The demand for luxury properties is growing: from Milan to Lake Como, Liguria to Tuscany and Rome, requests have recently grown by 30% thanks to the “flat tax”. First introduced in 2017, the flat tax has only just begun to have a dramatic influence on the market which is evident in the numbers from 2019.
What is “flat tax”?
The flat rate tax of 100.000 euros is basically a “flat tax” for foreigners who plan to settle in Italy. The scheme was introduced in 2017 as as a way to encourage the movement of capital into Italy by attracting both Italian and foreign high-net-worth individuals who are residing abroad. The effects are only just beginning to unfold. When the tax was first rolled out two years ago, it has been argued that Italy did not advertise it forcefully enough internationally and so only now are wealthy foreigners becoming aware of this opportunity.
Those who intend to transfer their tax residence to Italy are offered a substitute tax on income generated abroad with a flat rate of 100.000 euros for each annual tax period.
What are the benefits for family members?
The flat-rate regime can also be extended to one or more family members who meet the requirements. It is possible through a specific indication in the tax return relating to the tax period in which the family member transfers the tax residence to Italy. In this case, the substitute tax is equal to 25.000 euros for each family member to whom the effects of the same option are extended.
Who are the buyers?
The new residents in Italy are mostly northern Europeans, including many French, Russian and Ukrainians, many of whom come from London, or who have Swiss, French or Bulgarian residences that are no longer convenient.
What kind of properties are in demand?
The foreign clients who transfer residence to Italy for the flat tax often buy luxury properties – the so-called “trophy assets”. There are also opportunities to rent prestigious properties in the high-end rent bracket. The trend is mainly focused in the cities of Florence, Rome and Milan where luxury penthouses with panoramic views are always in demand, as well as coastal areas and large historic residences in the country.