Checking 2025 tax regulations in Italy: Does the flat tax rate for pensioners persist?
Headline: It's Still a Sweet Deal: Seven-Percent Tax Break for Pensioners Moving to Italy's Heartland in 2025
Retirement in Italy? Here's the scoop on the 7% tax rate for pensioners moving to underpopulated towns in Italy's center and south in 2025.
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Since 2019, Italy has offered a tempting seven-percent tax rate for pensioners considering a move to the heartland. But is this golden opportunity still available in 2025? You bet! Let's dive into the details.
Who's Eligible?
Ever dreamt of sipping a cappuccino in sunny Sicily or exploring enchanting hill towns of Umbria—all while enjoying a lower tax burden? Well, here's a boatload of good news for you. The seven-percent tax break scheme is open to retirees who have been legally residing in a country other than Italy for the past five years. Fancy traveling the globe before settling down? No problemo! The five-year residency requirement doesn't mean you can't apply if you've previously lived in Italy—just make sure you've been a tax resident elsewhere during the past five years.
To be eligible, you must also draw your pension from outside Italy. Whether you're a citizen of the Old Continent or the Land of the Rising Sun, as long as your pension comes from another tax treaty country with Italy, you've got the green light.
Benefits and Limitations
What makes this deal sweeter than a famous Baci chocolate? The financial perks, obviously! The seven-percent tax break isn't confined to your pension—it applies to all your foreign earnings, including rental income and dividends overseas. With Italy's personal income tax (Irpef) brackets ranging from 23 to 43 percent depending on your income, you'll be swimming in savings.
Another big plus? No regional and municipal income taxes; these tend to add extra two to three percent to your tax bill.
Of course, there are some strings attached. To enjoy the seven-percent tax break, you must move to a small town with less than 20,000 inhabitants in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia, or selected towns in Lazio, Marche and Umbria. Once you've found your dream spot, you can move between qualifying towns, but if you move outside Italy, you'll lose your tax break privileges.
Remember, you've got until the year after you become an Italian tax resident to apply for the seven-percent tax break scheme.
What's New in 2025?
In 2022, the list of eligible towns was expanded to include some towns with fewer than 20,000 inhabitants in Lazio, Marche, and Umbria affected by earthquakes in 2009 and 2016. In late 2024, the Italian government planned to promote this initiative more aggressively to attract more folks to these areas.
The Bottom Line
Are you tired of paying exorbitant taxes in your homeland? This seven-percent tax break scheme offers a fantastic opportunity to live the Italian dream—beautiful landscapes, a relaxed lifestyle, and a cozier tax bill. So, pack your bags and enjoy la dolce vita!
[1] Italian Revenue Agency Website (in Italian)[2] Nicolò Bolla, Accounting Bolla[3] Studio Legale Metta[4] Il Resto del Carlino[5] CNN Travel
- For retirees aiming to sip cappuccinos in Sicily or explore Umbria's hill towns while enjoying a lower tax burden, Italy's seven-percent tax break scheme in 2025 is still an attractive option, given their residency outside Italy for the past five years.
- Whether a European Union (EU) citizen or a resident from the Land of the Rising Sun, as long as a pensioner's pension originates from another country with a tax treaty with Italy, they meet the eligibility criteria for the seven-percent tax rate.
- In addition to reduced tax on pensions, the seven-percent tax break can extend to other foreign earnings like rental income and dividends, making it a significant financial advantage for many.
- However, to be eligible, pensioners must move to specific underpopulated towns in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Puglia, Lazio, Marche, or Umbria and maintain their residency there to keep their tax benefits.
- The Italian government has plans to enhance this initiative in 2025 by targeting more individuals and expanding the list of eligible towns, making it easier for people to live the sweet Italian life with a lower tax burden.
- Ultimately, the fascinating Italian dream of inexpensive living, beautiful landscapes, and a relaxed lifestyle, all while enjoying a cozier tax bill, awaits eligible expats who are ready to seize this incredible opportunity in 2025.
