Are you a retired person from the US and you start to live in Italy? Are you an American retired and you spend some months of the year in Italy?Read this article and figure out if your US pension is taxable in Italy.
In case you are not an official resident
Therefore, if you are residing in Italy for 3 months or less, you are not deemed as a tax resident, thus you do not have to worry about paying taxes on your American pension in Italy.
Be aware that, according to the US state department, American citizens staying in Italy for more than 3 months per year, are considered tax resident overseas.
From a legal point of view, if you do not hold a EU passport and you plan to stay in Italy longer than 90 days, you are required to obtain a VISA to enter the country and then apply for a residence permit (or “permesso di soggiorno” in Italian). This procedure is administered by various entities, such as the immigration office, the Italian foreign embassy and, at some point, your local post office.If you are a pensioner and you want to move to Italy quickly, we advise to opt for the Elective Residence VISA. You can get more information in regards to our VISA program in our Immigration section.
They will give you an application kit to fill. After giving it back to your local post office, they will address you to a local police station to present your official demand which is scrutinized and, hopefully, approved.
Upon being granted your residence permit and owning or leasing a residential property, as an American citizen, you can finally apply for residency at your local Comune. You will then obtain your certificate of residency (“certificato di residenza”) from the local Vital Statistics Bureau (or Anagrafe) and you can enroll under the Universal Health Care system of Italy.
In case you are a resident in Italy
We can divide foreign pensions in two categories:
- Pensions for public functions paid by a foreign country (or by one of its political or administrative subdivisions), for services and work carried out on behalf of these entities;
- Private pensions paid by entities, institutions or insurance organizations of foreign countries appointed to handle the pension payments related to the termination of employment in the private sector
The first ones are normally ONLY taxable in the US, therefore no disclosure is required in the Italian tax return, whereas the second ones are taxable in Italy.
We recommend for more information, to check the double treaty agreements between the US and Italy.
If you find them hard to read or you do not know where to look, check out our video below about how to read them and how to find relevant information.
In case of Italian Nationality
What about other sources of income?
In case you have other sources of income, besides your pension, you will be subject to pay Italian taxes on these earnings, unless there is an exclusion as provided by the Double Tax Treaty.
For more info about this check out our article about income tax rate in Italy.
2019’s 7% Tax regime for pensioners
This tax regime lasts for 10 years, and it has been introduced as a response to many other Mediterranean countries launching similar programs, as well as repopulating Southern towns.
For more info check our video below.
Do you need help in filing your annual income statement? Write to us.
I’m interested in retiring to Italy. But I’m not sure that I want to live in one of the Southern towns nor Abruzzo. I see that a foreigner can qualify for a 7% tax rate on retirement income if they move to the Southern regions, or Abruzzo. My preference would be to live someplace else, such as Rome, or Florence, etc. Can I still qualify for the 7% rate if I have a residence in say Abruzzo, and also have a second residence in Rome? If not, can you tell me what the tax rate would be for foreign retirees living in Rome?
You may live somewhere else from Abruzzo, however the tax office can claw back your 7% regime in case of audit
Hello Nicolo – I plan on retiring in Italy. My retirement income will be 100% from a public (government) pension. If I decide to acquire Italian citizenship will I lose eligibility for the 7% flat tax rate should I choose to live in Sardegna? Also as a retiree whether American or Italian Citizen will I have to pay the 43% tax rate since my income will be greater than 75,000 Euro? . . . which is really high. Any advice would be appreciated thank you.
You won’t lose the 7% regime eligibility if you claim your Italian citizenship. Note that if you don’t claim your Italian citizenship, your public pension will not be taxable in Italy
So is it better not to claim citizenship if you are retiring w a government pension outside of Italy?
I am an American and Italian citizen that will have tax residency in Sicily and will elect the 7 percent flat tax. All of my income and assets are US sourced. It appears the US does not allow any foreign tax credits to avoid double taxation unless the income is foreign sourced. In effect, with only US income is it correct that we pay the full US tax bill without any offsets for the additional 7 percent paid to Italy? Thanks.
You can resource your income in form 1116 and claim the Italian taxes against the US ones
We live in Abruzzo and are US government retired. No assets in the US. The IRS takes taxes out on out government retirement before we get them. We file our taxes in the US as our income is below 30,000 US.
Is your pension related to government work?
I receive Veteran Disability pay that is tax exempt in the US. Will I have to pay taxes on that if I am an Italian resident?
Apparently yes. I have a state government tax exempt disability pension and my research shows Italy will want to tax it anyway.
I live in Abruzzo and I have retired from my job working for the
United States Postal Service. Does that qualify for the tax exemption here in Italy?
Yes as long as you are not an Italian citizen
I’m interested in the 7% program. To clarify, that’s only the national Italian income tax. I’d still have to pay regional/local income taxes, correct?
The 7% tax covers local taxes (regional and municipal) too
I’m 65 my wife 64.
We are both American and Italian citizens.
We lived in Usa for many years.
In 2020 we both lost our job due to covid 19.
We sold our house.
In May 2021 we moved to the south of Italy in a small town, because of the 7%.
We are now residents.
We will start getting social security money in 3 years.
We are now living on money from 401K to plus some dividends of money we invested from the selling of our house.
We found out contradicting informations.
