Are U.S. Pensions Taxed in Italy? (2023)

Do you live in the US and you are planning to retire in Italy?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

As you might already know, Italian tax residents are required to pay tax on their worldwide income.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.

(Video) Are US Pensions taxed in Italy?

​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

As a general rule, American pensions are taxed in Italy. However, there are few exemptions as explained by the double taxation treaty with US.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 you have any doubts you may want to ask an international tax consultant, or to the American Embassy in Italy.

(Video) Taxes on foreign pension in Italy

Are U.S. Pensions Taxed in Italy? (1)

In case of Italian Nationality ​

In case you are an Italian citizen or you are applying for Italian citizenship, then you will be liable to pay Italian taxes on your public US pension.

In this case your American pension will be counted as a foreign income, therefore you must declare it in your income tax return and pay tax on it.

What are other income sources?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.

(Video) Pension and Retirement Account in Italy : taxed ?

2019’s 7% Tax regime for pensioners

To attract more pensioners, Italy introduced in 2019 a new tax regime. It consists of a 7% flat tax rate on all foreign sourced income. In addition to that, you do not have to disclose your foreign held assets and you do not pay any wealth tax.

However, you must acquire residency in a town with a small population (less than 20.000 inhabitants) located in the southern regions and Abruzzo as well, and receive a public or private pension at the time of relocation.

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.

Find Out More About Paying Taxes in Italy

Accounting Bolla is a boutique Italian tax firm equipped with experienced accountants assisting corporations, individual and expats with their tax affairs. Specialized in international tax areas for expats and companies wishing to establish in Italy.

(Video) Foreign Pension in Italy: where should I pay my taxes?

Reach out to Nicolò and request a consultation to discuss the home buying process in Italy and the financial incentives in making such investment.

Are U.S. Pensions Taxed in Italy? (2)

Want to Retire in Italy?

Read on to find out how

Learn more about Paying Taxes as a Foreigner in Italy

(Video) What taxes do I have to pay in Italy on my pension


Are foreign pensions taxable in Italy? ›

The 7% flat tax applies to all foreign income sources, including: Pension Income. Interest Income.

Which countries do not tax US pensions? ›

Top 9 Tax-Free Retirement Countries for Americans Abroad
  • Panama. Panama tops most lists of the best countries to retire in, and there are good reasons for that. ...
  • Costa Rica. ...
  • Portugal. ...
  • Ecuador. ...
  • Greece. ...
  • Belize. ...
  • Nicaragua. ...
  • The Philippines.

Will Italy tax my US Social Security benefits? ›

In case you are an Italian citizen or you are applying for Italian citizenship, then you will be liable to pay Italian taxes on your public US pension. In this case your American pension will be counted as a foreign income, therefore you must declare it in your income tax return and pay tax on it.

How is my US pension taxed if I live abroad? ›

Distributions from your 401(k) and pensions are still taxed as income, albeit they're treated as unearned income—meaning you won't be able to claim them under the Foreign Earned Income Exclusion.

What is the 7% tax rule in Italy? ›

Under the new preferential tax regime, an individual would be exempt from income taxes at the normal scale on all foreign income and only pay 7%. This includes pension income, capital gains and dividends, overseas business income, rental income and Social Security.

Can I retire in Italy from USA? ›

While a visa is unnecessary if you're merely visiting Italy from the U.S., you'll need to apply for one in order to gain permanent residency. You will also have to provide proof of sufficient retirement funds with which you can support yourself.

Which country is best for retired American expats? ›

In order of top to bottom, the following top 10 countries to retire abroad include Portugal, Mexico, Panama, Ecuador, Costa Rica, Spain, Greece, France, Italy, and Thailand.

Is Italy a good place to retire? ›

Italy is often referred to as one of the best countries in the world to retire to for various reasons, from a relaxed lifestyle to large expat communities in some areas, not forgetting the Mediterranean climate, high quality of life and the incredible food and wine culture that Italy has to offer.

