Milan's Tax Haven Appeal Creates Unexpected Divorce Boom
Milan has emerged as a surprising destination for Britain's wealthiest former non-domiciled residents, drawn by Italy's generous flat-tax system. However, the opening of a prominent London divorce law firm's new office in Italy's financial capital suggests many of these ultra-high-net-worth immigrants are already regretting their relocation decisions.
London's Wealth Exodus Creates Ripple Effects
The United Kingdom's abolition of its non-dom regime last year has triggered predictable consequences across multiple sectors. Financial advisers report unprecedented activity helping Britain's wealthiest residents depart, including prominent figures like steel magnate Lakshmi Mittal, Aston Villa co-owner Nassef Sawiris, and Goldman Sachs executive Richard Gnodde.
The ramifications extend beyond straightforward financial planning into more unexpected areas. London's luxury car dealerships, particularly Ferrari showrooms accustomed to serving deep-pocketed clients, now stand empty with reduced inventory allocations. Domestic staff including butlers and nannies face dwindling employment opportunities, while exclusive private members' clubs have experienced membership cancellations from former regulars concerned about providing tax residency evidence.
These secondary effects have spread beyond Britain's capital. In Milan, property markets have reached unprecedented highs while hotels enjoy record occupancy rates thanks to the influx of wealthy immigrants seeking Italy's favourable tax environment.
Divorce Lawyers Follow the Money to Milan
The recent establishment of Vardags family law firm's Milan office indicates another London phenomenon taking root in Italy's financial hub: high-stakes divorce proceedings. Specifically, the trend involves substantial expenditure on elite legal teams to secure optimal financial settlements during marital breakdowns.
"We observed a clear shift from clients who relocated to Milan while maintaining UK connections," explains Maria Fiorito, the Vardags partner leading the new Milan operation. "Numerous cases emerged involving clients with dual UK-Italian connections requiring specialised legal services."
Founded by Ayesha Vardag, the eponymous firm has established itself over decades as Britain's premier and most formidable divorce practice. Their portfolio includes landmark British divorce cases such as the £64 million separation between Laura Ashley chairman Khoo Kay Peng and his beauty queen wife, alongside the high-profile Brewster's Millions divorce involving Scot and Michelle Young.
Fiorito, Italian-born but UK-qualified, previously facilitated settlements for London's substantial Italian diaspora through Britain's famously generous divorce courts. However, simultaneous tax system overhauls in both nations have dramatically altered this pattern.
Diverging Tax Approaches Create Migration Patterns
Italy initiated this shift first, introducing a flat-tax system for wealthy foreigners in 2017 as the country sought international investment following Eurozone debt crisis constraints. The scheme originally required €100,000 annual payments to Italian customs with no additional taxes on international earnings or assets, though this has since increased to €300,000.
While Italy relaxed regulations for ultra-high-net-worth individuals, Britain moved in the opposite direction. Successive wealth-focused policies culminated in the Labour government's 2024 non-dom overhaul, including measures making foreigners' international trusts subject to inheritance tax.
According to Fiorito, the consequence has been significant growth in Vardags clients with dual UK-Italian connections, whether returning Italians or former non-doms relocating from Britain.
Milan offers unusually comprehensive advantages compared to other low-tax jurisdictions. Beyond its vibrant financial sector, the city provides proximity to Lake Como's glamour and the Dolomites' luxury resorts, alongside cultural and gastronomic attractions rivalling more fiscally demanding cities like London and Paris. These amenities remain unmatched in destinations like Dubai, Abu Dhabi, or Geneva.
Breakfast Table Negotiations and Marital Strain
As tax lawyer David Lesperance of Lesperance and Associates observes, financial considerations represent just one factor in wealthy clients' relocation decisions. "You must consider what works for each moving client," he notes. "What justification can they present to their family during breakfast table discussions?"
Vardags previously served Anglo-Italian clients from London desks, but increasing client migration to Milan prompted the firm's physical relocation. Just two weeks after opening their Mediterranean office, evidence suggests this "breakfast table" appeal proves inconsistent, generating a new client category: disgruntled divorcees seeking London returns.
"Most Milan relocation decisions stem from tax planning considerations," Fiorito explains. "Typically, husbands drive these decisions while wives reluctantly follow. After moving, many realise they never truly wanted to leave their previous lives. Marital breakdown often begins with relocation and worsens during resettlement struggles."
The boutique law firm has received approaches from approximately eight prospective divorce clients within its Milan office's first fortnight, all seeking annulment proceedings initiation. Additional urgency stems from UK courts' reputation as the world's divorce capital, offering exceptional generosity toward less wealthy divorce parties.
"Substantial interest exists," Fiorito confirms. "Once clients recognise they can still file for divorce in England, the separation process accelerates dramatically. Ultimately, we strive to secure the most favourable financial outcomes possible for them."