Is the 401K considered a US pension that qualifies us for the 7%?
Or do we need to get money from the social security?
In case of the second one should we get back to Aire residency in order non to lose the privilege of the 7%?
401k is a qualifying pension income source
Nicolò,
Thanks for this great blog!
My wife and I are dual US/Italian citizens who have never lived in Italy. I will retire next year from my non-government, private job in the US and we plan to move to Italy to live. Our sole income will be from my 401(k) plan, and, in approximately five years, from US Social Security payments. 2 Questions: (1) assuming we do not take advantage of the 7% plan, will we be fully taxed in both countries on my pension income, with no credits going either way? (2) same question, utilizing the 7% plan.
Hi Did you find out the answer to your question regarding the IRA? We are retired, and live in Italy. We are residents of Italy (PDS). Our only source of income is SSA and IRAs. We have paid taxes in the USA to withdraw part of the IRA so that we can purchase an apartment in Italy – our only residence in both countries. Will we have to pay additional Italian taxes here on our retirement income? We went to an Italian accountant who didn’t know what an IRÀ was, and he didn’t have an answer. We now have an appointment with a second accountant.
Does government pension apply to only federal government or local as well? I will be retiring with a pension from a local government fire department I am assuming that is considered government pension in Italy since it does in US. And what of VA disability? That is a government agency as well so does that apply too?
The government pension tax exemption applies to federal government as well as local subdivisions/departments of the federal government. VA disability is normally disregarded
Sir, is there documentation that states that a US Govt Pension and VA Disabilities aren’t taxed? My wife and I are wanting to move to Italy and apply for the Elective Residence Visa and our income is solely from Govt Pension and VA Disability. Thank you for any advise.
yes! please check the Italy – US double tax treaty
Thank you very much.
Hello,
Can you please clarify what it means “VA disability is normally disregarded”? Does it mean that VA disability pension will be taxed in Italy as income?
Normally it isn’t, however there are various types of VA disability that may be taxed as well
My husband and I are retired teachers and considering moving to Italy. We receive pensions from teaching in 2 different states. We pay tax on them in the US. Would they be taxed in italy?
We will also be receiving Social Security payments as well which we will be taxed on by the US as well. Would our Social Security be taxed in Italy?
If you are US citizens only government pensions are not taxed; same as social security
Hello Dr. Bolla – so you are saying as an American citizen only and resident in Italy – I only pay taxes on social security to America?
Some people are saying I have to pay taxes on social security in Italy > regardless!
Please clarify as I am really confused now and thanks!
Sincerely
MJA
Depends on your citizenship, and if you worked for the government in the past
My husband and I purchased a house in Toscana and will want to move there permanently when we retire in 4 years. My income is mainly Social Security and a very small 401K and my husbands income will be from 401K, Social Security and a pension from a private employer. I am thinking of becoming a citizen through jure sanguinis. Would I be taxed higher on my social security and 401K if a citizen?
You would be taxed in Italy regardless of your citizenship. The only exclusion is if you were a public employee during your life, in that event a non Italian citizen does not pay any income tax on it, whilst Italian citizens do
How are Roth 401k and Roth IRA accounts treated ? These are not taxed in US because you contribute with after-tax funds. If you withdraw money from these accounts while you’re retired in Italy (Sicily, small village) will these funds be considered income you have to pay tax on in Italy ?
Yes, they are defined as financial income sources
May I please ask (for a US citizen who is a legal resident of Italy), in addition to the 401K and Roth IRA you mention above, is a traditional IRA account also defined as taxable “pension” income?
yes it is
Hi! What if I convert my traditional IRA to Roth IRA. Will my income from both be taxable in Italy?
yes, both of them
Hello, Nicolo,
I would appreciate your clarification about what is counted as “Pensions for public functions”. We are applying for ER want to move to Lombardy for our retirement this Summer. My biggest source of income will be the social security payment. I worked for 25 years at the NJ public state University and I am considered a State employee. Will my sociail security qualify as “Pensions for public functions”? or it will be taxed in Italy? If it qualifies, what documentation is needed to prove it?
Thank you in advance,
Brian
It does!
Hi Mr. Nicolò Bolla;
I am in the same situation as Brian as I have a DOD PENSION (pension for government work /public functions) but I receive (set up by the Federal Government) social security and not sure if it would be exempt from Italian taxes ? So just to clarify if I become a resident of Italy would my Social Security be taxed even though I was a former DOD GOVERNMENT WORKER? I’m still not sure? And thanks!
as long as you are not an Italian citizen
Hello Nicolo,
If I take an early distribution from a 401k pension (private) in the US and am a tax resident of Italy/dual citizen it would be taxed as regular income in Italy, correct?
Since the early withdrawal is subject to an additional 10% early withdrawal fee in the US (in addition to US income tax), does the double taxation treaty account for the early withdrawal fee or would it be in addition to the applicable income tax in Italy?
Thank you in advance.
your withdrawal is taxable, and you can deduct the extra 10% against your italian taxes
Hi Nicolo,
Are you familiar with Canadian RRSP’s and TFSA’s? Are they also considered pension income?
Grazie
they normally are
Hi!
