Italian Taxes Explained for A US Retiree Living in Italy
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- เผยแพร่เมื่อ 25 มิ.ย. 2024
- One of the most common questions that come up on our channel is questions around the cost of Taxes for a US resident retired in Italy. So, in this video, I explain Italian taxes for a US retiree living in Italy.
I hope this video helps and answers many of your questions on taxes for a US retiree, living in Italy.
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Great info. Thx!
Thank you for your insights.
Thank you very much for the information
Great info! Thank you!
Thanks for sharing this! 💯
Thank for all these amazing information
Oh, I've been wanting to see this topic popup.
Great information.
Thanks you . This is amazing information sooo helpful
Greetings Chip. Stumbled on your channel and enjoy your talks. I am an Italian, who left and lived in the USA for 28 yars and now returned home to Italy and am so happy. I agree on everything you are experiencing. Maybe we'll cross paths some time! Ciao!
Welcome to our channel and thanks for the vote of confidence. We love your country and similar our own USA, it has its quirks and idiosyncrasies, but for us at this moment in our lives, siamo tranquillo con la dolce vita a bella l'Italia.
Good information Chip, thank you!
Glad it was helpful!
And thanks for a meaningful video
Thank you for watching
Great information!!
Glad it was helpful!
Thanks so much for this. You have a gift for making things make sense!
You are so welcome!
im new to your channel. looking fwd to adding Italy as one of 2 final destinations for my retirement. thanks for all the helpful info. Im looking at 6-7 yrs before I retire so I have some time. thanks again
Outstanding
Great video. Very informative
Glad it was helpful!
Excellent video looking at retiring in 5 years to never to early to start learning and you brought a lot of useful information as Taxes is one my concerns the other is Hospital care.
thank you sir
Most welcome;thanks for watching!
Your videos are great! Thanks so much! And I hate to be “that guy”, but Bari has the emphasis on the Ba, not the ri…. 👍🏻😁
YOu are right... it's BA ri. Thanks Chip
It is my understanding that a portion of social security may be taxed based upon your income (there is a formula to determine what if any needs to be reported as income and taxed).
Great vid, thanks very much. As a Brit, i think 7% is very reasonable. Not sure what im currently paying in total. Will check it out and post it.
Great info I’m still undecided between Spain or Italy I was stationed on both places as US Navy in Sicily to be exact I visit Italy every summer I’m retired military and covered by Tricare anywhere in the world it all comes to taxes
Good luck on your hunt.
Bright Tax for US expats sounds legit!!
GREAT videos, Chip!!! Can you explain (as a response to this comment, or maybe you have a video on this I can't find?) how taxes will be handled when it comes to Italy's upcoming Digital Nomad visa? At some point, I would like to retire there, but I am also thinking that I can work there for a while which will help to figure out the place to live, etc. :)
The truth is the government is in the process of working that out still but you have a choice still as far as I know, of filing in either country, however it depends on where you get paid. We are in the process of meeting with a tax professional who can explain it in detail, so we can share it.
Hi Chip. Great information and I appreciate you putting this together. With the 7% flat tax only being good for 10 years, what options do you have once it expires?
Taxed to death at 45 %
Hello Chip, very well done video!!! I have a question if you can answer. At minute 10:28 you say (as also shown in the infographic) that SS and Government pensions are not taxed. Some say that it is not true, and some say that it is indeed true. Is there a way to contact your tax attorney in order to be sure of that? Thank you for your answer!
N.B. The non-taxation does not apply to me, because I am also an Italian citizen, but I was talking about my wife who is only an American citizen
As a business owner in the America we paid between 35 and 41 percent federal, not including state and local taxes. This also does not account for massive double and triple taxation in a hundred more directions, nor NO medical coverage, which is higher for the self employed. As an employer the taxation and additional requirements are crushing and not worth the work.
