Wealthy residents of Italy who choose to move abroad could be hit with an “exit tax” under the draft 2027 budget proposed by Italian Prime Minister Giorgia Meloni’s government.

Under Article 17 of the bill, submitted to the Chamber of Deputies on 30 October, the government is proposing a 26% capital gains levy on certain investment holdings worth more than €800,000 when individuals transfer their tax residence abroad, The Telegraph reports.

The surprise policy, which was not announced in advance, could affect wealthy British expats and others who have relocated to Italy in recent years.

According to data from Henley & Partners, approximately 3,600 millionaires moved to Italy in 2025, placing it third behind the US and the United Arab Emirates as a destination for the wealthy.

Wealthy individuals have been attracted by Italy’s favourable tax arrangements and the lifestyle offered in cities such as Milan and coastal regions including the Italian Riviera and the Amalfi Coast, The Telegraph reports.

A number of high-profile individuals have moved from Britain to Italy in recent years, including Natalia Grosvenor, the Duchess of Westminster; Richard Gnodde, one of London’s top bankers at Goldman Sachs; Nassef Sawiris, the billionaire Aston Villa co-owner; and Thor Björgólfsson, an investor known as Iceland’s first billionaire.

Many were motivated by recent tax changes in the UK, including the abolition of non-domiciled status, a tax arrangement that allowed qualifying UK residents whose permanent home was considered to be abroad to avoid UK tax on foreign income and gains that were not brought into the country.

The regime was abolished in April 2025. Björgólfsson, who relocated to Milan, described the number of wealthy entrepreneurs leaving Britain as “an exodus”.

Who would be affected by Italy’s exit tax?

La Repubblica reports that the proposed Italian exit tax would apply to individuals who have been tax residents of the country for at least six of the preceding ten years.

Italy previously sought to attract wealthy foreign residents by introducing a €100,000 flat tax on foreign income in 2017. However, Meloni’s right-wing government doubled the annual charge in 2024 amid public backlash, before raising it to €300,000 earlier this year.

Meloni became prime minister in 2022, with Italy’s next general election expected in 2027. While the prime minister’s ruling Brothers of Italy party is ahead in the polls, its support has been declining, The Telegraph reports.

Several other countries impose exit taxes on certain capital gains when individuals leave or give up their tax status. France, for instance, has an exit-tax regime covering certain shareholdings valued at more than €800,000, while the US imposes an expatriation tax on certain individuals who relinquish their citizenship or long-term residency status.

Around 66,000 Britons live in Italy, with some 60% aged 55 or older, according to data from the British embassy in Rome.

Rachel Reeves, the former chancellor, previously considered introducing an exit tax in the UK. However, the proposal was abandoned amid concerns that it would drive wealthy residents out of the country. Economists warn that such a tax could encourage wealthy residents to leave before it takes effect, potentially undermining its intended purpose.

Portugal and Italy compete for wealthy residents

Before Italy’s proposed changes, both Portugal and Italy offered internationally mobile investors an advantage through the absence of a broad exit tax on unrealised investment gains, according to IMI Daily.

Both countries have been popular investment migration destinations, with their respective tax arrangements offering potential advantages to families considering future relocation.

According to AIMA’s Migration and Asylum Report 2025, 42,418 Italian citizens were registered as residents in Portugal in 2025, approximately 2,000 more than in 2024. Italians were among Portugal’s ten largest foreign-nationality groups, outnumbering residents from countries including Pakistan and São Tomé and Príncipe.

According to Henley & Partners’ Private Wealth Migration Report 2026, Portugal and Italy are both competitive destinations for wealthy migrants.

The report evaluates countries across 12 dimensions, including tax treatment, rule of law, quality of life, investor and high-net-worth migration pathways, family inclusion, geopolitical stability, and capital mobility.

Each country receives a Wealth Mobility Competitiveness Score that measures its relative attractiveness to internationally mobile individuals, families and capital. Portugal received a score of 72.5 out of 100, compared with Italy’s 72.3.

The scores measure structural competitiveness rather than actual migration flows.

Wealthy migrants consider multiple countries

The report also points to a broader trend in which wealthy individuals increasingly consider several countries when planning their residence, investments and business interests.

The findings identify “a growing shift away from traditional relocation planning as the world’s wealthiest increasingly build ‘sovereign portfolios’ of residence rights, citizenships, investments, and business interests across multiple jurisdictions.”

“The world’s most mobile wealth are making jurisdictional decisions the way sovereign wealth funds allocate portfolios — diversifying across climates, governance systems, and geopolitical zones to protect against shocks none of us can fully foresee”, says Dr Parag Khanna, Founder and CEO at AlphaGeo. “The wealthy individual of 2026 is no longer selecting a single country. They are constructing a portfolio of jurisdictions.”

Whether Italy’s proposed exit tax will influence the decisions of wealthy residents to move abroad remains uncertain. However, with Portugal and Italy closely positioned in Henley & Partners’ assessment of wealth mobility competitiveness, Meloni’s proposal highlights how changes in national tax policies could become another consideration for internationally mobile individuals deciding where to live and invest.

Set The Portugal News as your preferred source for news on Google

GoogleAdd as a preferred source on Google