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Relocating to Italy: the tax break for foreign pensioners

  •  By Property Organiser

Planning to retire in Italy? Retirement in Italy can be a great option, art, history, sunshine and generally low cost of living...

Italian governement has lately introduced several tax incentives for those relocating to Italy including a tax break for new resident with foreign pensions.

The tax regime opportunities for individuals relocating to Italy are:


the special tax regime for new resident workers 


the flat tax regime for high-net-worth new residents 

 * the tax break for new residents with foreign pensions 

 The opportunities for new residents with foreign pensions

Individuals with an income from foreign pension or other source abroad, who transfer their tax residence to one of the municipalities with populations not exceeding

20,000 inhabitants in the Regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily, may opt to have their foreign income taxed on a flat-rate basis of 7% for each tax period in which the option is valid.

Individuals who opt for the new flat tax regime for retirees will be exempt from paying taxes on the value of both financial assets (taxes on financial activities outside Italy) and real estate property (taxes on properties outside Italy) which they own abroad.

The flat tax regime for retirees will also allow you to carve out income produced in one or more foreign countries or territories if you wish: you may decide that for income generates in a certain country or territory, the ordinary Italian tax rules should be applicable.

In principle, this allows you to benefit from foreign tax credits based on applicable tax treaty protections and relief on taxes paid abroad. You must specifically indicate this intention when you exercise your option to take up the flat rate tax regime.



The regime is granted to:

- individuals from countries which have Tax Information Exchange Agreements (TIES), Double Taxation Agreements (DTA) and Foreign Acoount Tax Compliance Agreements (FATCA) with Italy, therefore over 80 countries from Ireland to Russia, United Kingdom, USA; Canada, UAE, Australia, etc.

- individuals who have not been an Italian tax resident for 5 years prior to the period for which their option is valid.

If you meet the criteria outlined above, you can elect to exercise an option to adopt the new flat tax regime for retirees when you file your tax return related to the fiscal period in which you moved your tax residency to Italy.

You will need to indicate the jurisdiction/s in which you had your previous tax residence and then the Italian tax authority will forward this information, through the appropriate administrative cooperation instruments, to the tax authorities of the indicated country.


- The flat tax regime is effective for nine years from exercising your option to adopt it. 

- You may withdraw from the regime at any time during the period. This will not prejudice the effect of previous fiscal years. However, withdrawal from the regime precludes you from exercising a new option to join the flat rate tax regime.

- If you fail to pay all, or if you only partially pay your annual tax bill, your rights to the flat tax regime will cease. The tax is payable in a lump sum by an annual deadline set by the Italian tax authority.

Are you interested in getting to know more about the steps to take for relocation?

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