Italy has already been attacked by the French Government for using tax incentives to lure wealthy French and other international residents away, but with the war in the Middle East hurting the Gulf states, Italy has become an even more attractive location for the rich.
Tax wasn’t the main reason for leaving France, Robert insists over a café crème at Charles de Gaulle airport. It was the beauty of Italy, the bella vita (the beautiful/good life), the art and the music. But for the Frenchman, buying a house in Rome and becoming an Italian tax resident was a very nice part of the package offered by the country, where high net worth individuals can pay a fixed annual tax on all foreign income – regardless of amount – and enjoy a series of other exemptions.
Robert, who describes himself as only “moderately wealthy”, moved to Italy eight years ago after a career in computers which ended with him selling his company. Robert, not his real name, may not be among the French billionaires who have fled the French taxman for Italy, but the advantages to him are clear.
If he’d been buying a house in France, he would have had to pay what the French call frais de notaire (solicitor’s fees) most of which goes to the government (much like Stamp Duty in the UK or Real Estate Transfer Taxes in the US). In Italy there’s an exemption for the prima casa, the first house you buy. In France, President Macron transformed France’s Impot sur la Fortune (wealth tax) into an Impot sur la Fortune Immobilière (real estate wealth tax) so stock market investments, for example, are no longer affected but “if you have ten million dollars’ worth of property, this tax is very painful indeed,” says Robert. Again, there’s nothing like that in Italy.
In France you also have to pay a property tax (taxe foncière or land tax). “We don’t have that here for the prima casa (first home),” says Robert, although he notes “there is a high charge for refuse collection”. The best thing as far as he is concerned is that there is no inheritance tax on property you own in Italy up to €1 million ($1.1 million) and it’s only 4% beyond that threshold. In France the tax-free limit is much lower – €100,000 ($110,000) – and beyond that it’s a sliding scale up to a top rate of 45%.
