Bringing Your Pension to Italy: What Gets Taxed and Where

Overview

How your pension is taxed when you move to Italy depends on several factors:

• Whether it's a government or private pension
• Which country the pension comes from
• The specific tax treaty between that country and Italy
• Whether you qualify for special tax regimes

Government Pensions

Government pensions (civil service, military, state pensions for government employees) are typically taxed only in the source country. This is a standard principle in most tax treaties.

How It Works

• The pension continues to be taxed in the country that pays it
• Italy generally doesn't tax it (though you may need to declare it)
• This applies even when you're Italian tax resident
• Exception: if you're both a resident of Italy and an Italian citizen, Italy may tax it

Private Pensions

Private pensions (workplace pensions, personal pensions, 401(k)s, etc.) are generally taxed in your country of residence,meaning Italy if you're Italian tax resident.

How It Works

• Private pension income is taxed in Italy as worldwide income
• Progressive Italian tax rates apply (up to 43%)
• Your home country may also have withholding,check the treaty
• You can usually credit foreign tax paid against Italian liability

Social Security Pensions

State social security pensions (UK State Pension, US Social Security) are usually treated differently from government employee pensions:

• UK State Pension: Taxed in Italy (not UK) under the tax treaty
• US Social Security: Treaty rules apply,may be taxed in Italy, US, or both with credits

The Flat Tax Regime

Italy offers a special flat tax regime for pensioners who move their tax residence to certain southern Italian municipalities, including many in Abruzzo.

Eligible Municipalities

The regime applies to municipalities with populations under 20,000 in:

• Abruzzo, Molise, Puglia, Basilicata
• Calabria, Campania, Sardinia, Sicily

Many attractive towns in inland Abruzzo qualify. Verify the current population count before committing,municipalities that grow beyond 20,000 may lose eligibility.

Considerations

• You must genuinely transfer tax residence,not just register
• Italian-source income is taxed at normal rates
• If you leave the regime early, you can't re-enter
• The regime may interact with your home country's tax rules,get advice

Country-Specific Rules

Planning Tips

• Get advice before moving: Understanding your tax position before you become Italian tax resident allows better planning. Afterwards, options may be more limited.
• Consider timing: When you become Italian tax resident matters. Moving mid-year has different implications than moving at year-end.
• Document everything: Keep records of your pension sources, amounts, and any tax already withheld. You'll need these for Italian tax filings.
• Understand the flat tax: If the 7% regime applies to your situation, the savings can be significant,but you need to meet all requirements.
• Plan for healthcare: Your pension income may affect healthcare entitlements. EU pensioners can use S1 forms; others need different arrangements.
• Consider currency: If your pension is paid in a different currency, exchange rate fluctuations affect your actual income and tax liability.