The Pensioners Flat Tax 2020 (or Flat Tax Sud) is an economic maneuver with which it aims to promote and develop consumption and investment in small municipalities in the Mezzogiorno (Southern Italy) that do not have a good housing density.

The flat tax for pensioners is a facilitated tax scheme that allows those who are already recipients of pension income received or produced abroad, to ask for the application of a substitute tax at 7%, but only in those municipalities that do not exceed 20,000 inhabitants and that belongs to Southern Italy.

In short, you can enjoy this preferential scheme if you move your tax residence to one of the municipalities that belong to the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia.

This applies to those pensioners who:

  1. have been tax residents outside Italy for at least five years prior to the tax year in which they became Italian tax residents;
  2. who transfer their tax residence to the regions of southern Italy mentioned earlier or in any case to a municipality with a population of less than 20,000 inhabitants or to a municipality with less than 3,000 inhabitants in earthquake zones
  3. were previously resident in a territory with which Italy has in place administrative cooperation agreements (i.e. sharing of tax information, which includes any EU Member State and a large number of other countries).

 

Do you want to live in a place like that?

The law includes any pension receiver (whether governmental or private) regardless of age, as long as it is registered in the registry of the resident population for most of the tax period (more than 180 days) or has his domicile or residence in the territory of the State. 

This facilitated tax scheme lasts from 5 to 9 years. In order to qualify for this scheme, pensioners will have to submit their tax return for the tax period referred to when they move to one of the above mentioned countries. The declaration shall include:

  1. The status of non-resident in Italy for the period of 5 years prior to the request of the option under examination.
  2. The jurisdiction or jurisdictions in which he had his last tax residence before the exercise of the validity of that option among those in which administrative cooperation agreements in the field of taxation are in force.
  3. Foreign states or territories for which you wish to exercise the right not to avail yourself of the substitute tax (Art. 24b, co 8, TIUR).
  4. The foreign person making the pension income.
  5. The amount of foreign source income to which to apply the rate to 7%.

If you want more details on the matter, we invite you to read this article, also available in English. 

In this way moving to Italy will no longer be a distant and abstract idea. The benefits are many, and we also talked about it in our previous article. In Southern Italy, moreover, the cost of living is very low and for this reason it is an area that we strongly recommend even to pensioners who do not enjoy very high wages. Not only that, it is the South that offers breathtaking landscapes and a quiet life punctuated by traditions, culture and a lot of sea.