By Marta Di Donfrancesco and Angelo Amante

ROME (Reuters) – The Italian government on Wednesday approved a measure doubling the flat tax on income earned abroad by wealthy individuals who move their tax residence to the country, to 200,000 euros ($218,220) a year.

The favorable tax system for wealthy newcomers was introduced in 2017 by a center-left government to attract particularly wealthy citizens and thus stimulate Italy’s ailing economy.

The programme, which according to Economy Minister Giancarlo Giorgetti has so far led to 1,186 resettlements in the country, has been under special scrutiny since Britain’s decision to end the centuries-old regime for residents without a residence permit (“non-dom”).

The previous Conservative government in the UK decided to abolish the “non-dom” regime after April 2025.

Giorgetti told reporters that Italy has become opposed to the idea of ​​countries competing with each other to give “tax breaks” to the wealthy.

“As we said at the G20 and G7 meetings, we are against competing with other countries to create tax havens for people or companies. A country like Italy, with limited fiscal space, can only lose such a competition,” he said.

Tax advisers said Italy was likely to become the new home of many wealthy non-UK residents seeking to protect their offshore income from higher taxation.

“We work with a number of clients who are considering moving from the UK to Italy for tax reasons,” said Vito Di Pede, tax advisor at Milan-based tax and law firm Studio Rock.

Italy’s decision could make a small contribution to Rome’s public finances as Prime Minister Giorgia Meloni prepares a 2025 budget aimed at reducing the country’s large fiscal gap.

According to the decree, the doubling of the flat tax will only apply to people who choose this option in the future. Those who have already moved their tax residence to Italy will be exempt.

A prominent beneficiary of the system was Portuguese football star Cristiano Ronaldo, who became an Italian tax resident through his playing time for Juventus between 2018 and 2021.

The Italian Court of Auditors estimated that between 2018 and 2022, 254 million euros in taxes were paid under this system.

The EU criticized the measure as unfair and damaging to public finances.

“The high-net-worth regimes in Greece and Italy are … the most damaging because they grant large tax exemptions to extremely rich individuals,” the Union’s tax observatory said in its Global Tax Evasion Report this year.

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(Additional reporting by Valentina Za and Giselda Vagnoni; Writing by Francesca Piscioneri, editing by Gavin Jones)