Just getting to your post now, excellent information!
The 7% aspect interests me, so I’ve done some research. It seems that uptake is low, which probably comes as a surprise to many. On closer reflection, I suspect that it’s because while Italy levies “just” 7% on foreign-sourced income, the foreign payor likely already deducts a certain percentage. Once you add those two numbers together, the total may be less appealing to some. There are of course tax treaties in many cases, but the foreign payor usually always has the right to withhold a certain percentage. And, if I understand correctly, in Italy’s case, you can’t deduct any tax paid abroad, so the 7% stays as is.
For your older readers, I would suggest two important points. First, it’s good to be in easy reach of a hospital - you don’t get younger and acquiring an Italian driver’s license is quite difficult ( you can’t use a Canadian or U.S. license once you are an Italian resident).
Secondly - good transportation links. One reason we chose Bologna rather than Siena was its excellent rail connections and airport.
we found this out when our daughter had concussion years back, the ambulance was able to easily access our house and then a short amulance ride to the village and a helicopter waiting for us to take her to the childrens hospital in Torino, it really makes me feel safer.
Finally someone who knows Italy pretty well, does not romanticise the Belpaese and has a pragmatic approach with no hyped up influencer jargon. Well done.
I'm Canadian, and live in Narni in Umbria. I was living in Norcia on the Big Day, October 30, 2016 (7:41 am). I was in the Grotta Azzura hotel morning room having a coffee an hour before we were supposed to have Sunday Mass in the monks' shop (the Basilica was already closed). My house wasn't damaged, but they completely evacuated the town that day, and I was never able to move back. I've lived in a little farming village near Perugia (down on the flat Tiber flood plain) and for six years in Santa Marinella while I commuted into Rome every day. I can attest that Umbria is a fantastic place. I never want to leave.
I've signed up for your Italian platform. I desperately need to improve.
Thank God, you're safe. Umbria is truly unique. We are visiting it in May and will specifically be coming to Assisi and Perugia. Alicia and I are catholic too so it's particularly meaningful since it's the 800th anniversary of the death of St. Francis. I actually chose him as my confirmation Saint. Please feel free to reach out at any time for any guidance or feedback related to Linguetto or Italian in general.
The air quality in Venice was a shock. It had never occurred to me to even consider it. So far, every other aspect of life here is easier than life in Rome (where I lived for 20 years) That was also a big surprise
As a dual Italian-American citizen I wanted to clarify an important point of your readers re teh 7% flat tax program, eligible in only a few regions. See passage from the article below. This program is not a true tax break when you consider that the "credit" Italy must be paid in your US taxes to the IRA. The 7% is a rate, but not an offset. It took me a lot of research to understand this, and after having done so I realized it really only makes sense to enter this program, given the requirement to own or rent for multiple years more than 184 days per year in a home in an approved region, if you have little or no income.
SO if you are retired, it can make sense but carries the home purchase or rental cost. That being said, there are some benefits, the largest of which is around the discounted Italian healthcare insurance fee vs if you are a non-7% resident. Also, the towns you are able to choose from are by definition very small and usually isolated. I already own a home in Sicily in a town of 50K. I would not enter the program because I would need to live 15 miles away and buy or rent a place to qualify in an eligible town.
When you think of the 7% plan, think of the 1 Euro home, that ends up costing $20,000 to $40,000 for repairs, contracts, etc, and takes several years to restore. If that is for you, go for it, but there are strings attached and a bit of marketing involved you need to cut through to understand.
" Italy offers a 7% flat tax on foreign pension income if you relocate to a qualifying southern town with fewer than 20,000 people. That covers regions like Sardinia, Sicily, Calabria, Puglia, Campania, Basilicata, Molise, and Abruzzo. The tax break is significant."
Thank you very much for sharing your research on the 7% tax rate. I agree that it's not for everyone, but it can still be an advantage for the right person. It's worth noting that for citizens of most countries this would be a genuine 7% tax rate, but the US is unique in that it requires you to pay taxes even if you've moved abroad permanently.
I agree, for those with non-Italian citizenship whose tax laws permit Italy’s tax rate to supersede their own (via a tax plan like the 7% flat tax scheme) it may work. The 7% plan has a 10 year max window from the enrollment date. This would seem to further align with the benefit of one’s retirement timeframe as leveraging the plan (whether it is a true offset or not depending on their nation’s tax laws) would allow there to be effectively little to no tax as they would likely have lower (retirement) income. Also, any US government pension ie Social Security, would not be taxed by Italy based on the most common interpretation of the 7% flat tax plan. So, an ideal scenario might be: Retire, move to Italy, acquire or rent a home/apartment in a Flat tax eligible town, secure the permesso di soggiorno with that address, enroll in the 7% plan, live on social security and savings, receive the discounted household tessera sanitaria discount (health services), pay little to no tax to the US or Italy for 10 years. Assuming a retirement at 65, this would allow one to maximize the period of one’s life when they have the most free time to spend a minimum of 184 days in Italy at a very low cost of living. This is not tax or financial advice (you need a US CPA and an Italian Commercialista to work with you on details and filings). Do your research, plan well and enjoy la dolce vita.