I live in Le Marche and just got my residency. Please don't forget the names for the commercialista! ☺
Retirees who meet the requirements can access the 7% Italian Flat Tax benefit, but must do so the year in which they transfer their residence to Italy. One can only qualify in the FIRST year of residency in Italy. Residency can’t be transferred if one previously lived in a non-qualifying region simply to receive the benefit.
Distributions from ROTH IRA's are taxed in Italy. Also, if you are taxed at the 7% rate in Italy, then you get that as a credit on your U.S. taxes but you'll still have to pay the difference to the U.S.
Thanks Fred!
Agreed. Consider a retired U.S. citizen of moderate to high income who has been paying U.S. rates all along (and would continue to pay on the difference), for whom it seems more like a wash. For a retired U.S. citizen with lower income (say,
@@davidecasassa8679 Hi David, you are right. There is no simple, straightforward, easy answer. But it is interesting to me that you didn't even consider the Lifestyle, the food, the people, the culture: the intangibles. That, to me, makes living in Italy so compelling. I will grant you that if taxes are the only compelling reason to move or not to move, it is truly a can of worms. I think your reasoning is convincing from a monetary point of view. But then money is not the only reason we moved. My best to you, sir. Chip
As an early retiree who lives off of investments, but not a pension (for another 15 years) this is disappointing. Even if it did, kicking the can down the road, so 45% taxation hits when I’m 10 years older and less flexible feels like a poor decision. By treaty, France doesn’t tax US pension/capital gains/rental income, which is hard to beat. Health care costs in Europe are so low, even if paying out of pocket, that it’s only really relevant as a tax offset if your income is fairly low.
I get that. Every country has different tax structures. My pension SS here in Italy is not taxed, but I am not on the 7% deal Chip
We are only beginning to consider the possibility of retiring to another country and only today started considering Italy. I’m sure we’ll eventually have more questions than just this one, but are you saying that if you DON’T qualify for the flat 7% tax, then your U.S. Social Security income is not taxed? Thank you for your great videos.
Thank you for that information. I will stop looking into Italy because as it stands lmy income is low enough in the states that l don't have to do my taxes.
As I understand it, the 7% tax paid to Italy is only a CREDIT when you file US Federal taxes. Using round numbers, if you have $100,000 passive income, the US tax bill is 24%, so $24K. Italy says give us $7K, you get a $7K credit towards the $24K. So you pay Italy $7K, you still owe US $17K. So don't go thinking you'll only pay 7% and be done. I find this 7% thing misleading.
Chip
Great video. I have an odd question. If I obtain a permanent residence visa. Meeting all the passive income requirements, can I have a monetized TH-cam channel?
Hi Chip, I apologize I see my question is not unique and will look at the comments/replies for that information. Rod from Honolulu
Could you please say “BAH ree”- Bari. Thanks so much, and thank you for the information!
What about High-Income earners with US citizenship = I heard that there is a flat tax of only $100,000.00 that needs to be paid!
So with the "no double taxation" treaty does that mean I would ONLY pay the 7% even though I have US Citizenship? (Note, I am also an Italian citizen and would be residing in a 7% zone/borgo). If you have a contact for a great commercialista, please post. Grazie!
I may be contacting soon as I may go to Italy as a dual citizen rather than a resident...fingers crossed as my case is now under final preparation! I'm heading to age 73, single (female)..
Good Luck to you
Did you have any special circumstances or was one of your grandparents eligible for citizenship?
@@MartineReed Hi thanks for the questions. We are here on an ERV elective residency visa. No parentage, no history. Chip
@@MartineReedI have 3 eligible lines, 2 fully established, 1 pending a final document.
@thelaughingretirement4714 Hello Chip! I wonder if you could do a video similar to this one on retiring to Italy from the US but as a Dual US/Italian citizen? In a case like mine (although I am not quite ready to retire) I recently got my Italian citizenship by descent and codice fiscale but still live in the US so I know that changes a few things for me.
