Italian tax authority has recently published a ruling that confirms the possibility for a taxpayer who holds an Italian pension in addition to one or more foreign pension to tax all their foreign income at 7% tax rate, provided that all the requirements set by the Italian Consolidated Tax Code are met.
In the specific case brought to the attention of the Authority, the taxpayer was tax resident in Germany before the transfer to Italy, receiving a German sourced pension and an Italian State pension. Agenzia delle Entrate confirms that the Italian State Pension is not an obstacle for the application of the favourable regime, provided that:
- The taxpayer has not been resident in Italy for at least 5 tax years prior to the transfer;
- The country where the taxpayer was resident before the transfer has tax cooperation agreements in force with Italy;
- The taxpayer transfers this residence to a municipality in southern Italy (or to a municipality of one of the regions hit by seismic events between 2009 and 2016) with a population below 20,000 inhabitants.
In the mentioned hypothesis, the Italian pensions fall outside the scope of the favourable provisions, and it will be subject to taxation at ordinary tax rates, alongside all other Italian sourced income.
Belluzzo International Partners can provide specific assistance regarding the pension holders regime and all other favourable tax regime currently in place in Italy. For a brief overview of the provision, please see our Focus Update “THE 3 REGIMES FOR NEW ITALIAN TAX RESIDENTS”.
