7% FLAT TAX INCENTIVE FOR NON-RESIDENT RETIREES MOVING TO ITALY

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With article 24-ter of TUIR, introduced by law no. 145 (budget law 2019), an option has been conceived for the application of a substitute tax on the income of individuals holding pension income from foreign sources who transfer their tax residence to the South of Italy.

In this sense, natural persons, holders of pension income paid by foreign subjects, who transfer their residence to Italy in one of the municipalities belonging to the territory of the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, with a population not exceeding 20,000 inhabitants, they can:

  • opt for the taxation of income of any category, received from a foreign source or produced abroad, to a substitute tax, calculated on a flat-rate basis, at a rate of 7% for each of the tax periods of validity of the option (for the identification of “income received from foreign sources or produced abroad”, it is necessary to refer to the criteria established by article 165, paragraph 2, TUIR). The tax must be paid in the manner provided for by art. 17 and following of Legislative Decree no. 241/1997 within the deadline for the payment of the balance of income taxes;
  • benefit from the exemption from the reporting obligations regarding tax monitoring and from the payment of Ivie and Ivafe.

In particular the option:

  • can be exercised by individuals who:

– have not been fiscally resident in Italy, in the five tax periods preceding the one in which the option becomes effective;

– transfer their residence from countries with which administrative cooperation agreements are in force;

  • it is valid for the first five tax periods following the one in which it becomes effective (in the event of forfeiture or revocation, the option can be exercised again once the five-year effective period has expired. The assessment of the tax residence in Italy during the five years preceding the first exercise of the option).

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