I no longer need visas but also, I am no longer a foreigner so how does that affect my taxes and income? Can I transfer my social security to Italy? How do I move my IRA (or can I) to Italy or how much is my IRA taxed as a dual citizen? Should I move my bank account over to Italy or just use a debit card and pay conversion as needed? After I move to Italy, I need to think about how I move my assets/finances.
Hope you can help! Thanks again!
Good question. I'm in the same boat, in process of getting dual citizenship by descent. I was wondering how that works for us.
If all income in the USA was taxed like it is in Italy we could also lower our tax rates to a flat tax of say...10%
Not a bad thought, but then we would be closing a bunch of loopholes, wouldn't we! Chip
Excellent video. Thanks for doing the work so we don’t have to. I am interested in retiring to Puglia a few years from now. If you have a higher income it will certainly pay to live outside any of the bigger towns on the 7% tax rate, especially if you are not American, however some of the 7% areas in Puglia are pretty decrepit and depopulating. It’s worth noting that Italian politics has moved to the right for the first time since 2011 and PM Giorgia Meloni is committed to tax cuts, so maybe the rates will be less punitive. Italian taxes are high and while healthcare is free at the point of use, it’s also similarly free in countries like the U.K. which has lower tax rates.
commitment is one thing, actually getting it done, in a country that needs money is another. PS I hope she does. Chip
Many politicians (including Meloni) talk about tax cuts but few achieve it in reality. It would be interesting to see if someone can provide an example in Italy where it actually happened. Another point is that the tax advisers in Italy are getting rich from from the complicated tax structure and the unsuspecting foreigners moving into Italy. Another point is that the price for an English speaking Tax advisor is 3x the same service from an Italian only speaking advisor. For an advisor that also understands that there are taxes outside of Italy requires even more money. It would NOT be unreasonable to discover that any tax cuts in Italy are nullified by the cost of the tax advisor required to fill out the volumes of paperwork necessary. And we haven't even talked about property taxes yet, only income tax.
Ciao Chip, just watched this video w/thks. What u went over didn't cover my situation as much. But maybe u have a idea. I am a dual US/Italian citizen living in NW Italy for good, retired , with my wife(who is only a resident not citizen). We only have my SS and a small fee I make a year on bank account interest and consulting fee , which in total is less than 40k USD per year. I moved to Italy just spring and was not a local resident(permit) until mid July(so less than the 183 days for tax purposes). So basically , do I need to pay Italian taxes at all for 2023(as I was here less than 183 days) , or because I'm also a Italian citizen, I must pay even if less than the 183 days? FYI . we do not live in a city for the 7% tax rate. Thanks for ur advise. Pete
Thanks so much for this. My wife and I are already retired and are looking at Italy, because we both have Italian ancestors (though we do not quality for citizenship on that basis). It's hard to understand all the requirements, for example, this is the first we've heard of the 7% solution. Question: you say one of the requirements is a US-based pension. That's pretty specific. What if you are drawing not from a pension but tax-deferred investments (401k, IRA, etc.)? Do they distinguish between drawing from retirement investments and a pension? Thanks in advance.
I do not see the 7% as a low number unless you don’t have much income and the 7% incentive is an incentive to live mostly with expats because Italians left those Towns, so what’s the point? The 43% on $100k thereafter is extremely high even for someone making $100k so even if you pay the difference between 22 or 28 % paid in the US, you’ll pay the difference to Italy under the tax treaty. This incentive is geared more favorably for those who don’t have many assets. For the most part, the US doesn’t have a wealth tax on your after tax assets. My advice is to live where you want and never stay 183 days.
Ok. No healthcare for people under 184 days though.
@@csabo1725private health insurance policies in southern Europe are typically under $1,000 per year for no-deductible total coverage plans. The “free health care” is not a financially sensible argument for paying 45% income tax unless your income is very low.
In Canada I pay $29,000 on my pension of $93,000. I would gladly pay $7,000 per annum for ten years and bank the $220,000 in tax savings. Plus my health care costs me $174.00 per month and I can’t find a family doctor here, and emergency room wait times are minimum ten hours to see a doctor.