My wife and are looking to retire to Italy fall of 2023. I have 32 years of Federal Government Work (6 years in the US Navy, 26 years at the Department of Transportation/FAA) could you tell me how my retirement would be taxed in Italy:
*Federal Pension
*Social Security Supplement (Special provision for Federal Air Traffic Controllers paid from date of retirement until they want to switch at age 62)
*Social Security from age 62 on (99% of the eligible social security payment is derived from a Federal job – excluding the few little jobs held as a teenager)
*TSP (Federal Employee 401k) both funded by Federal Government & myself through payroll deductions
*IRA’s – (if we don’t withdraw from them are they taxed and how)
We plan on living in the Southern area under the 7% tax scheme because we are worried about paying high taxes, so I’m really wondering if we could be living someplace else based on your response.
Thank you for your time.
If you are not an Italian citizen, your government pensions are non taxable as per the double tax treaty
So you’re saying that nothing at the moment, is considered taxable in Italy?
TSP?
FERS SS Supplement?
Then we wouldn’t be eligible for the 7% flat tax rate correct?
I was under the impression that if you resided in Italy for more than 180 circa days you had to pay Italian taxes…
depends on the double tax treaty too. It’s a very complicated matter
Nicolo,
Is it true that if I take advantage of the flat 7% tax I can’t claim a tax credit for the foreign taxes I would pay in Canada and USA for my pension income? I also get 25% withholding tax taken on our Mineral Rights cheques.
Thank you again
Nicole two clarifications please. Is the 43%tax rate on American residents on ALL qualifying income if it is over 75,000 euros or only on the portion over 75,000? Second do you file Italian taxes first and then get a credit for Italian taxes paid on your American taxes based on the double taxation rule? Thanks
1. 43% is chargeable on income in excess of 43%
2. you can do it in both ways
I want to ensure no double taxation; American citizen and I would get an extended visa in Italy, and would live off my investments. I will pay capital gains taxes in the US. What taxes would be due in Italy? Thanks!
Capital gains are taxable at 26% rate in Italy, however they don’t provide any tax credit for foreign taxes. I advice to pay tax in Italy first and then claim it in your form 1116 in the US. In Italy you must report your capital gains as well as your foreign held assets
I am an American UN pensioner desiring to become resident in Italy. Is my UN pension considered public or private? Since it is for service as an international civil servant it seems that it must be public not private and hence I will not be taxed on it in Italy. Is that correct? I will have to pay taxes on it in the US. This is very important because if my UN pension is not taxed in Italy I will not need the 7% tax deal and will be able to reside outside the exempted regions. I have looked everywhere to get a clear answer on this but to no avail. Can you answer my questions? Thank you
Your pension may not be taxable in Italy depending from its source. Please get in touch with us so we can advise on your matter
The source of my UN pension is the UN Joint Staff Pension Fund in New York which issues checks to every UN retiree member. Is that what you mean by source? Thank you.
Good morning Nicolo, I am in the same situation as Janet above regarding receipt of a pension from the UN. Grateful if you can confirm if it’s your current understanding that the pension would most likely NOT be taxed, but any social security may be. Sincere thanks in advance. Best, Joe
confirm!
I am a state employee who will retire next year with a pension and social security. Will these be taxed in Italy if I am there more than 183 days? There are also private accounts which I presume will be taxed (IRA, etc.). Also I have read conflicting information on the 7% flat tax. Is it for 5yrs or 10yrs? Does it start from when you start living in Italy greater than 180 days and start collecting your pension?
The 7% flat tax is for 10 years, and you can access it you will receive any type of private or public pension from overseas. If you become a resident of Italy, your worldwide income is taxable
If I retire in italy with a US state pension and obtain italian citizenship, will I be eligible for italian tax credits on my pension income that I will most likely pay tax on in italy?
Yes you will!
So confused 🤔
Husband is Italian & US citizenship. We retired in Italy Monte Argentario (his hometown) I’m American only have resident status.
Our only source of income is his US Social Security which is less than 35K
We have an annuity but not drawing from that yet.
Filed US TAXES & FBAR for an act here in Italy under 10K.
Italians saying we don’t have to pay Italian taxes – just making sure as we are FT here and own our home here (no real estate in the US). I am concerned reading about the Wealth Tax at 26%? Does that apply to his US SS?
Thank you in advance
Wealth tax is 0.2% of your foreign held assets. Note that your Social Security pension may be taxable in Italy
So confused 🤔
Husband is Italian & US citizenship. We retired in Italy Monte Argentario (his hometown) I’m American only have resident status.
Our only source of income is his US Social Security which is less than 35K
We have an annuity but not drawing from that yet.
Filed US TAXES & FBAR for an act here in Italy under 10K.
Italians saying we don’t have to pay Italian taxes – just making sure as we are FT here and own our home here (no real estate in the US). I am concerned reading about the Wealth Tax at 26%? Does that apply to his US SS?
Thank you in advance
Wealth tax is 0.2% of your foreign held assets. Note that your Social Security pension may be taxable in Italy
Hi Nicolo,
We plan on retiring in Italy before we start taking our Social Security benefits. How can we qualify for the 7% flat tax? We planned on living on cash that we have after we sell our house. It that possible?
Grazie
Thank you for this helpful blog. My husband and I are working toward retiring in Italy in a year or two on Social Security (from private sector work) and income from rental property, as well as small RMDs from traditional IRAs. We are trying to decide the best way to hold our assets and generate income, and minimizing taxes. If we live in the South, will we be taxed on net income from the rentals? Or gross? Will we pay wealth tax on the market value of the properties?
