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Italy pitches 7 per cent tax rate to retired migrants

Thursday, 10 January, 2019

Italy’s 2019 Budget introduces a new tax regime encouraging retired foreign persons to take up residence in certain areas of the country.

As from 1 January 2019, immigrants to these areas who receive pensions can elect to pay a 7 per cent flat-rate tax on all their foreign-sourced income and gains – not just their pension income. They will also be exempted from wealth taxes on their foreign assets, and from any obligations to report them to the Italian authorities.

The offer is subject to certain conditions. The individual must not have been an Italian tax resident in the preceding five tax years, and must come from a jurisdiction that has an administrative cooperation agreement with Italy. Their pension must come from a non-Italian source.The 7 per cent tax regime will last for up to six years after taking up Italian residence, after which the individual will revert to Italy’s ordinary income tax regime.

The most significant restriction is a geographical one. The new place of residence must be in a town of less than 20,000 inhabitants in one of Italy’s less wealthy or rural regions – namely Sicily, Sardinia, Calabria, Campania, Basilicata, Abruzzo, Molise or Puglia.

The new regime is in addition to two other recent initiatives intended to attract prosperous migrants to Italy. These are the EUR100,000 substitute tax regime on foreign-sourced income and gains, aimed at high-net-worth individuals; and the so-called impatriate tax regime, which consists of a 50 per cent exemption for Italian-source employment and self-employment income, aimed at skilled workers.

Sources