Italy is undoubtedly one of the most attractive destinations among foreigners due to its natural beauty, historical monuments, lifestyle and investment opportunities. As a result, many dream of moving to Italy to study or work there, and many foreigners also choose Italy as their retirement destination. With regards to this, this article will discuss an interesting option for retirees wishing to relocate to Italy: the 7% Flat Tax Regime – an advantageous tax regime which is applicable to any individual who receives a pension from abroad. It will be the aim of this article to provide you with further information regarding this regime and the specific requirements that must be met in order to apply.

What is 7% Flat Tax Regime? 

The 7% Flat Tax Regime is a tax incentive that was introduced by the 2019 Budget Law, and it was designed for people who receive a pension from a foreign institution. In other words, individuals who receive a pension from abroad and who relocate to Italy are granted a special substitute tax of 7% on their income deriving from their pension. This tax incentive was designed to attract not only foreign retirees but also Italians that once left Italy and continue to live abroad, including those who are no longer Italian citizens. The aim, in fact, is to encourage people to move back to Italy, especially to repopulate specific municipalities and areas of Italy that have experienced mass emigration.

What are the requirements to benefit from this tax incentive?

One of the most important requirements to be able to benefit from this regime is to receive a pension from abroad; the pension can either be issued from a private or public institution. As previously mentioned, you do not need to be an Italian citizen in order to benefit from the 7% Flat Tax Regime. In addition to the above, you need to establish your residency in Italy in order to qualify for the incentive. More specifically,

  • you must not have resided in Italy 5 years prior to applying for the incentive;
  • the benefit applies only if you move to an Italian municipality in Southern Italy (specifically in the regions of Abruzzo, Calabria, Campania, Molise, Apulia, Sardinia and Sicily) whose number of inhabitants must not exceed 20.000 people. However, we suggest checking the data on the Annual municipal statistical survey provided by the Italian National Institute of Statistics (ISTAT) for an updated number of inhabitants in each municipality.

It is worth clarifying that the benefits deriving from the tax regime are limited it time, in other words the incentive is valid only for 9 consecutive years from the date you establish residency.

In conclusion, both a foreign citizen and an Italian citizen who relocate to Italy can benefit from this tax regime. The 7% flat tax regime may be an interesting option to consider to minimize any impact on your retirement funds and at the same time to move to one of the most beautiful countries in the world.

If you would like further information please feel free to contact us at info@italianrealestatelawyers.com for a free consultation. We will be happy to assist you.

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