Foreign pensions received by individuals who are tax residents in Italy are taxable under Article 3 of the TUIR (Consolidated Income Tax Act). These pensions must be declared in the Italian 730 tax return, in Section I of quadro C.
Below is a clear breakdown of how foreign pensions are taxed in Italy, how tax residence is determined, and how the €1 house scheme may connect to the 7% tax regime for retirees relocating to southern Italy.
- €1 houses: benefits for retired foreign residents
- Foreign pensions received by residents in Italy: how do they work?
- Criteria for establishing residence in Italy
- Taxation of foreign pensions in Italy: what to know
- Foreign private and public pensions: how they are identified
- Which foreign pensions do not have to be declared in Italy?
- Pensions in Italy FAQs
€1 houses: benefits for retired foreign residents
It is possible to buy a €1 house in Italy and potentially benefit from a favourable tax regime if you transfer your tax residence to certain southern municipalities.
Under the Decreto Sostegni Ter, individuals who:
- Receive pension income from foreign entities
- Transfer their tax residence to Italy
may opt for a 7% substitute tax (imposta sostitutiva dell’Irpef) on all categories of income produced abroad.
This optional regime applies only if tax residence is established in municipalities located in southern Italy with a population of no more than 20,000 inhabitants.
The measure is designed to attract retirees to smaller towns, including some participating in the €1 homes initiative.
Foreign pensions received by residents in Italy: how do they work?
To understand how foreign pensions are taxed when retiring in Italy, it is essential to determine whether the individual is tax resident in Italy.
For tax residents in Italy, the territoriality rules governing the taxation of foreign pensions are based on:
- Articles 3, 23 and 49 of the TUIR, which treat foreign pensions as income comparable to employment income and therefore taxable in Italy;
- Articles 18 and 19 of the OECD Model Convention against Double Taxation, which distinguish between private and public pensions.
In practice, foreign pension income received by a resident may be subject to taxation either in the source country, in Italy, or in both, depending on the applicable double taxation treaty.
Criteria for establishing residence in Italy
Under Article 2 of the TUIR, an individual is considered tax resident in Italy if, for more than 183 days per year, they meet at least one of the following criteria:
- They are registered in the resident population register (anagrafe);
- Their domicile, meaning the centre of their personal and economic interests, is located in Italy;
- Their habitual residence (permanent abode) is in Italy.
These criteria are alternative. Meeting just one of them is sufficient to establish tax residence.
If an individual moves to a non-cooperative jurisdiction or a country with a privileged tax regime, they may continue to be considered tax resident in Italy under specific rules.
Taxation of foreign pensions in Italy: what to know
According to Article 3 of the TUIR, foreign pensions received by individuals resident in Italy are taxable.
Alongside domestic rules, bilateral double taxation treaties also apply and may modify where and how the pension is taxed.
Applications relating to foreign pensions can be submitted to the INPS foreign pensions office or via the relevant online portal.
Foreign private and public pensions: how they are identified
It is important to determine whether a foreign pension is classified as private or public.
- Private pensions are generally taxable only in the country of residence of the beneficiary. They are paid by foreign social security institutions or pension bodies.
- Public pensions are generally taxable only in the country from which they originate and are paid by a state or local authority.
However, the exact treatment depends on the specific double taxation agreement between Italy and the relevant country.
Main treaty examples:
Country | Taxation of public pensions | Taxation of private pensions |
|---|---|---|
Argentina, United Kingdom, Spain, United States, Venezuela | Taxable only in Italy if the taxpayer has Italian nationality | Taxable only in Italy |
Belgium, Germany | Taxable only in Italy if the taxpayer has Italian nationality | Taxable only in Italy |
France | Taxed only in France. If the taxpayer has Italian nationality and not French nationality, taxed only in Italy | Taxable only in Italy, with possible exceptions |
Australia | Taxed only in Italy | Taxable only in Italy |
Canada | Taxable only in Italy if the amount does not exceed 12,000 CAD (or equivalent). If exceeded, taxable in both Italy and Canada | Same 12,000 CAD rule applies |
Switzerland | Taxed only in Switzerland if the taxpayer has Swiss nationality | Taxed only in Italy |
Which foreign pensions do not have to be declared in Italy?
Pensions that are subject to withholding tax at source as a final tax are not required to be declared in Italy. This applies to Swiss Old Age and Survivors’ Insurance pensions.
Failure to declare a foreign pension that should have been declared may result in administrative penalties ranging from 120% to 240% of the unpaid tax.
Pensions in Italy FAQs
Which foreign pensions must be declared in Italy?
Generally, all foreign pensions received by individuals resident in Italy must be declared and taxed, regardless of whether they are public or private.
How is a foreign pension taxed in Italy?
Foreign pension income received by a resident may be taxed in the source country, in Italy, or in both, depending on the applicable double taxation treaty.
What happens if a foreign pension is not declared?
Administrative penalties may apply, ranging from 120% to 240% of the tax due and not paid.
How are German pensions taxed in Italy?
Private pensions received by residents in Germany are not subject to taxation in Italy.
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