London’s private equity bosses are eyeing an escape to Milan amid fears over Labour’s tax plans.
Sir Keir Starmer’s party wants to raise the levy on fund manager bonuses to as much as 45 per cent if it wins the election.
As a result top City lawyers are fielding more calls than ever from private equity clients who are plotting an escape to the grand Italian city – and what is seen as a much more solid environment under prime minister Giorgia Meloni).
Marco Cerrato, a partner at Maisto e Associati, whose job it is to help clients relocate to Italy, said: ‘We are trying to deploy as much resource as we can.’
City crackdown: Keir Starmer’s party wants to increase tax on carried interest – the portion of investment returns shared by fund managers – from 28% to as much as 45%
With opinion polls pointing to a landslide win for Labour, the party’s campaign promise to target private equity is fuelling concerns of more taxes on the rich, he added.
Milan has attracted major investment firms in recent years, including Capstone Investment Advisors, Eisler Capital, and billionaire Steve Cohen’s Point72 Asset Management.
Home to renowned international schools, it is close to seaside towns, lakes and Alpine ski resorts.
Peter Ferrigno, a tax director at Henley and Partners, said: ‘UK nationals are worried about what a Labour government might do to private equity carried interest.’
With Labour set for a landslide, listed private equity companies took a hit yesterday.
Amid fears of higher taxes for buyout firms, shares in 3i and Petershill Partners dipped by around 1 per cent.
Labour wants to increase the amount of tax on carried interest – the portion of investment returns shared by fund managers – from 28 per cent to as much as 45 per cent. Shadow Chancellor Rachel Reeves said in 2021 the tax loophole was ‘absurd’.
And during the unveiling of Labour’s election manifesto on June 13 Sir Keir, the party’s leader, said he was ‘absolutely determined’ to make the change.
Meanwhile preferential tax treatment for wealthy non-domiciled foreign residents in the UK will be scrapped from April next year.
Stability: Milan is seen as a much more solid environment for private equity under Italian prime minister Giorgia Meloni (pictured)
The phase-out was announced by Chancellor Jeremy Hunt in the last Budget, but the super-rich are concerned that Labour will move faster and further.
To escape the taxes, Milan has emerged as a hotspot for the private equity executives who are fleeing London.
A flat rate of tax for foreign residents has boosted Italy’s appeal among wealthy individuals. It means they would pay €100,000 (£84,660) on overseas earnings.
And political uncertainty in France and Germany has taken the shine off destinations like Paris and Frankfurt.
Emmanuel Macron’s snap election has seen French bonds hammered this week, amid fears the hard-right could win the upcoming parliamentary elections.
In comparison Italy’s hard-right leader Meloni – the country’s first female prime minister – is perceived as providing more stability.
Figures show around 2,200 millionaires are set to move to the country this year.
Italy is also convenient for those with family still living in the UK, when compared to other destinations like Greece and Dubai.
Simon Goldring, a private client and tax partner at Excello Law, said: ‘With the possibility of changes to the taxation of carried interest, private equity bosses are looking to relocate to Milan to take advantage of the Italian ‘res non-dom’ regime, a tax regime aimed at attracting wealthy individuals to become tax residents in Italy.’
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.