If you live in the south, you can claim the 7% tax regime!
Ciao Nicolò,
Thank you for all the interesting information.
I am soon going to move to Italy after having lived in the US and UK. I am an Italian and British citizen and I am not quite yet at retirement age.
I have a traditional IRA (rollover from a 401(k)) and UK SIPP (self invested pension plan). They both are made up of pre tax money and capital gains and dividends are not currently taxed.
Upon moving to Italy, would I need to declare these as financial assets abroad and pay the 0.2% wealth tax on them?
What about capital gains and dividends would they still be not taxed or would I need to start declaring them in my Italian tax return?
Grazie.
Ciao, Paolo
No wealth tax on private pension funds. You are not liable to pay cap gains tax until you withdraw the funds
Thank you Nicolò, very helpful. Do you know if the same holds through for UK’s ISAs (individual savings accounts)? Those are made up of after tax funds, attract no tax for capital gains and dividends and have no constraint on withdrawals while there are constraints on the contribution per year.
I would expect these are not pension funds and hence do not attract any beneficial treatment in Italy?
Italian/USA citizen with a USA government pension and rental income combined over 100,000 euro annually, if I lived in Palermo would both be taxed at only 7%? And then pay the remainder to USA deducting the 7% paid to Italy?
Also I didnt understand the roth too clearly? Are USA Roth accounts taxed in Italy?
Thanks
Palermo does not qualify for the 7% regime. You need to find any municipality with 20,000 inhabitants or less
I am considering retiring to Italy in the next several years. I will only have my Social Security and pension from state employment. Will either of those be taxable?
no if you are not an Italian citizen
Hi Nicolo,
My dad is a dual citizen retired (74) moving back home to Italy. He has both federal social security benefits and employment retirement benefits with his bank and another bank institution. How does he transfer those into Italian banking sources? What is the protocol so he can receive his benefits residing in Sperlonga, Italy.
he needs to request the institution to pay his pension to the Italian bank
Hi Nicoló,
We are planning in the next year or 2 to split our time between our home in Los Angeles and a home in Puglia, living off rental income and dividends. Our income will be well above €100k, and I’m not sure I want to give up our California residence status because we do noy want to sell our home. Can you explain what the tax implications of this would be? I am trying to plan financially, and that is proving quite challenging.
Dear Jessica,
if you want to stay in Italy for more than 90 days in a row you need to have a residence permit, however if you move between the two countries you may not trigger Italian tax residency. This topic is fairly complicated and requires a good planning to achieve that
Hi I only have Social Security and cash from the sale of my mum’s home.
Will I be taxed or does the 7% apply?
Also can I get residency?
you can get residency if you are a EU citizen or have a valid residence permit. You can be taxed on 7% if you have social security and move to a qualifying municipality
Hello,
Wondering if any small towns in Friuli Venezia Giulia would qualify? We own an Italian home in a small town of 6,000 inhabitants.
Thank you
unfortunately it doesn’t
Hello Nicolo`, thanks for your blog, I find it very interesting.
I am a dual citizen USA/Italy and I am planning to return to Italy in a few years. My question is whether I should do conversions from IRA to ROTH IRA. Nearly all of my IRA assets are pre-tax money. As you know I would pay distribution taxes during conversion to ROTH but any future withdrawals would be exempt from taxation.
What exactly would I pay to Agenzia delle Entrate? Are distributions taxed in both cases? Is any tax levied on dividends kept inside the IRA accounts?
Thanks much,
401k withdrawals are taxed as pension income (progressive tax brackets) while Roth IRA distribution are deemed as dividend distributions taxable at 26% rate
Hello Nicolo,
Thank you in advance for the wealth of information you have provided.
My wife and I are both recently retired. We would like to move to Italy full time and become residents. We have cash and a private 401k (currently not taking any distributions) that we will live of off. For the Italian taxes, would we only be taxed on the distributions that we take from the 401k? Is the Italian wealth tax also applied to the entire 401k amount too?
Thank you!
No wealth tax on your 401k!
Are distributions from US government Thrift Savings Plan accounts taxable for retirees (not Italian citizen)? TSP is like a 401(k) but for Federal employees, so it is in some ways a government pension. Thanks for your helpful blog.
It depends on your past employment, regardless of the type of fund
Hi Nicolò
Many thanks for the valuable information here. I am a Swiss citizen, resident in Switzerland, worked for eight years in the US for a private company nearly twenty years ago, and have a rollover IRA and a Keogh account still there. I was told that I can take the money out of the accounts without paying any withholding taxes in the US by submitting the W-8 BEN form to Fidelity where my accounts sit (as a citizen and resident of Switzerland). Until now I have not withdrawn anything from these retirement accounts, as I am not retired yet.
I am considering retiring in a couple of years and taking residency in Italy, where we have a house. Does the same apply as to US citizens (if I understood correctly), that any annual withdrawals from these accounts would be taxed at regular income tax rates? What if I would withdraw the whole amount as a lump sum? Do you know if I could use the W-8 BEN form to avoid paying withholding taxes in the US as an Italian resident?
