A retiree who leaves town a day early owes €10,200 more

Italy taxes a foreign pension at 7% if its holder moves to a small town in one of eight southern regions, and the same 7% then covers every other kind of income they have abroad. The deal runs for the year they arrive and the nine after it. It also ends the moment they stop living in a qualifying town — and the Agenzia delle Entrate has fixed the point in the calendar where that ending starts to hurt. A retiree with a €50,000 foreign pension who leaves on 2 July 2026 pays €10,200 more income tax for 2026 than one who leaves on 3 July.12

Whether that is the real cost depends on one thing, and it is worth saying before anything else: the figure holds for a pension that only Italy taxes. The regime refuses the credit for tax already paid abroad, and the ordinary rules grant it, so a pension the paying country has already taxed at more than roughly a fifth loses nothing at all by dropping out. The arithmetic for that case is further down, and in the data.16

What the 7% covers, and who holds the ticket

Article 24-ter of the TUIR is one sentence long and does a lot of work. A person who holds “redditi da pensione ... erogati da soggetti esteri” — pension income paid by a foreign body — and who moves their tax residence to a comune in Sicilia, Calabria, Sardegna, Campania, Basilicata, Abruzzo, Molise or Puglia, with a population of no more than 30,000, may elect to have “i redditi di qualunque categoria, prodotti all’estero” taxed at 7%. Income of any category, not only the pension. The pension is the entry condition; the rate applies to everything foreign the person has.1

Nothing in the article sets a minimum for that pension, and the Agenzia has been steadily widening what counts as one. In a ruling published this month it accepted that the annual distributions from a United States Individual Retirement Account, paid for by the applicant’s father and passed to her on his death, are “pensioni di ogni genere” for this purpose, so she “potrà beneficiare del regime agevolativo di cui all’articolo 24-ter” from the year she becomes resident. The ticket can be inherited.3

Two further conditions sit in commi 2 and 5. The person must not have been resident in Italy in the five tax periods before the one in which the option takes effect, and must come from a country with which Italy has an administrative-cooperation agreement. The option is exercised in the return for the year of the move, and takes effect from that same year. Comma 4 then gives it the nine tax periods after that one, which is ten in all.1

The day that decides the year

Comma 7 ends the option when its conditions stop being met: “Gli effetti dell’opzione ... cessano al venir meno dei medesimi requisiti”. Living in a qualifying comune is one of those conditions, so moving house ends the regime. The statute says nothing about when, within a year, that takes hold.1

The Agenzia filled the gap in circolare 21/E of 17 July 2020, and did so in its own voice rather than the statute’s. For someone who moves to a comune in a region the article does not name, it writes that “si è dell’avviso che la decadenza dal regime produrrà effetti a partire dal periodo d’imposta in cui il soggetto perde i requisiti” — the year the conditions are lost is the year that goes. Then it adds the exception that matters: where the conditions held “per un periodo superiore ai 183 giorni nell’anno”, the forfeiture operates from the following tax period instead.2

More than 183 days keeps the year at 7%. A hundred and eighty-three days or fewer puts the whole year’s foreign income onto the ordinary scale, including the months the person was still living in the qualifying town. Counted off the 2026 calendar — 1 January being day one — a condition that holds through 3 July has held for 184 days and clears the line. Hold it through 2 July and the count is 183, which the circolare’s wording does not reach. The two dates are a day apart and the tax years they produce are not comparable.2

What the lost year costs

A pension is employment income for Italian purposes, so the ordinary bill is IRPEF at 23% up to €28,000, 33% to €50,000 and 43% above, less the pension allowance of article 13 comma 3. That allowance is generous at the bottom and gone by €50,000: €1,955 up to €8,500 of total income, then €700 plus €1,255 × (28,000 − income) / 19,500 in the band to €28,000, then €700 × (50,000 − income) / 22,000 up to €50,000, after which there is nothing left of it.45

€50,000 is where the two schedules are easiest to check by hand, because the allowance is exactly zero there. Gross IRPEF is €13,700, the allowance takes none of it away, and 7% of the same pension is €3,500. The gap is €10,200 for one tax year, on identical facts — same person, same pension, same twelve months.47

What would make this go away

The obvious objection to every figure in that table is that it compares two Italian charges and ignores the tax the pension may already have borne where it is paid. That objection is right, and it bites in one direction only, because the two regimes treat foreign tax differently.

