World elite in Italy: tax benefits and sweet life.

The luxurious rooms of Palazzo Raggi, an architectural marvel of the 18th century, are just a stone's throw from the Spanish Steps inRome. They once belonged to a famous noble family, as well as numerous cardinals and other historical figures of the Italian aristocracy. Now, this six-section building, which had fallen into disrepair for many years, is being revived in a new capacity, preparing to welcome a new class of residents: foreign billionaires who are turning away from Switzerland, Dubai, or the Cayman Islands and moving to Italy to experience the sweet life - "dolce vita" - and, moreover, the financial advantages of an attractive tax system.

Italy introduced a little-known incentive for super-rich individuals of all nationalities in 2017. In exchange for an annual fee of 100,000 euros (£87,000), those who obtain residency in the country are completely exempt from paying taxes on income earned abroad. The initiative also extends to family members for an annual payment of 25,000 euros per person.

The measure, designed to stimulate large investments in Italy, whether in real estate or luxury brands, attracted 98 people in its first year, before growing to 549 people in 2020 and more than doubling to 1,339 people in 2021.

Their arrival has revitalized the luxury real estate market - buyers rarely spend less than 10 million euros - and has prompted the renovation of long-abandoned historical landmarks in city centers.

Nineteen out of 29 luxury apartments currently under development in the exquisite Palazzo Raggi have been sold since sales began less than a year ago, with several of them purchased by those benefiting from a fixed tax payment incentive.

“We have never sold so quickly inRome,” said Diletta Giorgiolo, head of the residential real estate department at Italy Sotheby’s International Realty. “People want a piece of an 18th-century home, but with a fully modernized interior.”

George has had a busy few years. The influx of super-rich individuals began in earnest in 2019, partly driven by British nationals with non-domiciled status—a regime similar to the Italian one, which allows them to be exempt from paying tax on income or capital gains earned abroad—fleeing due to the impending Brexit. Then came the coronavirus pandemic, which forced many to rethink their way of life.

Djordjolo sold a property on the island of Capri to a French couple, who turned it into a boutique hotel; a mansion worth 20 million euros in Venice to a Chinese buyer; and a mansion worth 10 million euros in Lallo, a town on Lake Como where George Clooney has a home, to a Swiss couple.

Among the recent clients who took advantage of the fixed tax rate was a Dutch couple who bought a house inRome for over 10 million euros, and another couple who paid 11 million euros for a property inMilan.

“Some of them bought properties that had just come onto the market, while others purchased properties that needed renovation,” said Giorgolo. “Some rented the best properties during their first year in Italy before making a purchase. This is definitely one of the best events that has happened in the luxury real estate market.”

Marco Cerrato, a tax lawyer and partner at Maisto e Associati inMilan, handles the financial affairs of several new billionaire residents in Italy.

He said that foreign citizens who previously had non-domiciled status in the UK were at the forefront. "Brexit is one aspect, as the UK, especially London, has started to feel less welcoming," he said. "But a major factor is the fear that a possible victory for the Labour Party in the next elections could lead to the cancellation of such tax benefits."

Among the influx of super-rich individuals, there are those who have changed their residence from Switzerland, which also has a favorable tax system, drawn by the lower cost of living, beauty, and warmer climate of Italy.

Among them are investment bankers, asset managers, entrepreneurs, technology workers, and those whose income is generated through dividends or trust funds.

“Initially, the fixed tax was particularly aimed at those with passive income,” said Cherrato. “But then came those who were actively working – they have to pay tax on income earned in Italy – yet they still found the regime attractive.”

The Italian tax authorities collected 108 million euros from an initiative in 2021, while luxury brands are investing more in areas where the super-rich have settled, mainly inRome, Milan, Florence, and Venice, as well as inTuscany, Lombardy, and Liguria, and in southern regions including Sicily.

Noto, a region in Sicily south of Catania, attracts many wealthy buyers, said Giorgolo.

“Catania has very good air connections, which has contributed to the growing interest,” she said. “So, if people need to be in the city, they focus on beautiful places like Sicily. But overall, the interest across Italy has been exponential.”

The showroom for the properties for sale at Palazzo Raggi attracts a steady stream of potential clients throughout the day. Since the building is scheduled for completion by the end of 2024, only sales brochures and promotional videos showcasing the terraces with stunning views ofRome, as well as visual materials displaying the stages of the restoration work, are available to them.

Vincenzo Luppatelli, a sales manager at Sotheby's, cannot disclose details about his clients. But he says their demands are modest. "Palazzo Raggi is about class," he says. "There’s nothing extravagant here like jacuzzis and saunas. They won’t bring flashy cars with them since there’s no garage. These are people who want to experience history but in a modern setting, and enjoy walks aroundRome. They also won’t have to deal with noisy neighbors, as a soundproofing expert is working to ensure all apartments are soundproofed."