🇮🇹 Italy's New Exit Tax: Bad News for Italians, Good News for Flat Taxers
Italy’s proposed 2027 exit tax could impose a 26% levy on unrealised capital gains when individuals relocate abroad. Yet wealthy residents benefiting from Italy’s flat tax regime may remain largely protected. Marco Mesina of JURIS Italy examines who could be affected, the potential risks and why careful tax planning matters ahead of the final legislation.
By Marco Mesina | JURIS Italy
Italy is about to do something it has never done before: tax individuals on their way out. The 2027 Draft Budget Bill introduces an exit tax for people who move abroad after living in Italy for at least six of the last ten years and who hold at least EUR 800,000 in financial assets. On leaving, they would be treated as if they had sold their investments, and would pay 26% on the gains, even though they have not sold anything.
The headlines have called it a tax on the wealthy fleeing the country. Look a little closer, and the picture is rather different.
It is still a draft
First things first: this is not law yet. Parliament has until the end of December to approve the Budget, and the text is likely to change along the way. The proposal has already drawn plenty of criticism. Anyone tempted to sell, move or restructure in a hurry should wait until the final version is out.
The flat taxers are (mostly) safe
Ironically, the people the tax seems designed for are the ones least affected by it. Wealthy foreigners who moved to Italy under the EUR 300,000 flat tax regime already pay a fixed amount that covers all their foreign income, gains included. The exit tax works by pretending the assets were sold in the last year of Italian residence. If a real sale in that year would have cost nothing extra, a pretend sale should not either.
The same goes for foreign pensioners enjoying the 7% regime in southern Italy: at most, a gain on their foreign assets would fall within the 7%, not the 26%.
There are a few catches. Italian assets are not covered by the flat tax, and the protection only works if you leave while your regime is still running. Leave after it expires, and you are back to ordinary rules. The draft does not spell any of this out, so a clear coordination clause would be welcome.