@@TheHomeDesigner123I think you’d be better off almost anywhere else.
@@TheHomeDesigner123 you are paying for all indians and middle eastern for their care , free housing , their kids school... that were imported for communist regime votes . Leave Canada ...
Thanks very much Chip, but drawing a pension per se is not required for the 7% tax treatment. Any form of passive income (dividends, income, rental income, royalties, etc.) that one would use to support an elective residency visa qualifies. So the 7% tax treatment is also available for those who have not reached retirement age, or who do not have a company or government pension.
that's not correct, the incentive only applies to pensioners. The pension income is the main requirement and any other passive income would be added to the pension. This is from Agenzia dell'entrate, the Italian tax office: Individuals with pension income paid by foreign subjects who transfer their fiscal residence to Italy, to one of the municipalities belonging to the territory of the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, with a population not exceeding 20 thousand inhabitants, can benefit from an optional tax regime, which provides for the application of a 7% Irpef substitute tax to any category of income produced abroad, for each of the nine tax periods of validity of the option (article 24-ter of the Tuir, introduced by article 1, paragraph 273, of law no. 145/2018).
@@MadeinEataly Well, as Chip points out, you get different answers depending on your commercialista or avvocato. For example, at least one Italian law firm advises that any "Substantial Equal Periodic Payments” income qualifies, eg disbursements from a 401K or IRA (US investment vehicles), which are not considered 'pensions' in the traditional sense. So, as in many things tax-related in Italy, an individual's mileage may vary depending on their advisor. At the end of the day, it's also important to keep in mind that the whole point behind the law is to incentivize repopulation of the Mezzogiorno and certain earthquake prone areas of Central Italy.
@@Mark-el8sb In US is the 401K and here in Australia is the Superannuation. When employees contribute through their income and employers match contributions that's a pension. I agree with you it's not a "traditional" pension from an Italian perspective, but these are all recognized with international agreements. Cheers!
@@MadeinEataly Yes, agreed, but US IRA's (individual retirement accounts) are not employer related and according to the Italian law firm, qualify as a "pension" under the 7% regime.. Anyway, like Chip said, a good commercialista/avvocato is a must.
Thanks for this. What gets confusing for me as a Canadian (granted the rules are different), are if I am Non-resident Canadian living full time in Italy in one of these 7% areas, but still make all money from Canadian sources (pension, rental property and dividends), then what are my tax obligations given that Canada and Italy have a treaty? Not expecting a direct answer of course, just sending it out in to the ether! :)
Another question would be IF governement pensions are not taxed then a person would be "stuck" paying USA taxes?? I love the area around Bari and could easily visit friends in Albania. Let me know when you have some names of tax experts. Thank you!
Question 1) Does all of Sicily qualify for the 7% tax rate or just towns w/ less than 20,000 people? Can you email me a list of towns near Siracusa that qualify?
2) If I qualify for the 7% tax rate, do I qualify for the low medical insurance rate mentioned in your video or is that only if I pay the standard tax rates?
3) If I have retirement income from the US and I’m living in Sicily and qualify for 7% Italian tax rate, would I pay any US income tax? Does the amount I pay in Italy get subtracted from what I would be paying in Italy?
Grazie
Joe LaRosa
👍👍
I love to move to Italy 🇮🇹 soon as possible before the prices goes higher & higher...I hate tax in the US 😢
Just recently found your TH-cam channel and find your videos quite valuable. We have been fortunate to have visited Italy quite a few time and, as a tourist, absolutely love the county.
Do you do individual consulting? We would love to attend your upcoming video conference but due to a rather full travel schedule that’s not possible. Living outside the US has been on our radar for some time and we’re now working towards that goal.
Could you PM me at your convenience for a text or voice chat? Most appreciated.
About the Healthcare.