This strategy works. However, if the payment is deemed as a lump-sum then you will suffer US taxation on this
Salve
I am retired on a US Government Employees Disability Pension. As well as Social security Disability pension. If I opt into the 7 percent exemption and living in designated area Does my public pension taxable under the 7 percent agreement. I know it would normally be exempt under tax law. But would I have to pay tax the pension if I ompted into 7 exemptions or just tax on social security?
Grazie Mille
Dario
Dear Dario,
the issue is that you need to have a taxable foreign pension to benefit of the 7% scheme. If you have such pensions and you are not an Italian citizen, you can’t opt for the 7% scheme; if you are an Italian citizen, such pensions are taxable, therefore you will pay tax at 7% rate on such sources
I moved to Italy and became a resident in 2020, but received no income until this year, 2022, which is when I began receiving my US Social Security Pension Distributions. I’ve been told I don’t qualify for the 7% flat rate because of this. Also I’m being taxed on my 401K as an investment plan. I understood that my 401K qualifies as a pension. I am not taking any distributions yet. Am I being taxed correctly? I am very confused.
You can’t claim the 7% scheme since you did not have any pension income in the first year you arrived
Sorry, I also need to ask if my American IRA is subject to wealth tax now that I’m a resident in Italy. Thank you
Private Pension funds are non subject to wealth tax in Italy
Salve, Nico. I am a dual-citizen US/Italy. I moved to a 7% tax-qualifying village in Southern Italy and established a tax residency this year. I retired early at 55, but am fully vested and able to withdraw funds from my 401K without limitation or penalty under the “Rule of 55”. Due to current market volatility, I have held off on taking a distribution this year, and have been living off of savings and long-term disability payments from a US employer insurance policy that will end this year. I plan on taking my first distribution from my 401K in December.
I understand from prior posts here that 401K qualifies as pension income. Someone told me that I would have to have already taken 401K distributions prior to becoming an Italian tax resident. Is this true or will I still qualify for the 7% tax regime if I take my first distribution this December? If so, do the distributions need to be set up as SEPP? Is there a minimum amount that must be withdrawn each year to qualify as a pension?
Do US Veterans Disability Benefits and/or Long Term Disability Payments from an employer insurance plan count as pension income?
I’ve looked everywhere for written guidance or law regarding this, but haven’t found anything.
Thank you very much in advance.
James
The amounts you receive count towards the 7% scheme. You need to have received it during 2022
Hi Nicolo,
we would like to move to Italy and will be living off my wifes 401k and other investments before receiving our Social Security in a few years. Would we qualify for the 7% tax regime?
Thank you
You are likely to qualify if you meet the criteria to withdraw from your 401k.
Hello.
I’m in the process of obtaining Recognition as an Italian Citizen.
I don’t plan on retiring for more than 10 more years
I might want to live in Southern Italy in a 7% town.
I will have a New York City Civil Service Pension, a 457 IRA, a 457 ROTH IRA, and My Social Security.
My Wife a Non-Citizen will have just Social Security.
I might keep My Home in New York and see about Renting it to Supplement the Cost of a Rental Home in Italy.
Combined, All of My sources of Income might be over $100K by the time I will live in Italy.
A few Questions.
1. Will Our Income be filed Jointly as it is here in New York or be seperate?
2. Will I still be able to qualify for the 7% with the Income possibly over $100K?
3. If Our Income is not going to be filed Jointly, then how would My Wife’s Income be if under $35K since She will only have Social Security or would I have to show that I can Financially Support Her with My Wife obtaining a Permission of Stay?
1. You always file separately in Italy
2. Until you become an Italian citizen, your civil service pensions are non taxable in Italy
3. see 1
Nicolò,
Grazie for this excellent post. My wife and I are US citizens with a home in Florida and a condominio in Piemonte. We have retired and have income from savings and 401ks. Eventually, we will start drawing on our US social security. We were considering applying for an elective residency visa so that we could spend more than 90 days in Italy, but after seeing your blog, I am concerned that I will be setting us up for double taxation. In reading the tax treaty, it appears that we would be considered residents of the US because that is the “center of vital interests”? It is where we have worked and have the vast majority of our wealth.
potentially you may be liable to pay italian taxes as well. Note that you may be covered under the art. 19 Italy-US Double tax treaty
Wow! So much information! We are two retired elementary school teachers living in Lucca off of my husband’s public school pension, his (small) social security and the rental income from our home in the US. We have our IRAs (both Roth and traditional) back in the US that we have not touched, along with a relatively small bank account. There is also my small pension from when I taught in a private school. We claim all of this on both state and federal tax forms in the US. We rent a small flat here in Italy and are here on Elective Residency visas. We have our Permesso di soggiorno and our Tessera Sanitaria. (Before moving to Lucca in April of 2021, we lived in a small hilltown for 10 months). What exactly is taxable here in Italy?
if you are not Italian citizens, you must pay tax on any other income (apart from your pensions), as well as disclose your foreign held assets and pay wealth tax. I can help you with the compliance
Bongiorno Nicolò, I have some questions: I have dual EU and US citizenship. I’m not Italian. I live in the US and I will have a Social Security pension in 2 years. I plan to retire in Italy in the next couple of years. My daughter bought an apartment in the Veneto area last year. I will live there and have my US Social security pension and income from real estate in the US.
