The 2019 Italian Budget Law introduced a new special tax regime, aimed at attracting individuals who hold foreign pensions to move their tax domicile to one of Southern Italy’s Municipalities. This is known as the “Foreign Pensioners’ Regime” as it requires the individual to already be in receipt of a foreign pension. Starting from January 1st, 2019, beneficiaries of this special regime may opt to pay a substitutive tax of 7% on all foreign source income

Such a taxation level looks quite competitive in comparison with that one provided by other EU Countries (i.e.Greece, Portugal) which have implemented similar tax regimes for pensioners and also in comparison with the Italian taxation in the absence of the special regime. 


Under the Italian tax legislation, resident taxpayers are taxed on a worldwide basis. 

Therefore, foreign pensions and almost all foreign source income are liable to individual personal income tax (Irpef), which currently ranges from 23% to 43%, plus local taxes up to 3%. 

Taxpayers can apply for the regime if they meet concurrently the following conditions: 

1. transfer their tax residence from a country with an administrative cooperation agreement with Italy to one of the following Italian Southern regions: Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sicily and Sardinia, in a Municipality with a population amount lower than 20,000 inhabitants or in a Municipality included among those affected by seismic events and indicated in annexes 1, 2 and 2-bis of the Legislative Decree 189/2016, with a population not exceeding 3,000 inhabitants; and 

2. have not been tax residents in Italy for at least five tax periods prior to the transfer to Italy; and 

3. are in receipt of a foreign pension. 

Taxpayer can exercise the option for the flat tax in the tax period in which they transfer the tax residency to Italy; the option can be exercised through the first Italian tax return and it is valid for that tax period and the following 9 tax periods. 

The flat tax should be paid in a lump sum, for each period of the application and within the ordinary deadline for paying individual income taxes. 

Ordinary individual progressive income tax still applies to Italian source income. 


By claiming the special tax regime, taxpayers will be exempt from additional income tax, local taxes and wealth taxes on all foreign source income. Moreover, for the entire length of the optimal period of 10 years, no foreign asset monitoring obligations (so called RW Form) apply along the period for which the option is in place.