If I'm a Dual Citizen and My Wife is Not and just a US Citizen that would get a Permission of Stay to Live with Me in Italy then How and in What way would the Healthcare be Effected for Me, Her or Both and What If We Both would want to Purchase Private Healthcare Insurance?
Can You Help Answer this which would Effect a LOT of People like Us.
Chip - great Vlog - a couple of thoughts. Not so sure about the Canadian Tax Treaty with Italy, in that our governments are currently in an international pissing match (insignificant who started it) that prohibits Canadians from purchasing residential property in Italy - and - vice versa. This will be reviewed again in 2025. As Canadians we also have Universal Health Care, however, our wait times for treatment and emergency room visits are ridiculously long (months for MRI and other sophisticated scans - weeks to see a GP IF you have one (many will not take any more patients - routine 8 hr waits in ER;s). Also, are the people delivering the health care - and their diagnostic equipment - at what would be considered a high calibre.
I realize that I have mentioned "buying" and we could just as easily rent = however - if the governments are spatting now we need to be cautious as to the future - especially going into a whole new country and life commitment. I would appreciate any thoughts or insights you might have (or could point me towards) on all of this. Julia and I are now retired - both aged 65 - and financially comfortable through full home ownership and no debt. Thanks - Steve
Its my understanding that SS payments to an American are taxed by Italy. If it puts money in your pocket, its considered passive income (under the 7% scheme), and would be taxed. In the USA, SS is generally taxed on 85% of what you receive...15% of your SS payments are not taxed by the Fed... Also, if you have tax-free US income, say from muni bonds or muni bond funds, that tax-free income will be taxed by Italy. However, you get to deduct all the tax you pay to Italy on your Fed return, so in essence, you generally pay no more that you would if living in the USA, its just split between 2 countries. Under the 7% scheme, you do not have to list your worldwide assets either. HOWEVER, if say you have a brokerage account with TD Ameritrade, TD Ameritrade does NOT allow you to make any BUY trades in your account if you are a tax-resident of Italy. You can receive money into your account, remove money or transfer money between accounts, but you cannot execute a BUY order in your brokerage accounts, retirement or cash account types....thats a non-starter for me. You can execute a SELL order, but not a BUY order.
Greece has the same 7% scheme, but applies to the entire country, lasts for 15 years, and TD Ameritrade (actually its Schwab International) has no problem with your brokerage accounts while being a Greek tax resident. Big difference.
I believe while working abroad we have $120K exemption on foreign income earned. However is there a similar exemption for US citizens residing abroad on US sourced income? I am guessing not and that the IRS still taxes a US citizen abroad at the regular US rates for US sourced income eg IRA, 401K, rental etc, but allows the US citizen in Italy to subtract the 7% per the double taxation treaty? In other words if the tax rate in Italy is below that of the US one pays no more than one would have paid in the US. Of course, I understand you are not a tax expert and what you say is based on what may or may not ultimately prove to be the case. Thanks Rod from Honolulu
My income is Compensation, not a pension. VA Compensation, .... that, and Social Security is all I have. Would this be taxed in this program?
I just found your video while looking for places to retire, I am 65 years I speak fluent Italian having lived there in the 80s, I am very interested with your list. How does one apply for a residency for Italy, do you have to go through a law firm.
Dear JC, please email me asking for the 7% cities.. then ask for a 20 min chat... I will also send you our mini-retirement Camp info for Sept of this year if it helps. Just ideas where and see what you like. My email is info@thelaughingretirement.com. Chip
I think that my financial situation will be very simple if I move to Italy. My income is, and will only be, social security. You didn't speak directly about that, but I assume that if it is not taxable in the US, it isn't in Italy either. A topic you may explore for a future video: ExPats moving from the US to Italy will not be able to use their Medicare ... especially the Part B coverage and Medicine coverage in Italy. I wonder how easy it would be to discontinue those coverages (Part B and Part D) without penalties and just buy into the Italian National Medical Plan. Something that can't be used and that is still being paid for is a big waste.
