be subject to inheritance tax in the UK. 'Milan is becoming a mini London' Flat tax movers are a small cohort – according to the Ministry of Finance, there were around 4,000 between 2017 and 2023, plus an estimated 1,000 since then. The scheme is only open to those who have not been tax residents in Italy for at least nine of the previous 10 years. Their impact is being felt in property markets and wealthy enclaves. 'A discreet yet powerful movement is reshaping the demographic of northern Italy, particularly in Milan and around Lake Como,' says Sara Zanotta, founder of Lakeside Real Estate in Como. 'Many movers are bringing their families, staff and entire lifestyles with them.' Milan is the obvious choice as Italy's financial centre, although not always the final stop. Since 2015, when it hosted the Milan Expo, it has evolved into a global city, offering good schools and the Alps and lakes within easy reach. To cater for these new arrivals, new private members clubs have opened up, such as The Wilde by Gary Landesberg, who previously owned Mayfair's the Arts Club, as well as a Soho House and Casa Cipriani. Michelin stars are multiplying and so are pupils at the British School of Milan, which is expanding. 'Milan is becoming a mini London,' says Roberto Magaglio, of Engel & Volkers. 'Since the abolition of the [UK] non-dom regime, billionaires are asking their private office, 'Where do we go?'. Milan is now full of French and English-speaking people. 'Rental rates are high [for Italy], but way lower than London. The most luxurious apartments might rent for €10,000 a month.' In prime central London, they cost that per week. Magaglio adds that while this is a 'very small market' of these ultra-high earners, there is still a shortage of turnkey trophy apartments to suit this new type of renter. Many want to live in the fashionable and bohemian Brera district, yet small apartments in the former blue-collar area are challenging to renovate. They don't come with large balconies or gardens – 'you don't even see a tree', says Magaglio. Those from the UK and France often bring large families, Magaglio adds – lower Italian inheritance tax is also a huge attraction for the French. 'Return of the brains' To arrest their brain drain, the Italian government offers the 'Rientro dei Cervelli', literally the 'return of the brains' scheme, a 60pc tax exemption on income for five years for highly skilled workers and expats moving back to Italy. It was recently made less generous, and is also open to foreign nationals, including British people. As a result, there are more highly skilled returning expats buying homes, which is helping to fuel demand for Milan's most expensive properties. In the year to December last year, the average price per square metre increased by 7pc to €18,500, according to Knight Frank. By contrast, the equivalent in central London fell by 5.6pc. In Milan, the flat-taxpayers always rent first, say agents, and some choose to rent in modern skyscrapers such as the Bosco Verticale or those in CityLife. With luxury blocks thin on the ground, developers are looking to profit from this new demand. A 220 square metre flat in a new block with vast terraces and amenities in the fashionable district of Tortona will cost from €4m to €5m, according to Savills. Those seeking more green space or a smaller city are looking to nearby areas with good international schools, says Diletta Giorgolo, of Sotheby's International Realty, who deals with around 20 flat tax buyers per month. 'Monza and Varese are popular – or the lakes, with €5m-€10m being spent on a home. French and South American flat tax buyers is a new trend.' The Italian lakes and specifically Lake Como, is the second-favourite choice for flat-taxpayers. A recent example was a British family from London, with the father working for one of the five biggest US tech companies, and a daughter at the International School of Como, which is expanding to cater for rising demand, according to Sara Zanotta. Its senior school fees start from £16,278 per year. 'We are seeing many flat tax buyers from the UK and US,' adds Giorgolo. 'They buy, not rent, spending €3.5m to €5m on a nicely renovated villa. These properties often sell before they go on sale – we have a waiting list. There is also growing interest from investment funds.' 'The bureaucracy is real' The flat tax regime does not exempt owners from Italian property taxes or income tax on rental income from an Italian property – or the complexities of local bureaucracy. Zanotta says the British family she worked with had a 'nightmare' getting their investor visa. Anyone on the flat tax regime who is not a European citizen needs a visa. They usually go for the investor visa (Italy's version of the golden visa) which requires investing either €250,000 in a start-up, or €500,000 in a company, a €1m philanthropic donation or €2m on government bonds. Because investing €500,000 in a company involves less risk than the start-up, it is usually favoured by clients, Daniel Shillito, of D&G Property Advice, who helps flat tax applicants choose where to live in Italy. He worked with a former London non-dom moving to Rome, where there are more super-prime homes than in Milan. 'Rome is a much more liveable city than Milan and has more schools,' says Shillito. 'Many people enquire about Milan then see the limitations. They realise they cannot transplant their Chelsea town house into Milan.' A villa on the fringes of Florence might be more similar in style, so Bill Thomson, of Knight Frank, sees people pivot to Tuscany. 'The typical flat -tax buyer spends at least €5m. Young guys in tech from California or New York favour the city centre so the limited supply is impacting prices.' New high-end development projects are popping up in Florence too, including one of town houses with gardens near Via Romana from €2.6m. He's selling a three-storey town house in the centre for €15m – the American owners came for the flat tax, but are now leaving town. After five years of ownership, they can be spared the Italian capital gains tax. Families will often live in the hills outside Florence, like Jack, who says the process of moving was 'shockingly easy'. He adds: 'It takes a long time, the bureaucracy is real, but it functions well. You need an accountant, a lawyer and somebody to keep them coordinated. It cost me €40,000 to €50,000 in professional services and government fees, but we did expedite the process.' Does he miss Australia at all? 'I miss family, friends, cricket and Australian rules football. But we have a steady stream of guests to our new home.'
