In 2019, a new tax treatment for pensioners got introduced, adopting art. 24-ter in the Italian income tax code.
Basically, a pensioner who has not been a resident of Italy in the 5 years prior to moving here can claim a flat 7% taxation on ALL of the foreign income sources, not just the foreign pension received. The 7% flat tax applies to all foreign income sources, including:
Pension Income
Interest Income
Dividends
Rental Income
Royalties
Capital Gains
Severance Payments
Miscellaneous Income
There is no income cap on the income attached to the 7% flat tax, making it very attractive to new pensioners wishing to move to Italy without spending a fortune on taxes. This regime lasts for up to 10 years, and you can drop off at any time prior the end of the period.
7% flat tax requirements
In order to qualify for the 7% flat tax regime for pensioners, you must receive a private or public pension, it doesn’t matter whether you are a citizen of Italy or not, but you must receive a foreign sourced pension.
You should not have been a resident of Italy in the last 5 tax years prior to moving to Italy. This means that you may have been a tax resident of Italy 5 years ago or more and still qualify.
Finally, you must settle in a qualifying municipality. Note that you cannot benefit from this favorable tax treatment if you move to Italy to a non qualifying municipality, and then move into a qualifying one! Which are the qualifying municipalities for the 7% flat tax for pensioners in Italy?
7% flat tax qualifying municipalities
In order to qualify for the 7% flat tax for pensioners, you must relocate to a qualifying municipality as per the paragraph 1 of the art. 24-ter. According to it, any municipality with 20,000 inhabitants or less located in any of the following regions qualify:
Abruzzo
Apulia
Basilicata
Calabria
Campania
Molise
Sardinia
Sicily
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