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Italian Non-Dom Tax Legislation: Recent Developments2 February 2019

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On 1 January 2019, the Italian Budget Law introduced a new tax regime for foreign pensioners moving to Italy.

This briefing note aims to provide a brief analysis of the main tax changes introduced.

The new tax regime

Art. No. 1, paragraph No. 273-274 of Law No. 145/2018 (i.e. the 2019 Italian Budget Law) introduced into D.P.R. 917/1986 (the Italian Income Tax Code or ”ITC”) Art. 24-ter, implementing a new optional tax regime1 applicable from 1 January 2019 for individuals:

  • receiving foreign pensions; and
  • moving their tax residence from a foreign country to a municipality with no more than 20,000 inhabitants located in Southern Italy2.

Under this new regime, all foreign income3 within the scope of the new regime will be taxed at a 7% flat rate in each fiscal year to which the election applies.

The 7% flat rate regime applies for up to six years from the first fiscal year for which the election is made (in the relevant annual tax return) and can be revoked at any time within those six years4.

The individual is allowed to exclude one or more foreign income-source countries from the scope of the optional tax regime on a “cherry-picking” basis. In such cases, the ordinary tax regime will apply to income from excluded countries5.

In principle, under the pensions article of OECD-style Double Taxation Treaties, pensions paid by foreign entities to individuals resident for tax purposes in Italy are liable to taxation in Italy only6.

The 7% flat tax is due in a single instalment by the ordinary deadline for the payment of any personal income tax or “IRPEF” balance (i.e. 30 June following the end of each fiscal year)7.

The additional requirements for this tax regime to apply are that:

  • the individual has not been tax-resident in Italy in the five fiscal years before the one in which the regime begins to apply; and
  • the last country in which the individual was tax-resident has an “administrative cooperation” agreement with Italy8 (e.g. an EU Member State).

The Italian Tax Authority is expected to provide further clarification on this new tax regime.

The main differences between this new tax regime for foreign pensioners (under Art. 24-ter of ITC) and the previous “Non-Dom Regime”9 (under Art. 24-bis of ITC) are summarised in the following table:

Key features Non-Domiciled tax regime (Art. 24-bis ITC) New tax regime for foreign pension (Art. 24-ter ITC)
General requirements ●    Moving tax residence to Italy

●    Receiving foreign income

●    Moving tax residence to a municipality in southern Italy with no more than 20,000 inhabitants (i.e. Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia)

●    Receiving a pension from a foreign country


“Non-residence tax periods”

Tax residence outside Italy for the previous 9 out of 10 fiscal years before the first fiscal year to which the option applies Tax residence outside Italy for the previous 5 fiscal years before the fiscal year to which the option applies


Country of origin



Any country

Only countries with an agreement for the exchange of administrative information with Italy (e.g. EU Member States)


€100,000 lump sum on foreign income  

7% flat rate on foreign income

Foreign income and gains excluded from the regime  

Capital gains derived from qualifying disposals during the first 5 fiscal years of the option



No exclusions currently

Fiscal years to which the election applies  

15 fiscal years


6 fiscal years

Exemption for gift tax and inheritance tax  




Quadro RW, IVIE and IVAFE10  




Tax regime extendable to applicant’s family members  

Yes (€25,000 lump sum for each family member of the applicant)





The introduction of the new tax regime aims to attract individuals receiving pensions from abroad and moving their tax residence to Italy, as per the previous Non-Dom Regime. However, the 7% flat rate on foreign income may represent an additional and significant tax saving.