I am working on a series of videos to answer your question. Chip
What if my pension is from the US military?
So transferring your USA bank account to Italian bank account, it is not taxed because its not income or it doesn't fall under the rules mentioned?...
Hi Estel, I am not trying to give you examples of what is an is not tax.... in this instance, I don't believe so, but please, I am not a tax expert. The tax or lack thereof depends upon your status, citizen of Italy or expat, and where the money is classified as income in that year of just assets. Yuu will need a commercialista for that answer. My best Chip
👍👍👍👍👍👍‼️‼️‼️
😊😊😊
Can you live in Italy onn a visa and avoid Italian taxes
Italy❤ Twice as nice for half the price. Is all of Sicily included in this tax scheme?
Bonjourno!
We are retired educators considering moving to Italy using the ERV. What is the time frame? I read online about the required documents, but must these documents be transcribed? Would you recommend a lawyer? Grazie! Dean & Cindy
I am looking at umbria ....what about renting
Mary, I would recommend you rent first. Also, Italian rentals are often 2 to 4 years long with an outclause after about 2 years. This is not bad, as two years is about the time it will take you to get settled and to figure out if Umbria is where you want to stay. chip
The first thing I would do before anything is run proposed tax returns for the US by itself and then Italy.
Their tax rates are significantly higher than ours at much lower levels.
I am reasonably smart, and can’t really figure out how this would play out.
Saying that a 7% tax rate is great really doesn’t answer the question about how much more you would pay living there. Compared to somewhere else.
Maybe it is and maybe it isn’t.
Only running the numbers will tell.
And for most people, if they retire there, how bad will the damage be in 10 years if the law changes?
Thank you for that very clear and excellent summary. It explains perfectly why Italy has been stagnate since the 60's and no one wants to have children.
I love Italy myself, one of my favorite places in the world.
Hi Chip Thank you for the information. I always thought that moving to another country, like Italy, I would still be taxed for the difference between say Italy's 7% and what I normally pay to the USA minus the 7% Italian tax but would still need to pay the the USA for the difference unless one decided to renounce their USA citizenship. From what you are saying here I am getting the impression that is not true. Am I understanding this correctly ?
I have the same understanding as you -- after paying the 7% tax in Italy, if that dollar amount was less than what you would owe in the US, then you would pay the difference to the IRS. Thus your tax bill is unchanged (compared to if you were living in the US), but your money is divided between the two countries with Italy getting the first share.
Wrong.
What are the 15 cities in Umbria with 7% flat tax?
Do you know what Google is?
So that is to say that if my only income is my Canadian pension income, then I would have no taxes to pay to the Italian government regardless of where i choose to live in Italy?
Your pension will be taxed according to the Canadian Italian tax treaty if there is one. Google it and read it
How did Italy treat distributions from Roth IRA? In US that's not taxable.
In Italy, depending on your residency, visa, etc. If you are here as an expat, your Soc. Sec. is not taxed but check with your tax representative in Italy for taxes on other pensions. If you become a citizen all income except Soc. Sec and maybe some other pensions are not taxable. You may qualify for the 7% flat tax incentive the Govt has offered foreigners. You have a choice where you pay taxes, but you may have to file in both countries. I am not a tax accountant and I don't feel comfortable giving specific advice. Every person's tax situation varies so be sure you look to a professional for advice. Other than that I can recommend the book Expat Taxes Made Easy by International Living and Marie Grazia Colombo who can help you find answers from English-speaking Italians.
mgcolombo@cocuzzaeassociati.it
The IRA withdrawals are taxed in Italy. Period
Is an annuity considered taxable income? My US military pension is actually an annuity.
Taxed
I read a news article saying that as of January 1st 2024 Italy changed the medical premiums for expats to a MINIMUM of $2000 a year. Would you do an update on this subject and confirm or deny this?
