Post 6 min read
Italy has spent the past decade courting wealth. Its flat tax on foreign income now costs new arrivals €300,000 a year. That regime made Milan one of the most sought-after addresses in Europe for internationally mobile families. The draft 2027 budget points the other way. Article 17 would introduce an Italian exit tax of 26% on gains that departing residents have built up but never realised.
The measure surfaced when the budget bill reached the Chamber of Deputies at the end of October. It still needs parliamentary approval, and the wording may change before the final vote. Even so, families weighing a move from Italy to Monaco now have a new figure to price in. Several details also bear directly on the Principality.
The provision would add a new Article 307-bis to Italy’s income tax code, the Testo unico delle imposte sui redditi. In effect, it extends to private individuals a logic Italy already applies to companies that relocate. On departure, covered assets are treated as if they had been sold, and the paper gain becomes taxable.
The charge applies only when all of the following conditions are met:
The covered assets are financial. According to the published bill and its technical report, they include shareholdings, securities, investment funds, foreign currency, precious metals, derivatives, receivables and crypto-assets. Real estate does not appear on the list. Crypto-assets would be taxed at 33%, while government bonds keep their reduced effective rate of 12.5%.
The design will look familiar to anyone who has left France. The French regime under Article 167 bis of the Code général des impôts uses the same six-in-ten residence test and the same €800,000 threshold.
Under the Italian exit tax, gains are measured on the last day of the tax year before the one in which residence ends. For a departure that takes effect in 2027, the snapshot would therefore be taken at the close of 2026. The tax then falls due within 180 days.
Payment can be deferred, although not everywhere on the same terms. Moves within the European Union qualify for a five-year window. Moves to non-EU states qualify for a ten-year window. However, that state must offer Italy both the exchange of tax information and assistance in recovering tax debts. In either case, the taxpayer pays 50% up front and provides a suitable guarantee.
Deferral carries real value. Any asset still held when the window closes falls out of the charge entirely. The levy also lapses if the assets pass to heirs during the period, and a return to Italian residence brings a refund of any excess paid. Specialist commentary from Coinlex sets out these release mechanisms in detail.
A Worked Example
Consider a portfolio worth €2 million, acquired for €1.2 million. The unrealised gain is €800,000, so the tax at 26% comes to €208,000.
Under deferral, €104,000 would be payable on departure, with the balance secured by a guarantee. If the portfolio is still held at the end of the window, the deferred portion is never collected.
For Italian families, the Principality has long been the natural alternative. It lies a short drive from the Ligurian border, and Italian is heard on every street. Italian nationals also form one of the largest communities among its residents.
The tax position is also straightforward. Residents other than French nationals pay no personal income tax, and Monaco levies no tax of its own when a resident leaves. As a result, gains that accrue after arrival sit outside the reach of personal income tax altogether. Our comparison of Monaco, Dubai and Switzerland explains how that stability weighs against the alternatives.
Capital has followed the residents. Our analysis of average resident wealth in Monaco shows the scale involved. Meanwhile, Monaco’s private banks have built their business around exactly this kind of cross-border family.
The draft leaves two open questions that matter specifically for the Principality.
First, Monaco is not an EU member, so the five-year EU deferral does not apply. A ten-year deferral would depend on Monaco satisfying both cooperation tests. Monaco and Italy already exchange tax information under a bilateral agreement. Recovery assistance, however, is a separate requirement, and the draft publishes no list of qualifying states. Families should not assume eligibility until the final text settles the point.
Second, Monaco remains on Italy’s list of privileged tax jurisdictions for individuals. Under this rule, Italian citizens who move there are presumed to remain resident in Italy unless they prove otherwise. As Fiscomania explains, the burden falls on the taxpayer to show a genuine home, family life and economic interests centred abroad.
Timing adds a further consideration. Italy generally attributes residence for a whole tax year, based on where a person spends most of it. Consequently, a departure in the final months of 2026 may still count as a loss of residence in 2027, which would bring it inside the new rules.
Property falls outside the Italian exit tax as drafted, so attention shifts to the financial portfolio. A villa in Tuscany or an apartment in Milan would not be treated as sold on departure. Italian property remains taxable in Italy under the ordinary rules.
In Monaco, real estate does a different job. A purchased or leased home is the foundation of a residency application and, just as importantly, the clearest evidence of a genuine move. Our guides to becoming a Monaco resident and the real-world residency timeline cover the documents involved.
For buyers, our breakdown of total acquisition costs sets out the figures, and the choice between SCI, SCP and SAM holding structures deserves attention early. Families who prefer to rent first should read what gets a rental application approved quickly. Many of the strongest residences never reach the open market, which is why off-market access matters.
Parliament can amend Article 17 before the budget’s final vote, which normally takes place by late December. Several points remain unresolved, including how the Italian exit tax would treat departing flat-tax residents. Advisers have also criticised the drafting. One Italian consultant, quoted by IMI Daily, said the measure appears poorly defined and called for a substantial revision.
The revenue at stake is modest. The government’s technical report projects €3.37 million in 2027 and around €6.7 million a year after that, according to Money.it. Yet for anyone who arrived in Italy on favourable terms and always planned to move on, the arithmetic of leaving has changed.
For families already considering Monaco, the first step is to quantify the exposure on the current portfolio. After that, tax counsel in both jurisdictions should confirm the deferral position before any move is dated.
Moving From Italy to Monaco
Baldo Realty Group works alongside Italian families and their advisers to secure residences in Monaco, including off-market sales and rentals that support a residency application.
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