7% Tax Information

If you’re an expat retiree looking to qualify for special Italian tax treatment, you may be eligible for a 7% tax program that lasts up to 10 years. The exemption begins in the year you transfer your tax residence to Italy and lasts for the following nine years. To qualify for this tax incentive, you must be a nonresident of Italy (regardless of nationality) who receives a non-Italian pension (public or private sector) and meets the following basic criteria:

• Has not been a tax resident of Italy for the last five years.

• Transfers their tax residence to Southern Italy in a qualifying municipality with a population of 20,000 or fewer residents.

• To qualify as a tax resident, you must spend at least 183 days each year within the country.

• Previously been a resident of a country that has a tax treaty arrangement with Italy.

If you meet these requirements, you may qualify for the special 7% Italian flat tax program. It is important to know that this special tax rule only applies to the specific regions, we’ll discuss them below.

The benefits of making this 7% flat tax Italian election are enormous! Income tax rates in Italy tend to be on the higher end. For example, any income earned above €75,000 is subject to a standard Italian income tax rate of 43%.

Under the new preferential tax regime, you would see reduced income taxes on all foreign income and only pay 7%. This includes pension income, capital gains and dividends, overseas business income, rental income and Social Security. This is an enormous benefit for retirees who would otherwise face higher taxation in Italy at the normal rates.