The article 24-ter of the Italian Tax Code established an optional regime, having a duration of 10 years, whereby foreign sourced income derived by individuals entitled to pension payments (pensioners moving to Italy) and who opt to transfer their residence to one of the Municipalities belonging to the territory of the Regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, or to one of the Municipalities included among those affected by seismic events, having a population not exceeding 20,000 inhabitants are subject to a substitute tax at a rate of 7% with respect to all the foreign income derived by the taxpayer (including those with privileged taxation).
The pensioners moving to Italy must have had the tax residence, for at least 5 years before opting for the regime, in jurisdictions with which administrative cooperation agreements are in force with Italy.
The pensioner regime, similarly to what happens for the regime of new residents for HNWI and UHNWI established by article 24 bis of the ITC , exonerates the taxpayer from reporting the assets held abroad and from having to pay some specific Italian estate taxes on foreign immovable properties and financial assets (IVIE and IVAFE).
Taxpayers who have moved to Italy can opt out of applying the 7% substitute tax for income derived from one or more foreign states or territories, subjecting such income to ordinary taxation, with rates up to 43% plus local surcharges. For income produced in the aforementioned foreign States or territories, the ordinary regime applies and the tax credit for income produced abroad is due (the use of this credit is, however, inhibited for income subject to substitute tax).
In order to evaluate the convenience of this regime, it is necessary to carry out a series of comparative calculations that also take into account the taxation that occurs in the country of the source of the income, for which it is advisable to rely on a local tax advisor.