Courting wealthy individuals isn’t all good news for communities

investmentnews.com:

Milan has become a mecca for the wealthy, but the downside of that shift is starting to show. 

While rich new residents bring tax revenue and create jobs in the city, they’re also contributing to higher costs of living, widening the city’s gap with the rest of Italy. Housing prices are now well over double those elsewhere in the country, while renting a room in Milan is a third more expensive than in Rome. 

Alongside bankers displaced by Brexit, wealthy foreigners have been lured by generous tax breaks. Mayor Giuseppe Sala — one of the architects of Milan’s upscale shift — said that the measures have been successful in attracting new residents, which is good for the city’s economy, but that there are issues that need to be addressed.

“Sometimes these billionaires do not live the idea of communities,” he said in an interview with Bloomberg on Wednesday. “They are happy here. They live in a very vibrant city and in an easy city because it’s not so big. But we would like to have a sort of give-back from them.”

A flat tax on foreign earnings has acted like an accelerator. The number of people in Milan benefiting from the unique perk — which can cut tax bills by hundreds of thousands of euros — has grown steadily and more than doubled in 2021 to a total of over 1,300 people. The pool of beneficiaries has likely continued to grow by several hundred a year, according to Marco Cerrato, a tax lawyer and partner at firm Maisto e Associati, who helps clients relocate to Italy. 

Read More: Milan Luxury Real Estate Booms as Bankers Leave London for Italy 

“Beneficiaries are mainly partners of private equity and investment firms,” with many expat Italians as well as people from Germany, France, the Middle East and South America, said