Italy's Tax Haven Edge: Outpacing the UK in Attracting Global Wealth

In the wake of the UK's post-Brexit tax reforms and the dismantling of its non-domicile (non-dom) regime, a seismic shift in high-net-worth individual (HNWI) migration and capital flows has emerged. Italy, with its meticulously crafted flat tax incentives and strategic pro-business reforms, has positioned itself as a formidable alternative to the UK, drawing a record influx of ultra-wealthy individuals seeking tax efficiency and long-term stability. This article examines how Italy's tailored policies are reshaping the global wealth landscape and why investors should consider its offerings in a post-Non-Dom era.

The UK's Tax Reforms: A Catalyst for Wealth Exodus

The UK's 2025 tax reforms, which replaced its long-standing non-dom system with a residence-based model, have triggered a historic outflow of HNWIs. Under the new regime, non-residents enjoy 100% relief on foreign income and gains for the first four years, but after that, they face full taxation on worldwide earnings. Additionally, inheritance tax (IHT) now applies to non-UK assets for individuals who have been resident for 10 of the last 20 years. These changes, coupled with a 12–15% tax rate on repatriated pre-2025 assets via the Temporary Repatriation Facility (TRF), have created a climate of uncertainty.

The Henley Private Wealth Migration Report 2025 reveals a staggering net outflow of –16,500 millionaires from the UK in 2025, the largest on record. This “WEXIT” (wealth exit) is driven by affluent individuals seeking jurisdictions with lower tax burdens and greater flexibility. The UK's economic stagnation—its resident millionaire count fell by 9% since 2014, contrasting with a 78% global W10 average—has further accelerated this trend.

Italy's Flat Tax Regime: A Strategic Counteroffer

Italy's regime forfettario per neo-residenti has emerged as a compelling counterpoint. Introduced in 2017 and expanded in 2024, this flat tax regime allows new residents to pay a fixed annual tax of €200,000 (or €100,000 for existing participants) in exchange for exemptions from ordinary income tax, wealth taxes (IVIE and IVAFE), and inheritance/gift taxes on foreign-sourced income. The regime applies to a wide array of earnings, including dividends, capital gains, rental income, and foreign pensions, and can be extended to family members at an additional €25,000 per person annually.

For a family of four with €1 million in foreign investment income, the savings are staggering: approximately €300,000–€350,000 annually compared to the UK's progressive tax system. Over 15 years, this could translate to cumulative savings exceeding €4.5 million, excluding inheritance tax benefits. The regime's 15-year duration—longer than similar programs in Portugal or Cyprus—provides unmatched stability for long-term planning.

Capital Flows and Migration Trends: Italy's Rising Appeal

The Henley report highlights Italy as a top destination for UK-based millionaires, with a projected net inflow of +3,600 HNWIs in 2025. This trend is fueled by Italy's 4% estate tax, streamlined Golden Visa program (offering residency via real estate or cultural investments), and a cultural allure that rivals its fiscal advantages. The country's real estate market, particularly in regions like Rome, Milan, and Lake Como, has seen a surge in demand from HNWIs seeking dual-purpose assets—investment vehicles and lifestyle properties.

Meanwhile, the UK's capital outflows are substantial. In 2025 alone, it is estimated to lose £66 billion in liquid investable assets (USD 92 billion), with Italy and other EU nations benefiting. This shift underscores a broader reallocation of wealth from traditional Western hubs to jurisdictions offering strategic tax advantages and EU access.

Strategic Investment Considerations

For investors, Italy's pro-business reforms present a unique opportunity. The flat tax regime's compliance with EU principles—focusing on foreign-sourced income and requiring genuine relocation—ensures legal certainty. Additionally, the Italian government's dedicated HNWI application office and the regime's grandfathering provisions for existing participants add layers of predictability.

However, careful planning is essential. Establishing residency requires meeting the 183-day physical presence rule and navigating administrative steps like registering with local municipalities and obtaining a codice fiscale. Non-EU citizens must also secure residency permits. Engaging legal and tax experts is critical to optimizing the regime's benefits.

Conclusion: A New Era of Wealth Migration

Italy's tax incentives and strategic reforms have redefined its role in the global wealth landscape. As the UK grapples with the fallout of its post-Non-Dom reforms, Italy's combination of fiscal efficiency, legal stability, and cultural appeal makes it a top destination for HNWIs. For investors, this shift represents not just a tax optimization strategy but a long-term asset preservation play. In a world where capital mobility and regulatory changes dominate, Italy's proactive approach offers a blueprint for jurisdictions seeking to attract—and retain—global wealth.