Because I will live in Northern Italy I can’t use 7% taxes. Should I pay 40% taxes on my SS and real estate income if I live permanently in Italy?
Grazie
Dear Eva, your foreign pension may not be taxable in Italy under art. 19 of the Italy-US double tax treaty
In any case, you can’t claim the 7% flat tax scheme
Ciao Nicolò, we are American citizens with Italian residency, permanently. We have 401k and IRA accounts which will be taxed at our general US income tax rate when we begin withdrawing to meet the US RMD at age 73, change for 2023. Our question is on our Roth IRA accounts. As we have paid income tax when we funded the accounts we have been told Italian income taxes would not be due on our original funds only the gains? Would this be taxed in Italy as capital gains or as income taxes? Grazie
This is correct. Gains are taxed at 26% rate in Italy
Ciao Nicolò, does it work also for the Roth 401k? I might contact you in the near future to understand how your team can support me.
Thanks in advance.
Yes it does
Thank you for your info. I am a US citizen. Have lived in USA all of my life (Italian parents). My wife and I wanted to buy an apartment in Florence with the purpose of renting it some time and visiting 1 month at a time, several times a year. I am about to pursue my Italian citizenship. Will that give me any advantages or disadvantages on taxes (real estate taxes?) and my American income (I plan on continuing to work in USA and have rental income here for over $300,000 p year)
Claiming your Italian citizenship will not affect your plan. US citizens can buy any real estate property in Italy, and Italy doesn’t tax you on your worldwide income. Once you buy the property you must pay property tax, as well as file an annual income tax return disclosing your rental income in Italy
I am retired American citizen and living in Tuscany, Italy. I have a PDS and will have the option to become a duel citizen after my spouse gains her citizenship through a 1948 case. Our only income source is my social security income: 1770.00 per month, that is deposited in my U.S. bank account. Can I be taxed twice on my social security? My understanding is that Italy has a tax agreement with the USA to avoid double taxation. I look forward to your reply.
you will be not double taxed since taxes paid overseas are deductible against your Italian tax bill or viceversa
I am an American and applying with other family members for Italian citizenship. If I keep residency in the US and visit Italy, will I be required to pay taxes to Italy on my U.S. teachers’ pension and social security?
you will be liable to pay taxes if you acquire residency to Italy. Italy doesn’t tax on your citizenship
I am American my husband born in Italy but naturalized in U.S. as a child. We came to Italy in 2016 to help family. We had permesso but stopped bc grandson was a minor. Declined elective residence and special protection. We are going to try cittadinanza and only get social security. Live in Verona. Will they tax our benefits?
I previously asked a question but received no response. I am a u.s. citizen, my husband born in Italy but naturalized in the u.s. as a child. We came to italy in 2016 to live and help with our grandson. We had a permesso familiare but it was stopped because it was based off our grandson who was a minor and my husband turned 65. We have had two lawyers apply for elective residence visa and recently special protection permesso. We want to apply for citizenship and have only income from social security disability. Will they tax our benefits if we apply for citizenship?
If your husband’s parents haven’t renounced citizenship before he was born, why don’t you reclaim Italian citizenship? You can do it from Italy
My wife and I are planning to move to Rome from the US. We both have 401k and Roth IRA Accounts. If we do not make any withdrawals from either the 401k or the Roth IRAs in a given year, will we still have to pay Italian Tax on interest earnings (not withdrawals) made within those retirement accounts? In other words, does Italy only tax the “withdrawals” from retirement accounts or would we have to pay Italian tax on the “interest earnings” within those retirement accounts even though no withdrawals are made and therefore no US taxes would be paid? Please clarify. Thank you very much.
Italy taxes withdrawals only
My wife and I are planning to move from the US to Rome, Italy. We both have 401k and Roth IRAs. If we do not make any withdrawals from these retirement accounts, do we still have to pay Italian tax on the interest earned (but not withdrawn) from these US retirement accounts? Thank you.
No, because the taxation principle for individuals is the cash basis. No payment to you, no tax
I am a dual Italian-US citizen and Italian national. I am a resident in the U.S. I just got my Italian INPS pension from working in Italy before I became an American citizen. Do i have to include the INPS pension as income on my IRS taxes? It is already taxed in Italy. I have tried reading the US-Italy tax treaty, but it’s not very easy to understand. Thanks.
Yes you should include that in your IRS return. Note that you must request INPS to pay it gross with no withholding tax on it
Hello sir, thank you for the information! I will retire with a US federal pension, social security, and federal TSP account, which is the federal employees 401k. My understanding is that my federal government pension and social security would not be taxed in Italy. Will the federal employee TSP distributions be taxed? I know my husband’s 401k will be taxed but will his social security be taxes in Italy? Thank you for clarification!
If you don’t become an Italian citizen, then all of your pensions will not be subject to taxation
I should have added this- Neither of us are Italian citizens. We would like to gain residency by the elective visa. Thank you!
