Flat tax of 7% for people who retire to Italy

Now is the best time to retire to the south of Italy thanks to the new pension laws / Gtres

11 April 2019, 17:05

With the Legge di Bilancio 2019, the Italian government introduced a Flat Tax of 7% for all pensioners who move their residence to Italy.

This is a rule that is intended to encourage natural persons who receive a pension from a non-Italian institution to transfer their residence to Italy.

The Flat Tax of 7% is granted to individuals with a pension income paid by foreign sources who transfer their residence to an Italian municipality with a population of no more than 20,000 inhabitants.

The municipality the retiree moves to must necessarily be in one of the following regions: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia.

If these conditions are met, the pensioner (who may be a foreign national or Italian, but who has not been resident in Italy for tax purposes in the previous 5 years), may opt to be taxed a lump sum at a rate of 7% in Italy on their income from their pension and from any other source, provided that it was received or produced abroad.

However, this tax regime has a limited term: it can only be claimed for five years starting from the year in which it takes effect.

In order to benefit from the new substitute tax regime, the applicant must indicate the jurisdiction (or jurisdictions) in which he/she had his/her last tax residence.

Subsequently, the Italian Tax Authority ("Agenzia delle Entrate") will transmit this information to the tax authorities in the corresponding jurisdiction.