Too good to be true? Not at all, the Italian government, in an effort to attract foreign retirees to relocate to Italy, has introduced an exceptionally attractive tax rate in its 2019 Legge di Bilancio (Budget Law); known as the  Retired Flat Tax (or Flat Tax Sud), which, as the name suggests, is a subsidised flat rate of tax of 7% which applies to overseas pensioners whose income or pension derives from a foreign government or another overseas source, provided they reside in southern Italy in areas that have no more than 20,000 inhabitants. The localities selected are Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia.  All the chosen areas are wonderful picturesque bucolic regions with the potential to provide an idyllic tranquil retirement, with the benefit of a warm climate, excellent cuisine and world-class wine.

There are criteria to be met which are governed by art. 2, co. 2 of the DPR. 917/1986 (so-called TUIR) In order to take advantage of the scheme:

• The individual must not have been resident in Italy for the past five years
• Their pension must be paid by a foreign entity
• The country from which their pension is paid by must have an administrative cooperation agreement with Italy
• The individual must choose to be resident in a town within the designated regions with a maximum of 20,000 existing residents
• Comprehensive health insurance is an essential requirement

This scheme, despite its colloquial name, is not limited to pensioners only and may have a particular appeal to an Italian national who, having lived for a period of time in the UK or any other part of the world and now wishes to return to Italy in their older years.  The criteria are the same and the advantages are the same.

An amendment approved in the Bilancio e Finanze committees of the Camera dei Deputati has extended the scheme from five years to nine years provided the individual files their tax returns from the time that they relocate to one of the approved regions in Italy.

The Italian government’s objective is to bring fresh money into Southern regions requiring a boost to their economies without the liability of having to support the new residents. Self-sufficient pensioners are the perfect choice, they will not be a burden to the Italian authorities, their house purchases will assist the depressed real estate market and they will have money in their pockets to spend in the region.  There are a wide-ranging benefits all round.  The regions will effectively receive a capital injection in the shape of the pensioners spending power, the population will increase in areas where it is declining potentially encouraging the development of businesses, the cross-over of cultures will cultivate and expand the understanding of existing the old and the new residents and the in-coming new residents will enjoy a blissful retirement surrounded by wonderful Italian scenery. Legal Law Limited’s lawyers can assist you with your application to ensure that all criteria are met and that your documentation is complete to avoid the possibility of a technical rejection causing the process to have to be repeated.