Salve,
I am an american and live in Abruzzo in a town of less than 20k. I have obtained italian residency. My source of income is social security and I took a withdrawal from my IRA account to purchase my home. What are the tax implications?
grazie mille
If you claimed residency earlier than July 2nd 2022 you are due to file an annual tax return and pay tax in June. You can definitely apply for the 7% tax regime ruling to reduce your income tax
How much will I be taxed if I retire to Tuscany and my husband and I have a combined income of $75,000 from social security and IRA? Thanks
In Italy you always file separately, therefore it’s important to understand each taxpayer’s income source
Buongiorno Nicolo’–
As an American, ‘resident’ in Italia, I believe my US military pension would not be subject to taxes in Italia; per IT – USA double taxation treaty [?] Knowing that, is it necessary to file Italian Income Tax form each tax year?
Correct. However, you must report other income sources (financial, rentals etc.) as well as disclose your foreign held assets (bank accounts, investment funds, real estate etc.)
I obtained my Italian Citizenship by Italian Descent in 2022, I am a US Gov’t pensioner since 2014. When seeking my Italian citizenship, I bought a condo in Italy and obtained residency for five months, until I obtained my citizenship and then moved back to the US, signed up in AIRE through my Italian comune/Italian consulate. I pay my IMU and TARI using F24 via my Italian bank and believe I have never become an Italian tax resident as I was there far under the 183-day limit. We return and stay in our condo a few months at a time, intending to stay no more than a total of 4-5 months a year. Am I running any risks of being taxed on my Government Pension under the aforementioned plans? Thank you for your informative blog!
As a pensioner you should not pay IMU on your primary residence in Italy. You are not risking of being attracted to Italian taxation if you stay in italy 4-5 months per year
Do American citizens living in Italy have to pay Italy’s Wealth Tax on either their 401k or Roth IRA balances that are held in Fidelity Accounts in the US?
Thank you very much for the informative blog.
I have recently been recognized as an Italian citizen. My wife is not eligible for that unless she were to apply as my spouse and takes the B1 language exam etc.
If my wife is resident with me in Italy, is her US public sector (government) pension going to be taxed in Italy if she’s paying US taxes on it? Additionally I see language in the treaty about exemption from some taxation rules for people working as professors or teachers. Is it helpful that she is retiring from teaching (again in a public sector capacity?)
Thank you in advance!
That’s non taxable as long as she doesn’t obtain Italian citizenship
Thank you for all the valuable information. My wife and I are planning to apply for the elective residence visa and move to Italy in 2025. We are US citizens. Our annual income will only be as follows:
Wife-Social Security $13000
Me-Social Security $24000
Me- pension from US federal government $34000.
We would like to live in Verona. Will we be required to pay Italian taxes? Thank you.
If you worked for the government or any of its subdivisions, you are protected by Italy-US Double Tax Treaty, otherwise you have to pay tax. in any case you must file an annual tax return disclosing your financial income sources (dividends, interests, capital gains), as well as foreign (non Italian) assets such as bank accounts, private pension funds, real estate, investment funds etc.
Hello my husband and i bought a home in a small village of 5,000 in Campo Tures Italy near Austria. Sud Tirol. (Too bad we didn’t buy in a Southern Italian small town)
We have elective residency and in 2022 spent 10 months in Italy. We are shocked that we owe a whopping 31,000 euros in additional taxes to Italy!!! We already paid
~ 10,000 US dollars (filed with our US tax preparer) but according to our tax preparer here in Italy that was only about 9% in taxes paid to the US government. We cashed out my IRA from my work so that added to my private income. Plus our rental income on our USA home. So my yearly income for 2022 was figured at 72,782 US dollars, putting me in a 32.7% Italian tax bracket. My husband’s income for 2022 was figured at 47,000 US dollars putting him in a 27.6% Italian tax bracket. My private social security is 30,000 US dollars and my husband’s private social security tax is also 30,000 US dollars. Off hand do you know what percentage of Italian taxes we would pay on just our social security? If we only stay in Italy for 179 days do we owe any Italian taxes?
I am an American Citizen Born and raised in the US and I work for New York City and I will have a New York City Pension with NYCERS when I retire. I will also have a 457 IRA and a 457 ROTH IRA and My Social Security. My Wife will only have Her Social Security. I am in the process of a 1948 Case to have My Italian Citizenship Recognized. Here in the US, My Pension will Not be Taxed by New York State. My 457 ROTH IRA I have been paying Taxes on to Fund it’s growth and when the Money is Distributed here in the US, it will Not be Taxed since I already Paid Taxes on it while Funding it. I would like to know How this will Effect Me and My Wife for Me and My Wife either as Individuals and or as a Married Couple. Also, We have a House that I would either Rent out as Income for Us or have it as a Rental that would after a bit of time tunr into a Rent to Own, or We might just Sell it which We Will make that decision If and When We decide on If and When We Move to Southern Italy in a 7% town.
Hi Nico,
I want to retire in 2024 to Umbria .I have my social Security as the only income ,$3400 mo.I know that will be enough to live a nice retirement ,I will rent not buy and I will like to know if I will taxed on that amount in Italy.
Thank you
you likely will be taxed on such an amount
I am a dual citizen of the US and Italy. I live in the Veneto as an official Italian resident. As a partial-year resident in 2022, I’ve just completed the Redditi PF at the local CAAF office.
These questions are about Italian tax liability for 2023.
1. In a US bank, I have a small Roth IRA certificate of deposit (CD) and a traditional IRA savings account. Will either or both of the IRAs be subject to Italian wealth tax for 2023? If yes, will I pay the flat rate of 34,20€ for each account or 2% of the balances?