What happens to my Social Security if I move to Europe? ›

If you are a resident of a country that has a U.S. social security agreement, (other than Austria, Belgium, Denmark, Germany, Sweden, or Switzerland), we will continue your U.S. Social Security payments.

What happens to my Social Security if I move to Italy? ›

How Benefits Can Be Paid. If you have Social Security credits in both the United States and Italy, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.

Does the US have a double taxation agreement with Italy? ›

Other provisions of the Italy-US double tax treaty

The new double taxation agreement allows the United States to tax US branches of Italian companies. The new treaty also allows Italy to tax a foreign company on a dividends equivalent amount. The agreement also changes the way pensions and other benefits are taxed.

How much of your income is taxed in Italy? ›

In 2022 the tax rate for an individual is between 23%-43%, In addition to direct taxation (IRPEF), there is also a regional tax of 0.7%-3.33% and a municipal tax of 0%-0.9%.

Can I receive my US pension overseas? ›

If you leave the U.S., we will stop your benefits the month after the sixth calendar month in a row that you are outside the country. You can make visits to the United States for specific periods of time, depending on how long you've been outside, to continue receiving your benefits.

Can I transfer my US pension to another country? ›

Yes, transfers can be made from The People's Pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) at your request. A 25% overseas transfer charge applies to certain transfers from a: registered pension scheme to a Qualifying Recognised Overseas Pension Scheme (QROPS)

What happens to my pension if I retire abroad? ›

What happens to my State Pension if I move abroad? As long as you've paid enough National Insurance, you can claim your State Pension while living abroad. The main difference is that if the State Pension increases, you may not benefit from the extra amount if you're living in certain countries.

What taxes do expats pay in Italy? ›

American expats in Italy are also subject to regional income taxation. Regional income tax rates range from 1.23% to 3.33%, depending on the applicable region of residence.

Are property taxes high in Italy? ›

Property tax ranges from 0.4% to 0.7% of fiscal value, depending on location and property type. There is no wealth tax in Italy. Individuals are exempt of capital gains tax five years after the purchase. If the property is sold within five years capital gains are taxed at 20%.

How long can I stay in Italy without paying tax? ›

An individual who is registered with the Registry of the Resident Population for less than 183 days in a calendar year is generally considered a non-resident for tax purposes (although other factors have to be taken into consideration) and is thus subject to taxation only on Italian source income.

Where do most American expats live in Italy? ›

With close to 3 million inhabitants, Rome is the third largest city of Europe. It's also home to 300.000 fellow expats, as around 10% of the city's population is non-italian.

What is the average monthly pension in Italy? ›

(ANSA) - ROME, OCT 27 - Around a third of Italy's pensioners, 32.8% or 5.3 million people, get State pensions of under 1,000 euros a month, INPS said on Thursday. The pensions and social security agency said the average State pension was 19,443 euros a year.

What is the number 1 place to retire in the world? ›

The Top 25 Best Countries to Retire in

With an overall score of 81%, Norway comes in at number one as the most retirement-friendly country on the list.

Where do the happiest retirees live? ›

1. Wilmington, North Carolina. Living on a coast boosts happiness, health and well-being, according to a 2020 report.

Where are US expats the happiest? ›

Mexico is the winner, with 91% of expats saying they are happy with their life South of the Border. Drilling down, Mexico ranks first for the ease of settling in and second for personal finances.

Can you live in Italy on Social Security? ›

Italy is happy to welcome retiring expats and their spending money. But to legally live in Italy as a retiree, you'll need to be able to show that you still have an income. Retirement income can come from many sources including: Social security checks.

What is the safest city to live in Italy? ›

Italy's Safest Regions
  1. Abruzzo. The region of Abruzzo lies to the east of Rome. ...
  2. Apulia. The “heel” to Italy's boot-shaped territory, Apulia is proof that the south does have plenty of extremely safe places to live. ...
  3. Milan. ...
  4. Tuscany.

Do I lose my Social Security if I become a citizen of another country? ›

Generally speaking, if you have qualified for Social Security by working and paying into the program for 40 quarters, then you will be eligible to collect benefits as an expatriate and retire in a foreign country.

