Retire to Italy: our ultimate guide
After a whole life of work you can finally make your dream life in Italy come true.
From January 1st 2019 you can also benefit of a great tax incentive if you receive a pension from overseas and you relocate to Italy.
From January 1st 2019 you can also benefit of a great tax incentive if you receive a pension from overseas and you relocate to Italy.
Who can qualify?
Italian 2019 budget law introduced a new 7% flat tax on foreign income for individuals moving to Italy. In order to qualify, you need:
The tax benefit lasts for 10 years.
- Have a foreign public or private pension
- Have been a resident of a foreign country in the 5 years prior your relocation to Italy
- Move your residency to a qualifying municipality in Italy
The tax benefit lasts for 10 years.
Where should I move to qualify?
You must move to any municipality with less than 20,000 inhabitants located in any of the following regions:
Furthermore, some municipalities with less than 3,000 inhabitants located in Le Marche, Lazio, and Umbria qualify.
- Abruzzo
- Molise
- Apulia
- Campania
- Basilicata
- Calabria
- Sicily
- Sardinia
Furthermore, some municipalities with less than 3,000 inhabitants located in Le Marche, Lazio, and Umbria qualify.
How much taxes do I pay?
You pay a 7% flat tax on ANY foreign sourced income, including pension, property income, capital gains, interests, dividends, and miscellaneous sources of income.
Assuming you are relocating to Italy from overseas and you receive an annual pension of € 20,000 meanwhile you realize a capital gain on your stocks of € 10,000; if you opt for the Pensioner's flat tax your tax liability will be € 2,100.
There is no cap on your income, and you can remit the income to Italy without any restriction.
The 7% flat tax does not cover any income made in Italy.
In order to qualify, you must file your tax return each year. please refer to this guide to understand more about the Italian tax system.
Assuming you are relocating to Italy from overseas and you receive an annual pension of € 20,000 meanwhile you realize a capital gain on your stocks of € 10,000; if you opt for the Pensioner's flat tax your tax liability will be € 2,100.
There is no cap on your income, and you can remit the income to Italy without any restriction.
The 7% flat tax does not cover any income made in Italy.
In order to qualify, you must file your tax return each year. please refer to this guide to understand more about the Italian tax system.
What about wealth tax?
Every Italian tax resident is required to disclose foreign held assets, as well as pay the Italian wealth tax amounting to 0.2% in regards to financial holdings, whilst the Italian foreign real estate tax is set at 0.76%.
The 7% flat tax also covers any wealth tax, and the taxpayer is not required to disclose any foreign held assets while living in Italy.
The 7% flat tax also covers any wealth tax, and the taxpayer is not required to disclose any foreign held assets while living in Italy.
What do I have to do?
The procedure to avail of this newly introduced favourable tax regime is quite straightforward, upon meeting all the required criteria set by the law:
Failure to meet any of the above mentioned steps will disqualify you from this regime, likely resulting in a superior tax burden.
- Register as resident in a qualifying municipality;
- File your tax return opting for the 7% flat tax regime;
- Pay your tax liability by June 30th of each year.
Failure to meet any of the above mentioned steps will disqualify you from this regime, likely resulting in a superior tax burden.
Why is this convenient?
Italy is known as a high tax jurisdiction; in fact Italian income tax rates range from a minimum of 23% up to 43% on top that, regional and municipal taxes are levied. Furthermore, a taxpayer suffers taxation on foreign assets held, adding a complication to the tax return as the taxpayer is responsible to disclose the asset ownership.
The 7% flat regime is a great solution! This regime allows you to pay a flat 7% tax on every source of foreign income as well as avoid paying any wealth tax.
Can it get any better?
As a registered resident you can benefit of the Italian Universal Healthcare system without any additional charge.
The 7% flat regime is a great solution! This regime allows you to pay a flat 7% tax on every source of foreign income as well as avoid paying any wealth tax.
Can it get any better?
As a registered resident you can benefit of the Italian Universal Healthcare system without any additional charge.
Who can become a resident of Italy?
Any Italian or EU citizen can obtain residency without any VISA or permit. A EU pensioner needs to provide the local Comune the following papers in order to apply for residency:
With the aforementioned papers a EU national can register smoothly at the local Comune. Non-EU nationals are required to hold a VISA to enter Italy and stay long term. A common VISA for pensioners is the Elective Residency VISA .
The applicant must have a minimum income of € 31,000 from non employment related sources, such as pension, financial income, dividends, real estate income.
If you don’t have enough money to meet the requirements of passive income, it can also be done through investing in residential real estate. If you purchase a property you can qualify for the elective residence visa, but part of the requirement is that the home is a permanent residence (either owned or leased).
Please check our immigration section to better understand how to move to Italy.
- A property lease of at least 1 year duration (or prove a home ownership);
- A minimum € 5000 available in a bank account;
- A 1 year private health insurance policy (travel insurance does not work).
With the aforementioned papers a EU national can register smoothly at the local Comune. Non-EU nationals are required to hold a VISA to enter Italy and stay long term. A common VISA for pensioners is the Elective Residency VISA .
The applicant must have a minimum income of € 31,000 from non employment related sources, such as pension, financial income, dividends, real estate income.
If you don’t have enough money to meet the requirements of passive income, it can also be done through investing in residential real estate. If you purchase a property you can qualify for the elective residence visa, but part of the requirement is that the home is a permanent residence (either owned or leased).
Please check our immigration section to better understand how to move to Italy.
Are Us Pension taxed in Italy?
It depends. Check out our specific guide about US pension for more information.
How can we help you?
- Assess your eligibility for the program
- Find the appropriate accomodation in Italy
- Set up a local bank account
- Tax planning on your income and assets
- Annual tax return filing and tax compliance
- Tax payment support
For more info, check also our articles about us pensions taxed in Italy, our video "tips for reading double tax treaties", or check also our video below.
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