Facilitated taxation for Italian pensioners abroad

Italy provides various benefits for Italian pensioners living abroad (AIRE) and this year new benefits have been introduced.

Facilitated taxation for the return of pensioners residing abroad to the regions of Southern Italy

Individuals holding a foreign pension who transfer their tax residence to Italy, in one of the municipalities belonging to the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, with a population not exceeding 20,000 inhabitants, may benefit from a facilitated tax regime, with a 7% substitute tax for Irpef (personal income tax) applicable to all income categories.

The maximum validity of the regime is 10 years and is applied in the tax period in which the subject becomes resident in Italy for tax purposes and for a further nine tax periods. This implies that the subject who transfers his or her tax residence to Italy, for example in 2019, will be able to benefit from the substitute tax starting from that year and up to 2028 (inclusive), without the possibility of renewing the option on expiry.

Requirements

To obtain the benefits listed above, the following requirements must be met:

• Not having been resident in Italy for at least the previous 5 years;
• To be the holder of pension income and allowances equivalent to them provided by foreign subjects;
• Transfer residence in Italy, in one of the municipalities belonging to the territory of “Mezzogiorno“, with a population of less than 20,000 inhabitants, located in the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia;
• Transfer residence from countries with which Italy has concluded bilateral or supranational agreements.

Circolare Agenzia delle Entrate (in Italian) 

Extension of benefits to retirees who move to the earthquake-struck areas of central Italy

The Sostegni ter decree (dl 4 of 2022), has received the confidence of the Senate by extending these benefits also to those retirees who will move their tax residence in the earthquake-affected areas in 2009, 2016 and 2017 (the text has passed the House, and must be converted by March 28).

The regions of Lazio, Marche and Umbria whose municipalities were affected by seismic events on April 6, 2009 (L’Aquila), August 24, 2016, October 26 and 30, 2016, and January 18, 2017 will be able to take advantage of the 7% flat tax rate for income received or produced abroad.

What is the pension accrued in the international regime?

These are pensions accrued through the accumulation of insurance periods in Italy with those relative to periods of work in foreign countries that have stipulated bilateral social security conventions with Italy and, specifically, in EU countries, EEA (Iceland, Liechtenstein and Norway), Switzerland, the United Kingdom and some non-European countries.

Italy has stipulated bilateral social security conventions with the following foreign non-EU countries:

• Argentina
• Australia
• Brazil
• Canada and Quebec
• Israel
• Channel Islands and Isle of Man
• Mexico (only pension payment in Italy)
• Countries of the former Yugoslavia (Republic of Bosnia and Herzegovina, Republic of Kosovo, Republic of Macedonia, Republic of Montenegro, Republic of Serbia and Vojvodina (autonomous region)
• Principality of Monaco
• Republic of Cape Verde
• Republic of Korea (detachment only)
• Republic of San Marino
• Holy See
• Tunisia
• Turkey
• Uruguay
• USA (United States of America)
• Venezuela

With these initiatives, Italy aims to attract individuals with high income levels in order to stimulate economic recovery in the most disadvantaged areas, but they still present some critical issues, including:

• The limitation of the option to some southern regions and municipalities with a maximum of 20,000 inhabitants;
• The period limited to 10 years;
• The regulation does not offer favorable conditions for Italian pensioners, and therefore there is a risk of attracting few foreign pensioners and encouraging the emigration of many Italian pensioners to other countries with more favorable regimes.

The latest data on the Swiss occupational pension scheme

In advance more than 40 percent of LOB benefits…

Residents abroad, in 2022 the IMU facility (Property Tax) is reduced to 37.5%

Pensioners living abroad (AIRE) in 2022 will enjoy a further reduction in taxes on property owned in Italy.

The IMU concession for pensioners residing abroad is reduced from 50% (in 2021) to 37.5% in 2022.

The same is valid for a single real estate unit for residential use, not rented or given on loan for use, owned in the territory of the Italian State by way of ownership or usufruct by persons not resident in the territory of the State who are pensioners under international agreements with Italy.

The waste tax (in the nature of a tax) or the waste tariff (in the nature of a fee) is also due at a reduced rate of two thirds.

Basically, the benefit is brought into line with EU law by extending it to foreign citizens not resident in Italy. The benefit is valid only for holders of pensions accrued under international conventions, i.e. with periods worked abroad (it cannot be applied to Italian citizens holding an exclusively Italian pension who move abroad for reasons of tax convenience).