Under ordinary rules, article 165 allows tax definitively paid abroad in deduction from the Italian tax, capped at “la quota d’imposta corrispondente al rapporto tra i redditi prodotti all’estero ed il reddito complessivo” — the share of the Italian bill attributable to the foreign income, which for a person whose only income is that pension is all of it. Inside the 7% regime there is no such relief. Comma 8 grants the credit “soltanto” for countries the holder has formally excluded from the option, and the circolare puts it beyond argument: “il credito d’imposta non spetta con riferimento ai redditi prodotti all’estero assoggettati ad imposta sostitutiva di cui all’articolo 24-ter”.612

So the foreign tax is paid in both states of the world and cancels out of the comparison, while the credit only exists in one of them. Re-running the €50,000 case at a range of source rates shows the gap narrowing euro for euro and reaching zero at 20.4%.

Below 20.4% the day in July is worth money; above it the regime was costing its holder more than the ordinary rules would, and losing it is a refund rather than a bill. Which side of that line a particular pension falls on is a question about the treaty between Italy and the paying country, and this piece does not examine any treaty. The break-even column in the first table gives the number to compare against.

There is an escape hatch in comma 8 and it does not help here. A holder may exclude a country from the option and keep the credit for it — but the circolare requires the exclusion to cover every income produced in that country, and says the choice “non è più revocabile” and can later be widened to more countries but never narrowed. For someone whose only foreign income is the pension, excluding the country that pays it empties the option of everything it held.2

At the bottom, the 7% costs money

The first row of the table has a negative sign in it. At €8,500 of pension the article 13 allowance is €1,955 and the gross IRPEF on that income is also €1,955, so article 11 comma 3 leaves nothing to pay. The substitute tax has no allowance of its own: 7% of €8,500 is €595, and it is due. The coincidence is the statute’s own design rather than a product of the figure chosen — the allowance’s first band ends at €8,500, and 23% of €8,500 is €1,955.45

The sign reverses once, somewhere between €8,500 and €12,000, and above that the regime is cheaper at every level in the published file. A person whose foreign pension is their only income and is small enough to sit inside the allowance is paying for a relief that is giving them nothing.

There is no second option

The year is the smaller half of what a move costs. Comma 7 closes the door behind it: “La revoca o la decadenza dal regime precludono l’esercizio di una nuova opzione”. The circolare spells out the consequence — someone who has left the regime, for any of the three reasons, will “finché fiscalmente residente in Italia” be taxed ordinarily on everything, wherever produced. Moving back to a qualifying comune does not restore it, and the ten tax periods do not restart.12

For the €50,000 pension that makes the whole regime worth €102,000 across its ten tax periods, and whatever is left of them when the move happens is what the move forfeits. The day in July decides only whether the year of the move itself is one of them.7

The surcharges follow the same logic and are not in any figure above. The addizionale regionale and comunale fall on the IRPEF base, and income taxed under the substitute charge is not in that base, so they come back with the ordinary regime. On the published 2025 regional scales — the latest year the sourced table covers — the same €50,000 pension carries between €615 and €1,393 of regional surcharge depending on which of the eight regions the person chose.9

What this does not settle

The 183-day line is the Agenzia’s reading, not the statute’s text, and the circolare says as much in the words it uses. It binds the Agenzia’s own offices and it does not bind a judge. The provvedimento of 31 May 2019 that sets the regime’s modalities could carry a more precise rule; it could not be retrieved while this was written, so nothing here rests on it.2

Which comuni qualify is not answered either. The article’s test is a population of no more than 30,000, and that needs a current population figure for each comune in the eight regions, which is not in any of the documents used here. A reader deciding where to live needs that number for their own town, and a move between two qualifying comuni triggers none of this.1

Every figure models a pension as the person’s only income. Real holders of this regime tend to have more abroad, and the 7% covers all of it — which widens the gap in the first table without changing the day that decides it. The comparison is also one of tax alone: contributions do not fall on a pension, but the ordinary regime brings the foreign income into total income, and total income is what several unrelated means tests are measured against.

The regime’s other arithmetic has been covered separately: what the €300,000 flat fee of article 24-bis buys, and what it has to displace, is priced in our piece on that regime, which this one does not restate.