Paris and Rome clash over 'baseless' accusations of tax dumping

 ROME - New frictions between Paris and Rome have surfaced after remarks made by François Bayrou, who claimed that Italy “is pursuing a policy of tax dumping.” According to Palazzo Chigi, the accusation is “baseless”, and the office expressed “surprise” at the statements.

 Bayrou made his accusations during a television interview only days before what is expected to be a highly delicate vote of confidence. Speaking out against “fiscal nomadism”, the French premier had said that in France “we allowed debt to accumulate” and that “ money intended for foreign economic players will not nourish the country[’s own economy].”

 He then cited Italy as an example of a country practicing tax dumping to warn the French against measures aimed at “the wealthiest,” who could “relocate” their tax residence “where it is most advantageous” to pay less tax. The French prime minister stated, “Nowadays, there’s a kind of fiscal nomadism, and people move where it's more convenient.” He was referring to the flat tax for ultra-wealthy individuals introduced by the Renzi government, which recently featured in a Financial Times article about Milan's appeal to high-net-worth individuals, and later modified by the Meloni government.

 Indeed, Palazzo Chigi’s response came swiftly: “The statements by French Prime Minister François Bayrou, claiming that Italy is engaging in ‘tax dumping’ and penalizing France, are astonishing and entirely baseless. The Italian economy is attractive and is performing better than others thanks to the stability and credibility of our Nation,” read a statement dictated by Prime Minister Giorgia Meloni to her communications team.

 The Italian government further emphasized that “Italy does not implement unjustified favourable tax policies to attract European businesses and, under this government, has even doubled the flat-rate tax burden in place since 2016 for individuals relocating their tax residence to Italy.”

 The policy introduced by the Renzi government had established a flat tax of €100,000 for those who moved their tax residence to Italy. The current government, led by Brothers of Italy, has raised that amount to €200,000. In 2022, according to the Court of Auditors, 1,136 individuals opted for the flat tax: 818 were “primary taxpayers” – each paying €100,000 on foreign income – and 318 were their family members, each paying €25,000. The state collected about €90 million, which, following the recent changes, has approximately doubled in recent years.

 “Italy,” the Palazzo Chigi statement continues, “has actually, for many years, been penalized by the so-called ‘European tax havens’ which siphon off significant resources from our public coffers.” Therefore, the government calls on France to “finally join Italy in pushing, at the EU level, for action against those member states that have long applied systematic tax dumping, with the complicity of some European countries.” Among political parties, aside from some members of Brothers of Italy, the League also quickly responded: “A serious and unacceptable attack on Italy, its entrepreneurs, and its workers by a French government now in full crisis. We’ll leave the nervousness and bickering to them, we prefer to work.”

rs