Retiring to Italy: the tax benefits provided by the 2019 Financial Act.

The 2019 Financial Act provides a tax benefit for people who decide to retire to Italy.

Parliament is currently discussing about  implementing the regulation, however the Financial Act already provides general benefits provided by the 2019 Financial Act

Apparently, for now, the intention is to encourage foreign people to set their main residency in South Italy and in particular in villages having fewer than 20,000 inhabitants in Puglia, Molise, Abruzzo, Campania, Calabria, Sicilia and Sardegna.

The tax benefit shall last for 5 years and shall consist in a flat tax equal to the 7% of the foreign incomes, such as pension check and similar annuity earned abroad.

Also, individuals who will benefit from the 7% flat tax, will be not required to pay taxes on properties owned abroad (IVIE) and financial activities carried out abroad (IVAFE).

Should the individuals have income in different countries, they can opt for the flat tax to apply to all or only to some of them, as  specified in their tax benefit application.

For now, there is no provision for the possibility to renew the flat tax benefit application for retiring to Italy after the first 5 years. Also, in order to successfully apply for it, individuals should not have been resident in Italy during the 5 years prior to the fiscal year that the benefit is issued.

Who can opt for the 7% flat rate pension tax – Income Requirements to retiring to Italy.

The flat tax benefit for retiring to Italy is provided for people who (i) earn income of any nature abroad (except for employment salary), (ii) transfer their residency to a village having fewer than 20,000 inhabitants in South Italy regions, such as Puglia, Basilicata, Molise, Campania, Calabria, Sicilia and Sardegna.

For now the law does not provide for a maximum annual income in order to benefit from the flat tax.

However, a minimum income might be required, as might an elective residence application.

In order to be considered mainly resident in Italy, the applicant should spend at least 183 days per year (184 for leap years) in Italy.

We will keep you updated on latest news about the flat tax for retiring to Italy and the best places to retire.

Are you retiring to Italy from USA or other countries and have questions on this topic? Get in touch.