Wealthy residents who leave Italy from 2027 could owe a 26% tax on gains they have not yet cashed in, under the government’s draft budget.
Article 17 of the bill, which the government sent to the Chamber of Deputies on October 30, would apply the tax to individuals who move their tax residence abroad with assets and rights worth at least €800,000 (approximately US$894,000).
The measure would cover transfers of tax residence that take effect from January 1, 2027, and only people who were tax resident in Italy for at least six of the ten tax periods before they leave.
Italian law already taxes companies and individual entrepreneurs who move abroad under Article 166 of the Consolidated Income Tax Act (TUIR), and Article 17 would extend the principle to private investors, who until now could leave without paying tax on unsold gains.
Il Fatto Quotidiano listed the exit tax among the budget’s unannounced measures when the 157-article text emerged on October 30, two days after the Council of Ministers approved the €26 billion package.
How the Tax Works
AGI, which reviewed the bill and its accompanying Relazione tecnica (technical report), reported that the tax would fall on gains accrued before departure, calculated as the sum of the positive differences between the market value of each asset or right and its tax-recognized cost.
Article 17 also requires that the move cost Italy its power to tax the income concerned and that the related assets and rights be worth at least €800,000 in total.
Italy’s double tax treaties, most of which follow Article 13 of the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention, assign gains on most shares and securities to the seller’s country of residence, so a departing investor takes those gains out of Italy’s reach.
The Relazione tecnica says the tax targets financial income, including gains on equity stakes, securities, and other financial instruments. Government bonds receive a reduced taxable base of 48.08%, which brings the effective rate on them to 12.5%, the rate Italy already applies to income from its public debt.
Simple partnerships (società semplici), equivalent entities that conduct no commercial business, and non-commercial entities also fall within the rules. Departing taxpayers must pay within 180 days of the transfer.
Deferral Requires a 50% Advance
People who move to another EU member state, or to a country with which Italy has tax cooperation agreements, can defer payment until they sell the assets, provided they pay 50% of the tax up front and lodge a suitable guarantee.
A long-term resident who leaves for Spain with a €2 million equity portfolio bought for €1.2 million would owe €208,000 on the €800,000 gain, and would need to pay €104,000 at once to defer the remainder.
Deferral lasts up to five tax periods after a move within the EU and up to ten after a move to another qualifying country, and the tax lapses on any asset left unsold when the period ends.
Unsold assets are also exempt if they pass to heirs during that period or if the taxpayer re-establishes tax residence in Italy, and the state refunds any excess already paid.
Published accounts of Article 17 do not name the non-EU countries that qualify, a detail that will decide whether a move to Switzerland or the United Arab Emirates earns deferral or triggers payment in full within 180 days.
The Court of Justice of the European Union (CJEU) ruled in de Lasteyrie du Saillant (Case C-9/02) on March 11, 2004, that France’s original exit tax on individuals infringed the freedom of establishment, and it found that making deferral conditional on guarantees was itself a restriction, because it deprived taxpayers of the enjoyment of the pledged assets.
A French Template
France’s exit tax, set out in Article 167 bis of the General Tax Code, applies to people who were tax resident in France for at least six of the ten years before departure and who own more than €800,000 in shares or other financial instruments, or more than 50% of a company.
Italy’s draft adopts the same six-of-ten residence test and the same €800,000 figure.
French law grants deferral automatically, and without a guarantee, to taxpayers who move within the EU or the European Economic Area, and its exit tax lapses if the taxpayer does not sell the securities for two years after departure, or five years if their value exceeded €2.57 million.
Revenue Estimate
Revenue would come to €3.37 million in 2027 and €6.74 million a year from 2028 through 2031, according to the Relazione tecnica, which puts the net yield from 2032 at €3.37 million a year once expected refunds are counted.
That 2027 estimate equals the annual flat-tax payments of about 11 wealthy new residents at €300,000 each.
“Definitely Not in the Right Direction”
Federico Salmoiraghi says the measure “appears poorly defined, leaving considerable room for doubt and interpretation.”
“For people making long-term decisions about where to live, invest and establish their businesses, that uncertainty is itself a cost,” he said.
Salmoiraghi also questioned what a tax expected to raise so little is meant to achieve.
“Is it intended to generate meaningful tax revenue, establish a framework that could be tightened later, or primarily serve a domestic political purpose? At this stage, the rationale is difficult to identify, but definitely not in the right direction, if you ask me.”
“Italy needs to attract people and capital from abroad for many reasons (aging of population, young workers leaving the country, depopulation, etc.),” he said.
“Introducing a potentially uncertain tax cost on departure risks undermining that objective: People considering a move will also assess what happens if they eventually need to leave. The potential damage to Italy’s attractiveness could outweigh the modest revenue anticipated.”
He called on the government to “substantially revise the proposal or withdraw it altogether,” adding: “A measure with limited expected revenue needs a much clearer justification before introducing this degree of uncertainty into international relocation and investment decisions.”
The Flat Tax Question
New residents who transfer their tax residence to Italy from January 1, 2026, pay a flat tax of €300,000 a year on their foreign income, up from €200,000, under the budget law approved on December 30, 2025.
The regime is open to people who were not tax resident in Italy for at least nine of the ten preceding years, and its effects end after 15 tax periods at most.
Reports on Article 17 do not say whether or how the exit tax would reach departing flat-tax residents, whose foreign income Italy taxes through the fixed annual payment in place of ordinary rates.
A flat-tax resident who arrived in 2021 would meet the six-of-ten-year residence test on leaving in 2027.
Portugal and Italy were, until this bill, two of the most popular investment migration destinations that let residents leave without a deemed sale of their assets, an advantage for families planning a further move.
Italy’s flat tax drew an accusation of “fiscal dumping” from then-French Prime Minister François Bayrou in September 2025, which Prime Minister Giorgia Meloni rejected, Malay Mail reported.
Legislative Process
Parliament normally approves the budget by the end of December, and lawmakers can amend Article 17 before the final vote.
The bill is the last budget of Meloni’s government before the general election due in 2027, and it cuts income tax for middle earners and raises taxes on banks, insurers, energy companies, and the gambling sector, according to Reuters.
