Pensioners in the South: who benefits from tax advantages? What does the 7% flat tax cover?
The favorable regime is for those who have not been fiscally resident in Italy during the 5 tax periods preceding the transfer and come from countries with which administrative cooperation agreements are in force. Retirees can opt for the application of a 7% (annual) substitute tax on the income earned from any category produced abroad. The tax, therefore, covers all income from foreign sources, not just pensions.
Other advantages
In addition, pensioners in the South are not required to declare activities held outside Italy and do not pay IVA and IVAFE (Italian Taxation for those who have an activity or business abroad). The option is exercised in the income-tax return related to the tax period during which the residence had been transferred to Italy.
The tax regime will remain valid for the next 9 years.