Italy’s 2027 Budget Proposes 26% Exit Tax on Wealthy Departures

Key points

• Italy’s 2027 budget proposes a 26% tax on unrealized capital gains for residents leaving the country.
• The tax applies to individuals who were Italian tax residents for at least six of the previous ten years.
• A minimum asset threshold of €800,000 is required for the tax to trigger.
• The measure targets those who previously used Italy’s flat-tax regime for new residents.
• Payment is generally due within 180 days of losing Italian tax residence.

Background

In recent years, Italy attracted high-net-worth individuals through a flat-tax regime, initially set at €100,000 annually by Matteo Renzi, later raised to €200,000 by Giorgia Meloni, and increased again to €300,000 in January 2026. This influx led to several thousand wealthy relocations. The current proposal represents a strategic pivot from incentivizing arrival to penalizing departure, contrasting with the UK’s recent decision to explicitly rule out exit taxes to maintain investor confidence.

How outlets are covering it

The Financial Times notes that Italy is unusual among large wealthy nations for previously lacking an exit tax, making this a significant policy shift. Reason Magazine criticizes the proposal as poorly defined and likely to discourage investment, highlighting the 50% upfront payment requirement for those moving to the EU or certain other countries. Simmons & Simmons provides technical detail, confirming the 26% rate and noting that the tax does not alter inbound regimes but may create planning complexities for those leaving during the benefit period. The Telegraph source was inaccessible due to a security block, offering no additional perspective.

Why it matters

This move signals a global trend where nations are balancing the attraction of wealthy residents with the need to capture revenue from their departure. It may influence tax planning for high-net-worth individuals and affect cross-border investment flows in Europe.

What to watch

The legislation is expected to take effect for tax residence transfers occurring on or after January 1, 2027. Final details may be adjusted during the legislative process, particularly regarding safeguards for those still benefiting from inbound tax regimes.