Elective Residence Visa and Taxes: A Guide for American Retirees in Italy

Introduction

Every year, more Americans move to Italy through the Elective Residence Visa, drawn by the country’s lifestyle, food, and history.
But one question always comes up: how are U.S. pensions taxed in Italy?

Fiscal Residency in Italy

According to Italian law (Art. 2, TUIR), you are fiscally resident in Italy if, for more than 183 days a year, you:

• are registered with the local Anagrafe (Resident Registry);
• have your domicile or habitual residence in Italy.

As a result, most retirees living permanently in Italy are taxed on their worldwide income.

U.S. Pensions and the Double Taxation Treaty

The Italy–United States Tax Treaty (1984) prevents income from being taxed twice.

Under Article 18:

• Private pensions are taxed only in the country of residence (Italy, for retirees living there);
• Public pensions (paid by U.S. government entities) are taxed only in the U.S.

So, an American private-sector retiree pays taxes in Italy, while a retired U.S. government employee continues to pay in the U.S.

The 7% Flat Tax for Southern Italy

Since 2019, Italy has offered a special 7% flat tax for foreign retirees moving to small towns in southern regions (Law 145/2018).

Requirements:

• Move to a town with fewer than 20,000 residents;
• Located in Sicily, Calabria, Puglia, Campania, Molise, Basilicata, Abruzzo, or Sardinia;
• Valid for 10 years.

This is particularly beneficial for Americans with a stable pension who want to enjoy a relaxed, lower-cost life under the Mediterranean sun.

Getting the Elective Residence Visa

You must demonstrate:

• Stable income (at least €31,000 per year for one person, €38,000–€40,000 for a couple);
• Accommodation in Italy (rental or owned);
• Private health insurance covering Italy.

Once in Italy:

• Apply for a residence permit;
• Register with the local municipality (Anagrafe);
• Declare fiscal residency.

Tax Declarations and Professional Help

Even with the treaty, you must:

• File the Italian income tax return;
• Declare foreign assets (form RW) if applicable;
• Continue U.S. tax filings, indicating the treaty claim.

A cross-border tax expert can help coordinate both declarations and legally minimize taxes.

Life as a Retiree in Italy

For Americans, retiring in Italy means:

• Lower living costs;
• Rich culture and cuisine;
• Access to public healthcare after one year;
• Eligibility for Italian citizenship after 10 years.

Proper tax planning ensures this dream stays sustainable.