Thank you for such an informative article! Although I don’t really plan to leave Saskatchewan for Italy …. I was in Puglia in December for the first time in Italy in 15 years …. I do love it there … a lovely day dream!
I mean, it's hard to give up Saskatchewan's winters. (I jest.) Puglia is such a stunning region to visit. I'm so glad you had a great time. Thank you also for your kind words. 😊
Thank you Antonio for this amazing piece. Best I’ve seen for this subject. I’m sure it will be useful for many. I was born in the Lazio region and after almost 60 yrs in Canada I know live in Tuscany. Love it. But yes a touch more expensive than many other regions in Italy. For me it works and I’m grateful for that. Great job 👌
Very well done. Have to say, we’ve been happy in Le Marche despite living through all three of the 2016 quakes. That said, we don’t live there full time. Also liked your suggestions about the Lazio area around Viterbo— it’s a fascinating place and very beautiful in that slightly rough, not too polished Roman way.
I was literally sitting right on top of ground zero for the October 30/16 quake, in the centro of Norcia, and lost my home that day, and I still don't ever want to live anywhere but Umbria.
In teoria rimangono, però non aspetterei troppo: continuano a cambiare le regole. Comunque, a parte il regime impatriati, sotto gli 85K c’è anche il regime forfettario per chi apre una partita IVA.
Kenne ganz Italien und meine Entscheidung ist gefallen, werde in den Südteil des lago maggiore ziehen, gute Infrastruktur, preisgünstig und eben, ich bin 72. Mit deutschem und Schweizer Pass dürfte es kein Problem geben
Very useful. I actually like Milan in small doses. It's the only future forward city in Italy. What about the Italian lakes to stay within reach (on a major rail line)? I can't afford a $1M second home, but I'm not super budget conscious.
Update: The 7% tax rate for retirees cap has just been raised to 30,000 inhabitants, opening up a lot of nice towns. 🎉
Just getting to your post now, excellent information!
The 7% aspect interests me, so I’ve done some research. It seems that uptake is low, which probably comes as a surprise to many. On closer reflection, I suspect that it’s because while Italy levies “just” 7% on foreign-sourced income, the foreign payor likely already deducts a certain percentage. Once you add those two numbers together, the total may be less appealing to some. There are of course tax treaties in many cases, but the foreign payor usually always has the right to withhold a certain percentage. And, if I understand correctly, in Italy’s case, you can’t deduct any tax paid abroad, so the 7% stays as is.
For your older readers, I would suggest two important points. First, it’s good to be in easy reach of a hospital - you don’t get younger and acquiring an Italian driver’s license is quite difficult ( you can’t use a Canadian or U.S. license once you are an Italian resident).
Secondly - good transportation links. One reason we chose Bologna rather than Siena was its excellent rail connections and airport.
we found this out when our daughter had concussion years back, the ambulance was able to easily access our house and then a short amulance ride to the village and a helicopter waiting for us to take her to the childrens hospital in Torino, it really makes me feel safer.
That’s truly great to hear. Not that you had to use it, but that the system worked. Torino is stunning, by the way.
it's such a beautiful city, and only an hour from us, so we get the best of both worlds, valley life and a big city nearby.
100% agreed on both points.
Finally someone who knows Italy pretty well, does not romanticise the Belpaese and has a pragmatic approach with no hyped up influencer jargon. Well done.
Thank you so much, Slim. I really appreciate your comment.
I'm Canadian, and live in Narni in Umbria. I was living in Norcia on the Big Day, October 30, 2016 (7:41 am). I was in the Grotta Azzura hotel morning room having a coffee an hour before we were supposed to have Sunday Mass in the monks' shop (the Basilica was already closed). My house wasn't damaged, but they completely evacuated the town that day, and I was never able to move back. I've lived in a little farming village near Perugia (down on the flat Tiber flood plain) and for six years in Santa Marinella while I commuted into Rome every day. I can attest that Umbria is a fantastic place. I never want to leave.
I've signed up for your Italian platform. I desperately need to improve.
Thank God, you're safe. Umbria is truly unique. We are visiting it in May and will specifically be coming to Assisi and Perugia. Alicia and I are catholic too so it's particularly meaningful since it's the 800th anniversary of the death of St. Francis. I actually chose him as my confirmation Saint. Please feel free to reach out at any time for any guidance or feedback related to Linguetto or Italian in general.
The air quality in Venice was a shock. It had never occurred to me to even consider it. So far, every other aspect of life here is easier than life in Rome (where I lived for 20 years) That was also a big surprise
As a dual Italian-American citizen I wanted to clarify an important point of your readers re teh 7% flat tax program, eligible in only a few regions. See passage from the article below. This program is not a true tax break when you consider that the "credit" Italy must be paid in your US taxes to the IRA. The 7% is a rate, but not an offset. It took me a lot of research to understand this, and after having done so I realized it really only makes sense to enter this program, given the requirement to own or rent for multiple years more than 184 days per year in a home in an approved region, if you have little or no income.
