Think of Italy, and wanderlust awakens immediately. Last year, over 140 million visitors experienced the beauty of the Amalfi Coast, enjoyed time at Lake Garda, in South Tyrol, Tuscany, or on the beaches of Sicily. Italy is a land of dreams with a rich cultural history, attracting those who want to experience the dolce vita in its finest form.
Italy is also a country that has drawn wealthy individuals from around the world for years. Last year alone, more than 3,600 high-net-worth individuals chose Italy as their new residence. They brought an estimated €21 billion in wealth with them – at least for tax purposes, as their investments or company holdings are usually spread across multiple countries.
What drives these wealthy newcomers may be Italian cuisine and the excellent weather, but above all, hard facts matter. Italy offers a special tax regime for the wealthy in the form of a flat tax. Incoming expats can either opt for standard domestic taxation or the so-called CR7 rule, under which wealthy newcomers previously paid a flat annual tax of €200,000 on all foreign income.
The CR7 rule, named after footballer Cristiano Ronaldo, whose now-iconic jersey bears the number seven, targets a specific class of taxpayers whose main sources of income lie abroad. It generally applies for up to 15 years and covers earnings from capital investments, image rights, licenses, foreign real estate, capital gains, or foreign inheritances.
Income from Italian domestic sources – in Ronaldo’s case, the salary from Juventus or revenues from Italian property – remains subject to standard Italian taxation. Ronaldo used this model after moving to Juve, allowing his billion-dollar wealth, largely invested abroad, to work tax-efficiently.
Italy has thus created a selective tax system designed to open doors for the global wealthy to settle in Italy, potentially establish business roots, and, later – even in the next generation – return to the regular tax system as integrated Italian citizens.
For the Italian treasury, this is a profitable arrangement. Adding ordinary consumption taxes and other routine levies, the state is estimated to have gained around €1 billion in extra revenue last year from the influx alone – without further effort. New businesses and investments from these wealthy newcomers also potentially create jobs and contribute to their local communities.
Also Read : Oil Declines as Iran Says ‘Understanding’ Reached in US Nuclear Negotiation