2. If a foreign bank account is closed during a tax year, will I have to pay flat rate tax on it? I assume yes.
Grazie mille.
1. US bank € 34.20; the rest is at 2%
2. yes, pro rating the duration
Hello there!
My wife (not an Italian citizen) and I (both Italian and American) plan to move to Italy after her retirement. She will get 2 pensions at retirement: the US Social Security and State pension. She has worked 20 years for the local government agency (Department of Rehabilitation Services). Previously she only worked a few years for private companies (and paid only into Social Security. The last 20 years of contribution to Social Security and State Government Agency come exclusively from the State job. Will she be able to pay taxes only to the US Government?
Thank you very much for your time!
According to the Italian – US double tax treaty, government pensions are not taxable in Italy.
I am a retired 64 year old USA citizen married to a 57 yr old italian woman. We have $4M in investments ($1.5M IRA and 401K, $2.5M stocks/bonds) and a $2.5M house in California. Will get social security of $60K/yr at 70 and $90K/yr once wife turns 65. We want to use some of our investments to buy a $1M house in northern Italy in the next year or two, live there for a substantial amount of each year, insure ourselves for our health in both USA and Italy, and minimize our tax burden in Italy, USA, and California.
We want to figure out what the right strategy is as regards which residency to apply for, how many days/yr to stay in Italy, how many days to stay in a stretch in Italy, and private vs national insurance.
Can you suggest a few sensible scenarios ?
For example, is the following a sensible and accurate scenario … italian retirement residence permit, <90 days per stay in Italy, <182 day/yr in Italy, rest of time in USA or travel around the world, wife covered by italian national health service, as husband I get the same as my wife, add a small amount of italian private health insurance to get quicker service in emergencies, wife gets USA citizenship so that she gets USA medicare just like me when we are in USA, we are not italian tax residents so we pay no italian wealth tax or capital gains tax, pay IMU of roughly $10K/yr on our Italian house (or is the Italian house considered our first house and hence IMU is much lower ?), we live off proceeds from investments until I turn 70 and after that mostly live off USA social security and pay 30%-35% Italian tax on that.
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Hi Nicolo,
I will be retiring on a public pension and Social Security as well as a 403b. At what percent would I be taxed if I retired and held residence in Tuscany? Would I be double taxed?
I’m interested in the rates of pension taxes and approximate rates of property taxes for expats in Tuscany.
Thank you!
Pensions are taxed as regular income, starting from 23% up to 43%; however, if you are not an Italian citizen and you receive a government pension, such pensions are not taxable in Italy
Hello, I am a retired elective resident from the USA living in central Italy. I find the taxes to be uncomfortably high but love my town and my life here and am committed to staying. Soon I will need to take compulsory withdrawals from my American retirement accounts. If I immediately invest this money in a certificate of deposit or an annuity in my American bank will that lower my tax liability on these withdrawals? Or would it be better to make investments with an Italian bank? Thank you.
that’s indifferent as the taxation doesn’t change
I understand that no government pensions from the US are taxed in Italy. But it seems that the pensions are still taxed in the US. I am looking at property in Abruzzo which should give me the 7% tax rate. I have 2 pensions, (military and private) 401k and Social Security. To me other than a better lifestyle (which makes Italy great!) there is no lowering of my taxes if I become a resident in Italy. Am I reading this right?
That’s true if you are not a dual citizen; should you also have Italian citizenship, your government pension becomes taxable in Italy.
As US citizen your tax minimization strategy must aim to pay less Italian taxes, compared to the US ones
I claimed citizenship already and have a US Government (firefighter) pension (80k annual Euro), to my understanding this will be taxed as ordinary income in Italy at 42%? But not dual taxed due to the treaty. Thank you.
Hello!
What happens after the 10 years is up on the 7% tax regime? Do we then pay the standard tax? We would only have our US social security as our income. Would there be any deductions that we could claim to lower our taxable amount?
My husbands annual SS is 38,000.00 and mine will be $18,000 both US dollars.
Any light you can shed on this would be appreciated.
after the 10 years, you are liable to pay taxes at standard rates; however, you can reduce the gross tax due by tax credits, and deductible items
NICOLÒ,
I will be receiving 2 government pensions (1 state pension, 1 military pension). I understand that the double tax treaty will make me exempt to the Italy tax system. However, I need some clarification on a couple of things. Am I not exempt if I am an Italian resident OR a citizen? Or is it Italian resident AND a citizen? Is it both or one or the other? I intend to have an elective residency (retirement)…
as an Italian resident without Italian citizenship, your government pension is not taxable in Italy
I became an italian citizen a few years ago. Will my US IRA be included in my Italian estate when i die?
No if you don’t reside in Italy
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Hello NICOLÒ, We are planning to retire in Italy by applying for Elective Residency Visa and moving to the South of Italy in a municiopality elgible for 7% flat tax. We will have Social Security benefits and Tranditional IRA withdrawals as our source of income. Can you please explain how our Tranditional IRA withdrawals will be taxed in this case? Will it be 7% tax no matter how much we take out during a tax year or it’l be profgressivly taxed depending on the amount?
Also, will it be taxed in the US as well or there will be no double taxation in this case?
Thank you.
7% tax i charged on your whole non Italian income with no caps.
You can deduct any tax paid to italy in your US tax return
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