Can Medicare be used overseas? ›

Medicare does not usually cover care that you receive outside the United States. However, it may be beneficial to enroll in Parts A and B if you live abroad on a temporary basis, or travel back to the U.S. frequently. Most people qualify for premium-free Part A, meaning you will pay nothing for coverage.

What is the Social Security 5 year rule? ›

You must have worked and paid Social Security taxes in five of the last 10 years. • If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced. 2. There is no marriage penalty or limit.

How long can U.S. citizens live in Italy? ›

If you're planning to spend more than 90 days in Italy and don't have an Italian or other E.U. passport, you'll need to apply for a visa and then a residence permit.

How long can you live in Italy without residency? ›

Americans staying in Italy for more than three (3) months are considered residents. This includes Americans who will work or transact business and persons who want to simply live in Italy.

How long can a non citizen live in Italy? ›

Carta di Soggiorno: a permanent residence permit issued for an indefinite period. You can apply for it after 5 uninterrupted years of residing in Italy with a temporary residence permit. This type of permit grants you rights similar to Italian citizens.

Do dual citizens pay taxes in both countries USA? ›

For individuals who are dual citizens of the U.S. and another country, the U.S. imposes taxes on its citizens for income earned anywhere in the world. 5 If you are living in your country of dual residence that is not the U.S., you may owe taxes both to the U.S. government and to the country where the income was earned.

Does Italy tax worldwide income? ›

Tax resident individuals

Therefore, tax residents are also subject to taxation on foreign incomes (e.g. deriving from real estate owned outside of Italy, foreign dividends and interest, foreign compensation and director's fees, and other foreign income).

Do dual US citizens living abroad pay taxes? ›

Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live. However, you may qualify for certain foreign earned income exclusions and/or foreign income tax credits.

How much is social security tax in Italy? ›

The total social security rate is around 40% of the employee's gross compensation (the rate depends on the work-activity performed by the company, the number of employees of the company, the employee's position), and is shared as follows: Employer's charge is around 30%. Employee's charge is around 10%.

Is Italy a tax haven? ›

So, we have seen that the major part of the Western-European countries – France, Italy, Spain, the United Kingdom, Germany, Switzerland and Austria – all have their own tax havens.

How much money do you need to live comfortably in Italy? ›

To answer this question, let's take a quick look at the average basic living expenses in Italy per month. Based on this, we can say that the average cost of living in Italy per month is around €1,600.

What happens to my Social Security if I leave the US? ›

If you are a U.S. citizen, you may receive your Social Security payments outside the U.S. as long as you are eligible for them. However, there are certain countries to which we are not allowed to send payments.

What countries do not tax U.S. Social Security benefits? ›

Countries Where Expats Can Avoid Double Taxation on Social Security
  • Australia.
  • Austria.
  • Belgium.
  • Brazil.
  • Canada.
  • Chile.
  • Czech Republic.
  • Denmark.

How long can I stay overseas before I lose my pension? ›

The full amount of age pension that a person is eligible for is payable while overseas for 26 weeks.

Do you lose your pension if you live abroad? ›

If you're in a personal or workplace pension scheme, moving abroad shouldn't have any effect: your pension should continue to be paid in full. you're normally entitled to any rises regardless of where you live in the world.

Do you pay taxes on pension in another country? ›

In general, while a foreign pension plan will usually grow tax-free or tax-exempt in the country of source (such as a UK SIPP) — the growth may not be considered tax-exempt under the US Tax Code and 402 rules. In general, U.S. persons are taxed on their worldwide income.

Which countries do not tax pensions? ›

Top 9 Tax-Free Retirement Countries for Americans Abroad
  • Panama. Panama tops most lists of the best countries to retire in, and there are good reasons for that. ...
  • Costa Rica. ...
  • Portugal. ...
  • Ecuador. ...
  • Greece. ...
  • Belize. ...
  • Nicaragua. ...
  • The Philippines.

