Italy's exit tax on wealthy emigrants fractures Meloni's coalition

Italy's budget bill, now before Parliament, introduces a 26% exit tax on unrealised capital gains for private individuals who transfer their tax residence abroad, triggering a public rift inside Prime Minister Giorgia Meloni's governing coalition.

The measure, contained in Article 17 of the bill, applies to anyone who has lived in Italy for at least six of the ten years before leaving and holds financial assets — including shareholdings, securities and other financial instruments — worth at least €800,000. The tax is levied on the difference between the original purchase price and the current value of the assets, even if those assets have not been sold.

Payment is due within 180 days of a change of tax residence. Individuals relocating to another EU member state, or to a country with a tax cooperation agreement with Italy, may defer payment for five or ten years respectively, provided they make an immediate advance payment equal to 50% of the tax due and lodge an adequate guarantee. For government bonds, the taxable base is reduced to 48.08% of gains, preserving their preferential effective rate of 12.5%.

The government's own technical assessment projects annual revenue of €6.74 million — starting at €3.37 million in 2027 to account for the 180-day payment deadline, rising to €6.74 million from 2028 to 2031, then falling back to roughly half that figure from 2032 as advance payments on five-year EU deferrals become refundable where gains are not realised.

The total budget is worth more than €26 billion, making the fiscal impact modest, but critics say the symbolic damage is large. Former Prime Minister and current senator Matteo Renzi attacked the measure on social media, calling it "madness" and accusing Meloni of "destroying a decade's work to attract investment with a populist measure."

The sharpest coalition challenge comes from Stefania Craxi, leader of Forza Italia's Senate group — a party inside the governing coalition. Craxi argues that only gains accrued while an individual was resident in Italy should be taxable, that the asset value at the point of arrival should serve as the starting basis, and that the 50% advance-payment requirement for EU moves may not survive scrutiny by the European Court of Justice. She also insists that commitments made to individuals who opted for Italy's existing flat-tax regime for new residents — an annual payment originally set at €100,000, later raised first to €200,000 and then to €300,000 — must be honoured.