Non-doms are descending on Milan – and getting a divorce
Thanks to its generous flat-tax regime, Milan has become a popular bolthole for former UK-based non-doms. But, asks Ali Lyon, does the opening of a new divorce law firm in Italy’s financial capital suggest some of its new residents are regretting their decision?
The United Kingdom’s decision to abolish the non-dom regime last year has wrought some entirely predictable knock-on effects.
Advisers to the super-rich hold it up as the main reason for thousands of Britain’s wealthiest residents fleeing the UK in the past 18 months. They speak of having been busier than ever helping arrange the departures of big names including steel magnate Lakshmi Mittal, Aston Villa co-owner Nassef Sawiris, and Goldman Sachs rainmaker Richard Gnodde.
Such are the foibles of the super-rich, though, ramifications have also spilled into the more exotic. London’s Ferrari showrooms – accustomed to a city bursting with deep-pocket-boasting freewheelers – are empty, and being sent fewer cars as a result. Its butlers and nannies are struggling for work.
Even its embarrassment of centuries-old private members’ clubs suffered a wave of ex-regulars cancelling their membership amid fears it might be held up by the taxman as evidence they were still resident in Britain.
These second-round effects have not been limited to the UK capital. In Milan – a popular bolthole for fleeing non-doms – the property market has been carried to fresh highs, while its hotels have enjoyed record demand thanks to a new wave of well-heeled immigrants.
London divorce lawyers mop up in Milan
Now, the launch of a new office for the Vardags family law firm would suggest another popular past time for super-rich Londoners has begun to take root in Italy’s financial capital: divorce. Or more specifically, a proclivity to spend inordinate amounts of cash on a hot-shot legal team to help secure the most favourable settlement.
“We could see the shift from clients that moved to Milan that retained some sort of connection to the UK,” says Maria Fiorito, a partner at divorce solicitor Vardags who will lead its Milanese office. “There were rows and rows of cases with clients that had connections to the UK and Italy, and they needed to be serviced.”
Founded by Ayesha Vardag, the eponymous legal firm has forged a reputation over decades as Britain’s top – and most feared – divorce lawyers. It has been retained on some of the largest annulment cases in British history, including the £64m separation of Laura Ashley boss Khoo Kay Peng and his beauty queen wife and the so-called Brewster’s Millions divorce between Scot and Michelle Young.
For years, Fiorito, who was born in Italy but is also qualified to practise in the UK legal system, had helped ensure that clients from London’s large Italian diaspora could reach settlements in the UK’s famously generous divorce courts. But after both countries unveiled eye-catching overhauls of their approach to taxing the super-rich, that pattern began to change.
A tale of two cities for non-doms
Italy came first. With the country buckling under the strict fiscal straitjacket imposed on them after the Eurozone debt crisis, the country unveiled a new flat tax for wealthy foreigners. The move would – it hoped – lure the kind of international investment necessary to resuscitate its flagging economy. Under the proposal, introduced in 2017, those who took up the scheme would pay €100,000 – a single line item – to Italian customs and not pay any tax on international earnings or assets. The charge has since risen to €300,000.
Just as Italy was relaxing its rules for ultra-high-net-worth individuals, the UK was cracking down on them. Successive wealth grabs were crystallised with the Labour government’s 2024 non-dom overhaul, which included a move to make foreigners’ international trusts viable to inheritance tax.
The upshot, according to Fiorito, has been that – whether from Italians returning home or former non-doms relocating from Britain – the number of Vardags clients with connections to both Italy and the UK has “grown significantly”.
Compared to other, low-tax jurisdiction rivals, Milan has an unusually holistic offering. It boasts one of Europe’s most vibrant financial sectors. It’s a short drive from glamorous Lake Como and the swish Dolomites. And it is home to a vibrant cultural and gastronomic scene that rivals the more fiscally punitive cities of London and Paris. None of this can be said – yet – for the likes of Dubai, Abu Dhabi or even Geneva.
Breakfast table dilemma
As David Lesperance, a founding partner at the tax lawyer Lesperance and Associates, puts it, tax may be a factor for moneyed clients’ relocation plans, but equally important are other, less financial factors.
“You’ve got to think what would work for each client that moves,” he says. “What can they sell to their family at the breakfast table?”
Vardags previously served its Anglo-Italian clients from a desk in London, but as more potential clients decamped to Milan, her firm chose to move with them, launching an office in the Mediterranean city this month. And just fortnight in, there are signs this ‘breakfast table’ appeal is not universal, giving rise to an even newer breed of client: the disgruntled divorcee who wants to return to London.
“The majority of these decisions [to move to Milan] are driven by tax and tax planning,” she says. “And in most cases, the husband makes that sort of decision and wives have to follow. When they move, they soon realise they actually didn’t want to move, and that they want to go back to their previous life. The breakdown of the marriage starts with the move, and only gets worse when they then struggle to resettle.”
The boutique law firm has seen as many as eight would-be divorcees approach its Milan office to help them instigate annulment proceedings in under two weeks. Adding to the rush, is the fact that – for the less wealthy party in a divorce – the UK courts are among the the most generous, earning it a reputation as the divorce capital of the world.
“There’s a lot of interest,” she says. “As soon as clients realise they have the possibility to still file for divorce in England, that accelerates the process of getting divorced.
“Ultimately, we’re just trying to secure the best deal for them financially as possible.”