Italy
Retiring to Italy
Italy is one of the most idyllic countries in the world with beautiful architecture, cities and quaint country towns and a deep and colourful culture and history, while its food and wine is renowned around the world. Added to that are its mild winters (especially in the South) and its warm climate in the Summer and it is easy to see why Italy has long been a popular destination for Irish and Northern European retirees.
Pros and cons of retiring to Italy for Irish expats
Pros
- Excellent healthcare system.
- Attractive tax regime for Irish retirees, with 7% flat rate applying on Pension and other Income.
- Reduced cost of living, lower than Ireland and other Northern EU countries
- Warm climate, hot Summers and mild Winters have attracted Northern EU retirees.
Cons
- Some knowledge of the language would be beneficial but less of an issue in the cities.
- The facilities are better in the larger cities than the countryside
Residence Visa
If you plan to retire in Italy, you will need a Residence Visa. As members of the EU, Irish retirees however have the right to live in Italy without getting visas or a residence permit. If you are a non- EU citizen, you will need the Italian Retirement Visa.
Entry Visas
- If you plan to live and retire in Italy, you should apply for an elective residence visa.
Eligibility requirements for Retirees in Italy
A prospective Irish retiree must satisfy the following requirements (which are not exhaustive).
- Provide proof of private Income, showing a minimum annual single Income of €31,000 or for a married couple the minimum amount increases to €38,000 {Income can consist of Savings, Investments or Pensions}
- For those retirees who may want to immigrate with a family member, the amount of Income required increases by 20% for each dependent.
- A retiree cannot perform any type of work in Italy.
- Must have either a rental property or have purchased a property in Italy
- A valid EU passport that expires after the expiry of the Italian Residence Permit.
- Complete an Italian Long-Stay Visa Application form.
- Provide vital details including, DoB, marriage certificates and clean Interpol background check.
- Bank statements for the last 6 months and two reference letters from a major Banking Institutions or Chartered Accountants.
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Recent Tax Incentives for Retirees
The Italian Government has recently introduced a range of tax incentives to encourage foreign retirees to relocate to Italy, one of these incentives is aimed at international retirees. This is a similar legislation to the more established regime offered by its neighbour Portugal (Non-Habitual Resident) which has attracted a sizeable number of EU and non-EU retirees since launching in 2009.
Italy offers a 7% flat tax rate on foreign Income and an exemption from reporting and tax on overseas assets. Part of the rationale for this scheme is to attract EU and non-EU pensioners to help re-distribute Income to the financially disadvantaged parts of Southern Italy. To be eligible for this incentive, you must be a non-Italian national and you must reside in certain Italian regions and towns with a population fewer than 20,000.
The Tax Benefits of residing in Italy for Retirees
- There is no minimum stay required in Italy
- It is also possible for a retiree to avail of a tax-exemption on some types of non-Italian sourced Income for a 5-year period, e.g., Dividends & Real Estate Income
- Potential for a foreign retiree to pay a flat tax rate of 7% on non-Italian sourced Pension Income for a minimum period of 5 years (this flat rate can be extended another 5 years)
- There was no Inheritance tax in Italy until 2006. The Inheritance tax rate though is quite low, and the thresholds vary according to the relationship of the beneficiary to the deceased. For a surviving spouse and any children there is a Nil tax rate band up to €1 million each, above this level the tax is chargeable at 4%.
Double Taxation Agreement (DTA)
Ireland has a DTA agreement in place signed by Italy. This means that Irish sourced Income is not taxed in Italy. If a retiree has non-Italian sourced pension income this is liable to a flat 7% tax rate.
Healthcare for Retirees in Italy
In Italy, a foreign retiree can get access to Italy’s excellent national health service (ranked in the Top 10 Worldwide by the WHO). For Irish retirees’ a private healthcare plan is recommended which can offer more advanced facilities and shorter waiting times.
Cost of Living in Italy
The cost of living in Italy is inexpensive compared with Ireland. Excluding the cost of accommodation (rental or to purchase) most retired couples could live comfortably on c.€2,000 per month. The cost of living in Italy will depend on where you choose to live and your lifestyle. The Islands are less expensive than the mainland cities, while if you chose to live in the countryside the cost of accommodation, food and services is lower than the cities.
Rental properties for a one bed apartments in the cities vary from €950 pm in Rome to €700pm in Florence, while there is even better value in the South of Italy with one bed apartments in Bari ranging from €400-500 pm.
When should you start planning?
As soon as possible, it is never too early to start planning and we can help you avoid some of the common mistakes, even if you do not eventually retire abroad, we can help you make your retirement dreams a reality.