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Italy unveiled a plan to allow the ultra-wealthy willing to take up residency in the country to pay an annual “flat tax” of 100,000 euros ($105,000) regardless of their level of income.
A former Italian tax official told Bloomberg BNA the initiative is an attempt to entice high-net-worth individuals based in the U.K. to set up residency in Italy as a way to remain in the European Union after the terms of Brexit become effective.
According to the March 8 plan, qualifying individuals from any country are eligible to take advantage of the law, although the impact on the individual’s tax obligation in their home country would depend on that country’s tax laws.
“The idea is that it will help raise revenue through the taxes collected from these individuals as well as from their economic activities: workers they may hire, property sales, and so on,” Francesco Brandi, a former Italian tax official now a professor with Rome’s Sapienza University, told Bloomberg BNA in a March 9 telephone interview.
The rule applies only to individuals who have been a resident in Italy for a maximum of one of the last 10 years, and it expires after 15 years of residency. Individuals paying the flat tax can add family members for an additional 25,000 euros ($26,250) each.
The local media speculated that the measure would attract at least 1,000 high-income individuals, a number which—if accurate—would add an additional 100 million euros ($105 million) to state coffers.
But the measure may not be a done deal. According to Carlo Garbarino, a tax law professor at Bocconi University in Milan, the plan is fraught with problems.
“It may be declared unconstitutional because tax laws are required to be equitable,” Garbarino told Bloomberg BNA March 9 in a telephone interview. “If, say, a Russian oligarch with 10 million euros ($10.5 million) in income relocates to Italy, he will basically pay 1 percent in income tax. Is that equitable?”
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