Relocation and Life in Italy

Application for tax benefits for foreign retirees in Italy

The application for tax benefits for foreign retirees in Italy today represents one of the most interesting opportunities for those who receive a pension from abroad and intend to transfer their tax residence to Italy. It is an optional regime introduced by art. 24 ter of the TUIR, which allows a 7 percent flat tax for ten years on all income produced abroad, including pensions.

This tax regime was created to encourage the return to Italy of retirees registered with AIRE and to attract new residents in specific areas of Southern Italy or in municipalities affected by seismic events. The opportunity translates not only into a significant economic advantage for the retiree, but also into a benefit for local economies, thanks to the repopulation of small towns and the consequent development of the territories.

The procedure, although advantageous, is very technical, precise requirements must be met, the M form of the 2025 tax return, section II B, must be correctly completed, and the causes of revocation and forfeiture must be understood. There is also the possibility to voluntarily exclude some countries from the option, with the consequent application of ordinary taxation.

The Boschetti International Law Firm, with its team of consultants specialized in tax matters, offers its expertise in tax law and immigration law to guide retirees step by step, from verifying requirements to submitting the application, ensuring complete and safe assistance.

What is the optional regime for foreign retirees

The optional regime for foreign retirees is reserved for those who receive a pension paid by foreign entities and decide to settle permanently in Italy. The option, exercised through the tax return, allows payment of a substitute tax equal to 7 percent on all foreign income, including pensions.

To access it, it is necessary to:

not have been tax residents in Italy in the five years prior to the transfer
transfer residence to one of the southern municipalities (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia) with fewer than 20,000 inhabitants, or to one of the municipalities affected by the 2009 or 2016 earthquakes
prove actual residence through registration in the municipal registry

Excluded from the regime are income from life insurance policies, supplementary pension funds, or foreign private pension instruments that do not constitute a recognized pension treatment (Circular Revenue Agency no. 21 E 2020).

The tax benefit is accompanied by further advantages, such as exemption from the obligation to complete the RW form for foreign financial and property assets and exemption from wealth taxes IVIE and IVAFE.

Tax relief for retirees residing abroad

The regime under art. 24 ter TUIR does not translate into a simple deduction, but into a real replacement of ordinary IRPEF with a fixed tax of 7 percent on foreign income. In this way, the retiree benefits from a significant saving compared to the application of progressive rates which, in the ordinary system, range from 23 percent to 43 percent plus local surcharges.

The duration of the benefit is set at 10 years, the year of transfer plus the following nine tax periods. The option is exercised in the 2025 tax return, M form, section II B, indicating the data of the foreign country of origin and the amount of pension income that will be subject to the substitute tax.

It is important to know that income voluntarily excluded from the option (a choice that cannot be revoked) will continue to be taxed according to ordinary rules. In addition, failure or late payment of the substitute tax results in forfeiture from the regime and the application of penalties for omitted payment.

Thanks to this regime, retirees residing abroad who choose to move to Italy have the opportunity to drastically simplify tax management and to benefit from stable and advantageous flat taxation.

Flat tax for retirees and transfer of tax residence in Italy

The 7 percent flat tax for foreign retirees represents a great opportunity for retirees abroad and tax residence in Italy. With it, not only is the tax burden reduced, but a clear and straightforward regulatory framework is also obtained. The transfer of residence must take place in one of the municipalities indicated by the legislator. The choice of territory is not irrelevant, as the benefit was designed to support regions and areas affected by demographic crises or natural disasters.

The total duration of the benefit is ten years and, during this period, the retiree also enjoys exemption from the RW form and from IVIE and IVAFE. In case of loss of requirements, the effects cease immediately from the year in which the irregularity occurs, without affecting the benefits accrued in previous years.

Another technical aspect concerns revocability, the retiree can renounce the option, but it cannot be reactivated afterwards. For this reason, it is essential to carefully evaluate, before submitting the tax return, whether the 7 percent flat tax is the most convenient solution compared to other fiscal alternatives.

Typical scenarios / Case studies

The typical scenarios have been developed by drawing on the most significant corporate immigration cases that the firm regularly handles, with the aim of creating structured, complex examples that help the reader navigate their own situation. The case studies, by contrast, illustrate individual real-life matters, anonymised to protect client confidentiality, presented with full factual and contextual detail.

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US opera singer obtains work authorization in 7 days

American opera singer with contracts already signed with an Italian theatre. Self employment work authorization obtained on an urgent basis to meet professional commitments.

Work authorization issued within 7 days from submission of the application

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American client assisted in the purchase of a property in Rome. Urban planning issues and contractual risks identified and resolved before signing, transaction completed through notarial power of attorney.

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Canadian couple, retirement property in Puglia

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7% flat tax activated, cadastral issues resolved before the deed of sale

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British entrepreneur, opening a business in Milan

Post-Brexit, a London-based tech entrepreneur establishes an operational headquarters in Milan. Immigration pathway as a non-EU national, company incorporation, and tax planning.