SO if you are retired, it can make sense but carries the home purchase or rental cost. That being said, there are some benefits, the largest of which is around the discounted Italian healthcare insurance fee vs if you are a non-7% resident. Also, the towns you are able to choose from are by definition very small and usually isolated. I already own a home in Sicily in a town of 50K. I would not enter the program because I would need to live 15 miles away and buy or rent a place to qualify in an eligible town.
When you think of the 7% plan, think of the 1 Euro home, that ends up costing $20,000 to $40,000 for repairs, contracts, etc, and takes several years to restore. If that is for you, go for it, but there are strings attached and a bit of marketing involved you need to cut through to understand.
" Italy offers a 7% flat tax on foreign pension income if you relocate to a qualifying southern town with fewer than 20,000 people. That covers regions like Sardinia, Sicily, Calabria, Puglia, Campania, Basilicata, Molise, and Abruzzo. The tax break is significant."
Thank you very much for sharing your research on the 7% tax rate. I agree that it's not for everyone, but it can still be an advantage for the right person. It's worth noting that for citizens of most countries this would be a genuine 7% tax rate, but the US is unique in that it requires you to pay taxes even if you've moved abroad permanently.
I agree, for those with non-Italian citizenship whose tax laws permit Italy’s tax rate to supersede their own (via a tax plan like the 7% flat tax scheme) it may work. The 7% plan has a 10 year max window from the enrollment date. This would seem to further align with the benefit of one’s retirement timeframe as leveraging the plan (whether it is a true offset or not depending on their nation’s tax laws) would allow there to be effectively little to no tax as they would likely have lower (retirement) income. Also, any US government pension ie Social Security, would not be taxed by Italy based on the most common interpretation of the 7% flat tax plan. So, an ideal scenario might be: Retire, move to Italy, acquire or rent a home/apartment in a Flat tax eligible town, secure the permesso di soggiorno with that address, enroll in the 7% plan, live on social security and savings, receive the discounted household tessera sanitaria discount (health services), pay little to no tax to the US or Italy for 10 years. Assuming a retirement at 65, this would allow one to maximize the period of one’s life when they have the most free time to spend a minimum of 184 days in Italy at a very low cost of living. This is not tax or financial advice (you need a US CPA and an Italian Commercialista to work with you on details and filings). Do your research, plan well and enjoy la dolce vita.
Thank you for such an informative article! Although I don’t really plan to leave Saskatchewan for Italy …. I was in Puglia in December for the first time in Italy in 15 years …. I do love it there … a lovely day dream!
I mean, it's hard to give up Saskatchewan's winters. (I jest.) Puglia is such a stunning region to visit. I'm so glad you had a great time. Thank you also for your kind words. 😊
Thank you Antonio for this amazing piece. Best I’ve seen for this subject. I’m sure it will be useful for many. I was born in the Lazio region and after almost 60 yrs in Canada I know live in Tuscany. Love it. But yes a touch more expensive than many other regions in Italy. For me it works and I’m grateful for that. Great job 👌
Thank you so much, Tino. Tuscany is objectively one of the most appealing regions, no matter how you slice it.
Very well done. Have to say, we’ve been happy in Le Marche despite living through all three of the 2016 quakes. That said, we don’t live there full time. Also liked your suggestions about the Lazio area around Viterbo— it’s a fascinating place and very beautiful in that slightly rough, not too polished Roman way.
Thank you very much, Eric. All in all, I think the center is the right compromise in Italy for many people.
I was literally sitting right on top of ground zero for the October 30/16 quake, in the centro of Norcia, and lost my home that day, and I still don't ever want to live anywhere but Umbria.
Ho appena letto tutto l'articolo in inglese perché molto ben scritto e interessante. E cmq lho sempre ditto che le Marche è lu mejo postu!
Io sto aspettando di capire se le tasse bassissime per il rientro di cervelli rimangano o meno 🤭
In teoria rimangono, però non aspetterei troppo: continuano a cambiare le regole. Comunque, a parte il regime impatriati, sotto gli 85K c’è anche il regime forfettario per chi apre una partita IVA.
Anche il Friuli VG andrebbe menzionato, per qualità della vita, posizione geografica privilegiata, prezzi ancora ragionevoli
Kenne ganz Italien und meine Entscheidung ist gefallen, werde in den Südteil des lago maggiore ziehen, gute Infrastruktur, preisgünstig und eben, ich bin 72. Mit deutschem und Schweizer Pass dürfte es kein Problem geben
Schöne Gegend und eine kluge Wahl. Ich wünsche Ihnen alles Gute!
Vielen Dank
I would eventually move back to Liguria, my birthplace, as a retiree, from present Tuscany
Very useful. I actually like Milan in small doses. It's the only future forward city in Italy. What about the Italian lakes to stay within reach (on a major rail line)? I can't afford a $1M second home, but I'm not super budget conscious.
What is your opinion on Turin ? Seems to have air quality issues…?
Air quality is the main issue. Other than that, I’m in love with Turin. It’s a city I have a hard time not romanticizing.