Which country gives the best pension? ›

Top countries with the best pensions in 2022
  • Iceland.
  • Netherlands.
  • Denmark.
  • Israel.
  • Finland.
  • Australia.
  • Norway.
  • Sweden.
Oct 13, 2022

Will my foreign pension affect my social security? ›

How does a foreign pension affect Social Security? If you are receiving a “non-covered” pension — one in which you did not pay into the U.S. Social Security system via payroll taxes — your Social Security payments may be subject to the Windfall Elimination Provision (WEP), which could reduce your retirement benefits.

Do I have to pay tax on foreign pensions? ›

Absent application of a particular treaty provision, foreign social security pensions are generally taxed as if they were foreign pensions or foreign annuities. They are not eligible for exclusion from taxable income the way a U.S. social security pension might be unless a tax treaty provides for an exclusion.

Are foreign service pensions taxable? ›

It is taxable as wages in the tax year during which you receive it.

Are pensions from other countries taxable? ›

Key Takeaways. Foreign pensions are generally subject to US taxation. Taxpayers may have to report their foreign pensions on additional tax forms, such as a FATCA report or the FBAR.

Is foreign pension fund taxable? ›

Subject to certain terms and conditions, the FSI remitted during the PKPP period will be taxed at 3% on the gross income.

How do I avoid paying tax on my pension? ›

If you have a defined contribution pension (the most common kind), you can take 25 per cent of your pension free of income tax. Usually this is done by taking a quarter of the pot in a single lump sum, but it is also possible to take a series of smaller lump sums with 25 per cent of each one being tax-free.

Can you collect Social Security and a pension from another country? ›

One of the provisions is the reduction of the US Social Security Benefit if receiving foreign social security payments or private pension payments. Generally speaking, the US benefit is reduced by $50 for every $100 of the foreign pension.

Do expats pay taxes on retirement income? ›

Taxes on Worldwide Income

Leaving the United States does not exempt U.S. citizens from their U.S. tax obligation. While some retirees may not owe any U.S. income tax while living abroad, it is likely they must still file a return annually with the IRS. Filing requirements are generally the same wherever one resides.

Do foreign pensions need to be reported on FBAR? ›

When a person has a foreign pension account (such as the type of accounts indicated above), then those types of retirement accounts are considered financial accounts that are required to be disclosed on the annual FBAR.

Do foreign pensions reduce Social Security benefits? ›

Keep in mind. By law, the WEP cannot reduce your Social Security retirement benefit by more than 50 percent of the amount of your non-covered pension and cannot wipe your benefit out entirely.

Are pensions taxed in Europe? ›

The taxation of occupational pensions in the European Union

the contributions by both employer and employee are tax deductible, the investment results of the pension fund are usually exempt (they are taxed only in Denmark, Italy and Sweden) and. the benefits are taxed.

How to retire overseas and avoid IRS penalties? ›

Even if you retire in a country without a US tax treaty, there are still methods for avoiding double taxation. The most common is the Foreign Earned Income Exclusion (FEIE). If you qualify for the FEIE, you can exclude a certain amount of foreign-source income from US taxation.

Which country is best for pension? ›

With an overall score of 81%, Norway comes in at number one as the most retirement-friendly country on the list. Norway is at the top of this year's ranking for several reasons.

How much pension cash is tax free? ›

When you can take pension tax-free cash. You can normally access your pension from age 55 (rising to 57 from 2028). If you have a defined contribution pension (like a Self-Invested Personal Pension), up to 25% can usually be paid to you completely tax free, and the rest will be taxed as income.


1. Pension Tax for Expats: Foreign Pensions for American Expats Explained
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2. The Italian Retirement Visa (Italian Elective Residency Visa)
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3. Italy: Flat TAX for HIGH Income Earners 🇮🇹
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4. Where do expat retirees living off a pension or social security pay tax?
(Online Taxman - US Expat Tax Services)
5. US taxation of foreign pensions, retirement plans, and social security-type benefits
(IRS Medic)
6. Isn’t there a Social Security penalty for retiring overseas?
(Live and Invest Overseas)


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