Deciding to transfer your residence to Italy, if you receive a pension from a foreign country, can be very convenient.
The 2019 budget law introduced article 24-ter of the TUIR (Tax Law), in which it is established that holders of pensions from foreign sources who decide to transfer their residence in Italy, can benefit from a tax on the income of natural persons ( IRPEF) in the fixed amount of 7% whatever the income.
Also interesting is the fact that at the same rate all income from foreign sources and/or products abroad are taxed. From a first interpretation, this means that also the incomes of different source, as for example those from companies participation (dividends), would benefit from the facilitation.
The fundamental requirements for those who decide to move to Italy for retirement:
- hold a pension from a foreign state;
- has not been resident in Italy in the five years preceding that in which the benefit is requested;
- has been resident in a country with which Italy has administrative cooperation agreements, against double taxation and exchange of tax information;
- move to a town with a population of fewer than 20,000 inhabitants in the regions of Puglia (Apulia), Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo and Molise.
The person who moves must go to an accountant or a tax assistance centre (CAF) and exercise the option for the tax year in which the residence was transferred.
For instance, if a person has moved to Italy in 2019, he will benefit from the reduced rate in the 2020 tax return.
The benefit will be valid for 5 years and the tax will have to be paid in a single solution at the time of the tax return.
The Tax Authority will have the power to monitor and possibly revoke the benefit if the person loses the requirements or the five years have elapsed.
Moving to Italy, how to be compliant with the concept of residence.
What must a foreign citizen do to actually move to Italy? The Italian law provides some requirements to define a person formally resident:
- must be registered in the domestic registry;
- must have the principal place of business and/or interests (domicile) in Italy;
- must have his / her usual residence (residence) in Italy
It will, therefore, be appropriate for the pensioner who decides to settle in Italy to comply with the aforementioned requirements whose formalities will depend on the country of origin.
Easier life will certainly have people from the European Union who will not be required any further activity other than to register at the registry office, while those coming from non-EU countries will have to work to request an entry visa. permanent subject to agreements between the country of origin and Italy.
For example, a U.S. citizen or an Australian citizen will have to request a visa for elective residence, having documented and ample autonomous, stable and regular economic resources, whose continuity over time can reasonably be assumed, for example the pension and the availability of an accommodation in which to reside, owned or in rent with contract already stipulated.
The advantages of Estate planning for successors in Italy.
Spending your retirement in Italy also has advantages for the inheritance matter that you need to think about right away in order to determine the destination of the assets and the related taxation also from a cross-border perspective.
A great opportunity, therefore, also for those who decide to buy a home in one of the regions mentioned above to enjoy their retirement by the sea or in the mountains.