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MOVING TO ITALY

Moving to Italy: Italy’s flat tax for pensioners and can you work with an elective residency visa?

Moving to Italy, a country infamous for its red tape, can seem like a daunting task. Our new newsletter is here to answer your questions - this time we're looking at how many people benefit from Italy's flat tax for pensioners and whether you can work on Italy's elective residency visa.

Moving to Italy: Italy's flat tax for pensioners and can you work with an elective residency visa?
How many people take advantage of Italy's flat tax for foreign pensioners? (Photo by MARCO BERTORELLO / AFP)

Here at The Local we’re an international team living in Italy – which means we’ve either grown up navigating Italian bureaucracy or been through the simultaneously exciting and nerve-wracking process of moving countries.

Our new newsletter is aimed at people who are in the process of moving, have recently moved and are still grappling with the paperwork or perhaps are just thinking about it – and we’ll share a regular selection of practical tips. Our team is also available to answer questions from subscribers to The Local.

Who benefits from Italy’s flat tax rate for pensioners?

Since 2019, Italy has offered a special tax rate of just seven percent for people who retire in certain parts of the country on a foreign pension.

You might assume that the vast majority of Italy’s foreign retirees, of whom there are many, would jump at this offer – but the strict entry requirements mean that many pensioners don’t meet the government’s criteria.

To be eligible, retirees must live in a town of fewer than 20,000 inhabitants in one of eight southern regions, have a foreign-sourced pension, and have lived outside Italy for the previous five years.

It’s perhaps unsurprising, then, that the latest data from Italy’s Department of Finance reveals that fewer than 500 people are taking advantage of the seven-percent tax rate, with just 474 people declaring a foreign pension under the scheme on their 2023 tax returns.

If you’re interested in benefitting from the flat tax rate, you can learn more about the requirements here.

Does Italy’s elective residency visa allow you to work?

Italy’s elective residency visa (ERV) is the smoothest path to Italian residency for many non-EU nationals without close family ties to Italy, Italian ancestry or a job offer.

At a minimum income requirement of €31,000 per person per year or €38,000 for married couples, it doesn’t require vast reserves of wealth, and there are few other strict barriers to entry.

Unfortunately for those of working age, one of those barriers is that you can’t work once you arrive in Italy on the ERV. The government is clear that all your income must be passive – and if you do get caught working while on the visa, you risk being kicked out of the country.

That means it’s mostly retirees over 60 who end up benefitting from the scheme. You can learn about the best ways to set yourself up for a successful ERV application here.

Questions

The Local’s Reader Questions section covers questions our members have asked us and is a treasure trove of useful info on all kinds of practical matters. If you can’t find the answer you’re looking for, head here to leave us your questions.

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MOVING TO ITALY

Moving to Italy: A guide to house-buying and can you get a mortgage as a foreigner?

Moving to Italy, a country infamous for its red tape, can seem like a daunting task. Our new newsletter is here to answer your questions - this time we're looking at what's involved in buying an Italian home and mortgage-hunting as a foreigner.

Moving to Italy: A guide to house-buying and can you get a mortgage as a foreigner?

Here at The Local we’re an international team living in Italy – which means we’ve either grown up navigating Italian bureaucracy or been through the simultaneously exciting and nerve-wracking process of moving countries.

Our new newsletter is aimed at people who are in the process of moving, have recently moved and are still grappling with the paperwork or perhaps are just thinking about it – and we’ll share a regular selection of practical tips. Our team is also available to answer questions from subscribers to The Local.

A beginner’s guide to buying a house in Italy

With its old houses often going for a song, Italy attracts numerous foreign buyers looking for an affordable second or retirement home. But for people completely new to the process, what does buying an Italian home actually entail?

Mario Mazzeschi, managing partner of the law firm Mazzeschi Consultancy, says there are four major stages to buying a house in Italy, from signing a contract with an agency – who typically take two percent to five percent of the asking price – to completing the purchase.

In between, you’ll be expected to sign proposta irrevocabile d’acquisto (binding proposal) and pay a deposit, followed a compromesso (preliminary contract), and eventually a final contract.

You’ll want to protect yourself from hidden traps by hiring a surveyor, who could save you a hefty chunk of change. “We had such a case once where the buyer shaved €5,000 off the asking price because his surveyor found something,” says Mazzeschi.

In all this, it’s worth bearing in mind that there are different rules for residents and non-residents of Italy, which may influence your thoughts about whether it’s worth pursuing Italian residency.

Non-residents, for example, can only buy if their country has a reciprocal arrangement in place with Italy – excluding residents of Canada and some Swiss cantons – while Italian residents benefit from lower taxes and cadastral costs.

Can you get a mortgage in Italy as a foreigner?

If you’re considering buying a home in Italy as a foreigner but don’t have the funds to purchase one outright, there’s good news: it’s generally possible for foreigners to take out a mortgage in Italy.

Persuading an Italian bank to lend to you as a foreigner, however, is likely to be less straightforward and more time-consuming than it is for Italian citizens.

Non-residents in particular are likely to require the services of a specialist mortgage broker who can help you access information about rates.

Italian banks are also known to be strict lenders and tend to require a larger deposit (regardless of whether or not the buyer is Italian) than international buyers may be expecting.

“In general, expect your down payment to be higher than it would be in the US or UK,” say lawyers from legal consultancy Italy Law Firms on their blog.

You can find out more about buying a home in Italy by browsing The Local’s Italian property section.

Questions

The Local’s Reader Questions section covers questions our members have asked us and is a treasure trove of useful info on all kinds of practical matters. If you can’t find the answer you’re looking for, head here to leave us your questions.

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