ITALY: An Introduction to Private Wealth Law
The private client sector in Italy is characterised by both stable growth and a positive outlook due to several specific but mutually reinforcing factors:
– greater internal political stability in Italy;
– geo-political instability in Eastern Europe, leading to the relocation to Italy of wealthy individuals;
– generational change of family businesses, resulting in either liquidity events, or the need to prepare business/wealth succession plans;
– a favourable tax regime specifically introduced to attract foreign wealth; and
– additional opportunities for professional advice related to specific practices.
Generational Transition of Family Businesses
The backbone of the Italian economy is formed by entrepreneurs who prospered in the seventies and eighties, who now need to prepare for a generational transfer of wealth. This mass transfer will require professional support to:
– enable families to express a vision of the future of their business;
– empower managers to implement that vision; and/or
– prevent specific family members from interfering with the realisation of such a vision due to an individual’s ambitions/expectations.
Tax Regimes for New Residents
In recent years, the Italian legislature has introduced several special tax regimes to attract high net worth individuals:
– The “new residents” tax regime, which allows individuals transferring their tax residence to Italy to opt for a “flat tax” covering their foreign income (EUR100,000 for each fiscal year, plus EUR25,000 per additional family member), exhausting any additional tax charge. This regime is expected to gain further interest in the coming years, due to the limitations being introduced to the UK regime for “non-domiciled residents”.
– The “tax regime for employees/professionals”, which allows individuals who transfer their residence to Italy to benefit from a substantially reduced tax base (usually 50%, for five years). This is particularly appreciated by celebrities and sports stars.
– The “tax regime for retired individuals”, which provides for a flat tax at 7% for nine years to retired foreign individuals who transfer their tax residence to Southern Italy or other specified areas. Each of the above regimes is subject to specific requirements, to be assessed on a case-by-case basis.
Family Property Regimes – Succession Rules
The increasing demand for Italian residency will focus attention on both succession and family property regimes. These might be substantially impacted by the relocation and will require professional planning to make sure that the rules applicable in the country of origin will still be effective after the relocation.
Real Estate and Luxury Yachting
The arrival of many new residents who are high net worth Individuals has contributed to the development of the Italian real estate market and the demand for luxury yachting, increasing the need of legal services to guide – or structure where needed – the purchase. In the coming years, it is expected that high net worth individuals may start investing in more dynamic and strategic areas, such as the industrial and financial sectors.