European operational hub established with self-employment visa successfully obtained

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Swiss retiree: 7% flat tax regime in Southern Italy

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American couple: retirement project in Abruzzo with visa and flat tax

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7% flat tax activated on Social Security and 401(k) pension income

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German couple, from Munich to Tropea

Retired engineers from the Bavarian automotive sector. Multi-tier pension management, Italy-Germany Tax Convention, and the 7% preferential tax regime.

Three German pension pillars optimised with Italian flat tax

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Fashion brand, representative office in Milan

Brand premium newyorkese apre presidio a Milano. Strutturazione per evitare stabile organizzazione, trasferimento direttrice creativa e gestione showroom.

Rischio stabile organizzazione prevenuto, presidio EU operativo

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Corporate

Manufacturing company, ICT transfers to Italy

Multinazionale giapponese trasferisce 3 figure chiave in Piemonte. Permessi ICT per manager e specialista, coordinamento consolare e regime impatriati per tutti i dipendenti.

3 trasferimenti completati in 4 mesi e mezzo, linea produttiva avviata nei tempi previsti

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How the Boschetti law firm can help you apply for foreign retirees benefits in Italy

The application for tax benefits for foreign retirees requires specific expertise in tax matters and knowledge of the most up to date regulations. The Boschetti International Law Firm, thanks to its team of experts in tax consultancy, offers complete assistance to:

verify eligibility requirements for the optional regime
manage the municipal registration and the transfer of tax residence
prepare and correctly complete the M form of the 2025 tax return
provide advice on the possibility of excluding certain countries from the option and assessing the consequences
assist in cases of revocation, forfeiture, or audits by the Revenue Agency

Our goal is to accompany every client through all stages of the procedure, ensuring maximum security and reducing risks related to formal or substantial errors. Thanks to long standing experience in immigration law and international taxation, the Boschetti Law Firm is the ideal partner to turn the transfer to Italy into a conscious and advantageous choice.

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Foreign pensioners in Italy: how the 7% flat tax regime works and who can access it

The 7% flat tax regime allows individuals receiving pensions from foreign entities to transfer their tax residence to a municipality in Southern Italy (with fewer than 20,000 inhabitants) and apply a 7% substitute tax on all foreign-source income for nine tax years.

Eligible municipalities are located in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia, as well as certain municipalities affected by the 2009 earthquake. The regime applies to all categories of foreign-source income. The option is exercised in the tax return, indicating the chosen municipality of residence.

Registered residence in Italy but tax residence abroad: is it possible and what does it imply?

This is a potentially risky situation. Registration in the Italian population registry creates a presumption of tax residence in Italy, with the obligation to declare worldwide income. This presumption can be rebutted by demonstrating that tax residence is abroad, including through registration with the AIRE or under applicable double taxation treaties, but the burden of proof remains on the taxpayer.

The Italian Revenue Agency may assess these situations based on objective factors. The presence of personal or economic ties in Italy may affect the determination of tax residence. It is therefore advisable to define one’s tax position in advance and prepare adequate supporting documentation, also considering tools such as advance rulings.

Health card for foreign nationals with elective residence: how to obtain it and what it covers?

Foreign nationals holding a residence permit for elective residence may enroll in the Italian National Health Service (SSN) on a voluntary basis, subject to payment of an annual contribution. Enrollment grants access to healthcare services under the same conditions as SSN beneficiaries, including general practitioners, specialist care, and hospital treatment.

The annual contribution is calculated based on total income and cannot be lower than €387.34. Alternatively, private health insurance may be used, provided it meets the requirements for residence in Italy.

New residents regime vs inbound workers regime: which is more advantageous and what are the requirements?

The new residents regime (Art. 24-bis TUIR) provides for a flat tax of €200,000 per year on all foreign-source income, regardless of the amount. The inbound workers regime (Art. 16 of Legislative Decree 147/2015) allows a reduced taxation on employment income produced in Italy. They are designed for different profiles.

The new residents regime is suitable for individuals with very high foreign income who do not work in Italy. The inbound workers regime is intended for those who move to Italy for work and have not been tax resident there in the previous two years. They are only partially compatible. The choice should be made before relocating.

Relocation: why are due diligence and real estate advisory crucial before purchasing?

Because the Italian real estate market presents specific risks that foreign buyers may not be aware of: unauthorized building works not regularized, outstanding mortgages, cadastral discrepancies, landscape restrictions, and undisclosed easements. Technical and legal due diligence carried out before signing the preliminary agreement allows these issues to be identified while it is still possible to renegotiate or withdraw.

Specialized real estate advisory for foreign clients also includes urban planning checks, verification of systems compliance, independent property valuation, and assistance in negotiations. Purchasing without these checks exposes the buyer to unexpected costs and post-acquisition disputes.