Are US pensions taxed in Italy?
Do you live in the US and you are planning to retire in Italy?
Are you a retired person from the US and you start to live in Italy? Are you an American retired and you spend some months of the year in Italy?
Read this article and figure out if your US pension is taxable in Italy.
In case you are not official resident
As you might already know, only Italian residents for tax purposes are required to pay on their worldwide income.
So first of all, if you are staying in Italy for less than 3 months per year, you are not a tax resident, thus you do not have to worry about paying taxes on your American pension in Italy.
Be aware that, according to the US state department, American citizens staying in Italy for more than 3 months per year, are considered resident in Italy.
From a legal point of view, if you are planning to stay longer in Italy you should apply for a residence permit (or “permesso di soggiorno” in Italian). The procedure requires you to apply to your local post office.
They will give you an application kit to fill. After giving it back to your local post office, they will address you to a local police station to present your official demand which is scrutinized and, hopefully, approved.
After getting your residence permit, as an American citizen, you can finally apply for residency at your local Comune, obtaining the certificate of residency (“certificato di residenza”) from the local Vital Statistics Bureau (or Anagrafe).
In case you are a resident in Italy
In this case as a general rule, American pensions are taxed in Italy. However, there are many exemptions.
This is because of the double taxation treaty with US.
We can divide foreign pensions in two categories:
We recommend for more information, to check the double treaty agreements between the US and Italy.
If you find them hard to read or you do not know where to look, check out our video below about how to read them and how to find relevant information.
In case you have any doubts you may want to ask an international consultant, or to the American Embassy in Italy.
In case of Italian Nationality
In case you become an Italian citizen or you are applying for Italian citizenship, then you will be liable to pay Italian taxes on your public US pension.
In this case your American pension will be counted as a foreign income, therefore you must declare it in your income statement.
What about other sources of income?
In case you have other sources of income, besides your pension, you will be subject to pay Italian taxes on these earnings.
For more info about this check out our article about income tax rate in Italy.
2019’s new tax regime for pensioners
To attract more pensioners, Italy introduced in 2019 a new tax regime. It consists of a 7% flat tax rate on all foreign sourced income. In addition to that, you do not have to disclose your foreign held assets and you do not pay any wealth tax.
However, you must acquire residency in a town with a small population (less than 20.000 inhabitants) located in the southern regions and Abruzzo as well.
This tax regime lasts for 5 years, and it has been introduced as a response to many other Mediterranean countries launching similar programs, as well as repopulating Souther towns.
For more info check our video below.
Want to read more? Check out also our articles about filing your taxes in Italy, or airbnb taxes in Italy, or our guide for retiring in Italy.
Do you need help in filing your annual income statement? Write to us.
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.