Tax relief for pensioners who move to the south of Italy

Enjoy your retirement in the sun in Italy / Gtres
Enjoy your retirement in the sun in Italy / Gtres
19 March 2019, Redaction

One of the new rules that has been introduced with the Italian Budget Law 2019 is a measure that provides tax relief to attract pensioners to southern Italy. Let's take a detailed look at the new tax law for retirees in Italy and who can claim the tax benefit.

In recent years, in fact, many pensioners of different nationalities have decided to retire to Portugal to enjoy their pension. The reason for this is an ad hoc law passed by the Portuguese executive that provides tax privileges for pensioners who decide to move there, so much so that it was informally nicknamed "the pensioners’ paradise".

Now Italy wants to recreate something similar. As of last January, a rule has been in force that applies a substitute tax of 7% on all foreign incomes, not just pensions.

In addition, there is also an exemption from the tax obligations for tax monitoring, as well as for the payment of tax on the value of real estate located abroad (Imposta sul valore degli immobili situati all'estero or IVIE) and the tax on the value of financial assets held abroad (Imposta sulle attività finanziarie detenute all'estero or IVAFE).

In detail, in order to benefit from the tax relief, it is necessary that those who receive income from foreign sources or which is produced abroad transfer their residence to an Italian municipality with no more than 20,000 inhabitants located in one of the following regions: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia.

In order to move your official residence to the south of Italy and benefit from this tax relief, you must meet two essential requirements:

  1. The first is not to have been resident in Italy for tax purposes in the five preceding tax years and to have transferred your residence from countries with which there are administrative cooperation agreements.
  2. Secondly, you must reside in Italy at least for 183 days a year (184 in the case of a leap year).

It should be noted, however, that the 7% substitute tax can only be applied for 5 years, at the end of which this tax regime will no longer apply.

You can find more information about retiring to Italy here, including the best places to buy property in Italy as a pensioner and healthcare for OAPs.

From the original Italian article: Paradisi per pensionati: il Sud Italia sfida il Portogallo (Il sole 24 ore)

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