Also Italy allure foreign retirees who want to choose a country other than their own to spend their old age there. How? With a sharp tax reduction on all income generated abroad; not only on pensions but also, for example, on real estate income, equity profits, annuities, etc.
The tax on all these incomes will be 7% for ten years.
These advantages are also expected by Italians who want to return to Italy and EU citizens, but here we only look after non-EU citizens. Let’s see in detail the conditions that must be satisfied by a foreign pensioner who wants to move to Italy:
– he must hold a pension paid by a foreign state;
– his last tax residence have to be in a State which signed a no double taxation agreement with Italy (the TIEA – Tax Information Exchange Agreement or subscription of the Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters);
– he must not have had a tax residence in Italy in the past five years;
– he must obtain an entry visa for Italy (e.g. investor visa, elective residence);
– he must transfer his tax residency to a Municipality with less of 20,000 population in one of the following Southern Regions: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia. This means that he must reside in the chosen municipality at least 183 days a year.
This tax break established by Article 24 of the Consolidated Income Tax Act which, indeed, declares a substitute tax regime for all income produced abroad at a rate of 7%. The rule also provides an exemption from any bureaucratic fulfillment related to activities held abroad.
Moreover, it should be reminded that the newly resident pensioner who receives income from different states will also be able to choose the states for which he wants to apply for the benefit.