- Wealth advisers say exit tax could hurt Italy's appeal
- Italy is affected by growing inequality, stagnant wages
- Meloni's last budget targets financial, energy sectors
ROME, Nov 5 (Reuters) - Italy is ready to consider changes to its exit tax on wealthy individuals leaving the country, Deputy Economy Minister Maurizio Leo told Reuters, after the proposed levy sparked criticism from tax experts and financial advisers.
Next year's budget announced last month by Prime Minister Giorgia Meloni envisages a 26% levy on the capital gains of individuals holding financial investments worth at least €800,000 ($900,880) who transfer their tax domicile abroad.
"Italy is happy to consider proposals to improve the exit tax, we are always open to dialogue," Leo said. He did not say what changes may be adopted.
Wealth advisers said the exit tax could hurt Italy's appeal to their clients, reversing efforts by Meloni's predecessors to lure affluent individuals.
The free-market Istituto Bruno Leoni (IBL) think tank called it a "disguised wealth tax," while former Prime Minister Matteo Renzi said it wasted a decade of work to attract foreign capital.
CALLS FROM CLIENTS
The wealthy who transfer their tax residence to Italy can currently pay a flat rate of €300,000 per year on foreign-sourced income. A separate scheme of tax incentives is designed to lure well-off expatriates back home.
These tax breaks have helped Milan, Italy's financial capital, to emerge as a top relocation hub, heating up its housing market and raising cost-of-living pressures for ordinary people.
"Every one of my clients has contacted me. The mere discussion of measures like this has created uncertainty," said Antonio Tomassini at law firm DLA Piper in Milan.
He said the government "needs to make clear that it will not apply to people who moved their tax residence to Italy under preferential tax regimes at least until the regime expires."
"NO WARNING"
Meloni's budget included €6.6 billion in higher taxes for financial companies and energy firms. As part of the package, Rome doubled an existing tax on financial transactions to raise an additional €1.38 billion per year.
"(The exit tax rule) is, in some ways, consistent with the idea of a budget that asks banks and wealthy individuals to make a contribution," said Nicola Daniele Coniglio, professor of economic policy at the University of Bari.
"Frankly, it does not seem to me to have been very well thought through," he added. "There was no advance warning or debate."
Advocates of wealth taxes point to growing inequality, with top earners becoming richer while real wages stagnate for low- and middle-income workers.
The top 10% of Italian households held 60% of net household wealth in 2023, up about 7 percentage points from 2010, according to data from the Bank of Italy.
($1 = 0.8880 euros)
Reporting by Giuseppe Fonte and Giselda Vagnoni in Rome, additional reporting by Giulio Piovaccari in Milan, editing by Gavin Jones and Keith Weir
Source: Reuters