TheChek News Flow

Throngs of wealthy newcomers have arrived in Milan including Nassef Sawiris, Egypt’s richest man, Richard Gnodde, vice-chair of Goldman Sachs and Yoël Zaoui, co-founder of advisory boutique Zaoui & Co. Rolly van Rappard, co-founder of private equity group CVC Capital Partners, is weighing a move. 

They are just the tip of the iceberg. Milan’s charm and a friendly tax regime have lured several thousand foreigners to Italy’s financial centre, write Harriet Agnew, Josh Spero, Ortenca Aliaj and Silvia Sciorilli Borrelli. 

New foreign residents — or a returning Italian who has lived abroad for at least nine years — can pay a flat tax of €200,000 a year on any foreign income and assets for up to 15 years and be fully exempt from inheritance tax on foreign assets during that period. What’s more, over 100,000 people have benefited from a scheme for those arriving from overseas that gives a 50 per cent reduction on taxable Italian income, with most moving to Milan.

Italy’s fiscal sweeteners come as the UK has abolished its 226-year-old rules for non-domiciled residents, exposing their overseas assets to a 40 per cent inheritance tax and their foreign income and gains to the wider British regime. Tax on carried interest — private equity managers’ profits on successful deals — has in effect also risen to 34 per cent in the UK, while Italy has a flat rate of 26 per cent.

Asset managers are moving too. As part of a wider European expansion, alternatives firms including CVC, Preservation Capital and Ares have been opening and expanding offices in Milan in recent years, joined by hedge funds, including Capstone Investment Advisors and Steve Cohen’s Point72 Asset Management.

But it’s not all good news. The influx of wealthy foreigners has caused friction with locals as property and rental prices have soared, while a corruption probe is under way over some redevelopment in the city’s most exclusive neighbourhood.