Entrepreneur
3 days ago
- Business
- Entrepreneur
Doing nothing is still doing something
Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur United Kingdom, an international franchise of Entrepreneur Media. Every week, I speak to people who've just sold a business, inherited a lump sum, or hit a major milestone. Suddenly, they're staring at a big question. What should I do with this money? More often than not, their answer is nothing. In a world that feels defined by rolling uncertainty – from elections to interest rates, inflation to geopolitical unrest – many smart, accomplished individuals convince themselves that pressing pause is the prudent move. They tell themselves they'll wait for the next election, the next Bank of England announcement, or until the latest crisis in the Middle East or the US blows over. But here's the uncomfortable truth, doing nothing is still doing something – and very often, it's the wrong thing. We saw this play out at the start of the year when Donald Trump's likely return to the White House and the prospect of fresh tariffs sent ripples through global markets. Investors froze, and while the tariffs have been shelved (for now), the real damage had already been done – not to portfolios, but to behaviour. This is decision paralysis in action. And in my experience, it's most acute among entrepreneurs and high-net-worth individuals post-exit, many of whom are navigating wealth independently for the first time. It's human nature to crave certainty, especially when it comes to money, but if you're waiting for a time when everything is calm, clear, and safe before investing or making a financial decision, I've got bad news – that day is never going to arrive. Markets move, the political climate is noisy, the global economy is always in flux. If you're frozen by fear, your money isn't standing still – it's slipping backwards. One former client sold down their pension right before the Brexit vote, convinced markets would crash. The market dipped, briefly, then bounced. By the time they tried to get back in, they'd missed the rebound and locked in the loss. Others are still on the sidelines, holding out for the 'right time'. Meanwhile, the market has delivered double-digit returns. High interest rates have only added to the inertia. Plenty of people are sitting on cash, happy to earn 5% in the bank. But if you're a higher-rate taxpayer, you're pocketing closer to 2.5% – less than inflation – and over time, your 'safe' money is shrinking in real terms. Global Equities, by contrast, are up 11% over the past year – despite all the turmoil around tariffs. This hesitation isn't limited to financial investments either, we're seeing the same reluctance around property purchases. Entrepreneurs are delaying buying homes or commercial units in the hope that mortgage rates will fall or prices will soften. However, unless you have a crystal ball, trying to time the market is a game you're unlikely to win. If you've found a property that suits your needs and budget, and you can afford it, the best decision is to buy it. Your home is where you live, not a speculative asset to be perfectly timed. There's immense freedom in simply making a decision. It takes the weight off your mind and gives you back your mental bandwidth – something every founder or investor will recognise as valuable in its own right. Doing nothing might feel like the safe bet, but inaction can be far more damaging than a well-informed choice. And contrary to popular belief, you don't need to have all the answers today. What you do need is a plan. Even a basic plan creates structure, helps you map the road ahead, and protects you from making knee-jerk decisions driven by fear or headlines. Here's how to break free from the grip of decision paralysis: Zoom out: Focus on your long-term objectives, rather than tomorrow's headlines. What do you want your money to do for you over the next 10, 20, 30 years? Separate fact from fear: Emotions often drive poor decisions. If you find yourself saying "I'll just wait until…", ask whether that's a rational strategy or an emotional deflection. Get advice: A good financial planner will help you understand your goals, cut out the noise, and navigate complexity with clarity. Act with intent: Even small, deliberate steps can make a difference. Wealth isn't built from the sidelines. Entrepreneurs are used to taking calculated risks, but when it comes to managing post-exit wealth or personal finances, many find themselves out of their depth. A little knowledge can be a dangerous thing – and half-understanding the tax system, the economy, or the markets can lead to costly mistakes. That's why it's so important to talk to someone. Burying your head in the sand is not a wealth strategy. The economy will always feel volatile, but the people who do best are those who act with confidence and intention – no matter the noise. You don't need to get every decision right, but you do need to make a decision. Inaction is a choice, and often, it's the most expensive one of all.