Hi, I paid our medical in January at the same rate as the year before, but they will rise next year. Even at 2000 euros a year, that is 166.66 euros a month or about $180 a month, depending upon the exchange rate. Even so, $180 a month with no deductible and almost no co-pays for everything without cap or limitation to the procedure is a bargain. You cannot look at the Italian system through the eyes of a US person who has US insurance.
@@thelaughingretirement4714 Thanks so much for your response. I can breathe easier!
We went to Sardinia hoping to look for possible towns where we could get the 7% tax benefit. We talked to 3 realtors, and NONE of them knew anything about that program. One even said "I doubt that applies to any towns here, b/c we're near the coast, and it's very popular to live here." Does that program apply to any town under 20,000 in the specified regions, or does each town have to be on a list of approved municipalities?
Dear Allison, it is my understanding that any town of less than 20,000 in the region specified applies, so as I understand it, Sardinia is on the list and any town under 20k is fine. I am not surprised that the realtor knew nothing about it. It is not unusual for the left hand not to know what the right hand is doing. Realtors generally know little about taxes or even mortgages and will send you to someone else. For taxes, the best place to go is a 'Commercialista." They are the Italian equivalent of a CPA. They will know what is going on. Good luck Chip
Thank you. That is very helpful advice.
I asked a waiter and he didn't know anything about it either. Funny that.
Good stuff. Can you provide me the Italian Tax Code that clearly states Social Security Income from USA will not be subject to Italian taxes, which I will begin deposited directly into my Italian bank account, beginning in a couple of months. Thank you. I am a new subscriber and moving with my family into an apartment in Livorno province which I completed the purchase earlier this year. Grazie mille
No, Michael, I cannot.... I am not an Italian Commercialista. MY SS comes from the US Treas to my Italian Bank account... It is not taxed, but I am not on the 7% tax scheme, nor am I working, and I am on an ERV, so in each case, it is different. When I get the name of a commericalista, which is one I like, I will let you know. Chip
Let’s say my wife n I move to Italy without selling our primary home. We want to live in Italy for a year to make sure it’s for us. If after a year of living in Italy n being tax residents we sell our US primary home , will Italy tax that sale? I fear they will. And if I’m living in the northern Italy that tax rate would be 43%?😢
Thanks for the info! I'm confused though, will Italy tax my US pension (my pension will be taxed in the US) if I'm living in Italy year round? (side note, when I do move to Italy, it will be as an Italian Citizen)
Nick, I am working on this one... It isn't very clear.... Supposedly, my SS is not taxed, but I have heard conflicting stories.... I am now, shortly, in touch with a guy who does both US and Italian taxes for Americans, and I will do a video ASAP....Chip
@@thelaughingretirement4714 Thanks Chip. I did a little more research and found that Public Pensions specifically are taxed by Italy in one or two situations, 1. If you are an Italian Citizen and then #2. You are residing full time in Italy. Then in this case, I was advised to inform my retirement board to not tax my pension as it will be taxed in Italy. I tested this and reached out to my board and they said if I tell them to not tax my pension, they won't, (other than state taxes as they know that some people move to other countries and are taxed there. The key bit of info I found here is Public Pensions. All this info does not apply to other payments such as SS, Investments etc etc apparently.
So after 10 years, if you own a house in the USA you have to pay 0.76% of the buying price in Italy as yearly tax? On top of USA property taxes?
Frederico, yes, you may have to pay a tax of 0.76%. But that tax is deductible from your US taxes. , you will get more for your taxes here, and Yes since the US is one of the few countries in the world that tax by citizenship not residency as in Italy you will have the pay the RE tax. Make sure you have all the facts before you make a judgment. My best. Chip
So if you do Six Months In Italy and Six Months in the US does that mean you don't need to pay taxes in Italy
I believe the cutoff is 183 days. If you are here less than that, you are not considered a resident, and only residents have to pay taxes.
I have about 5 months left in waiting to have my Italian citizenship recognized. I bought a house in Tocco da Casauria Pescara and would like to know if I would qualify for the 7% tax and is my social security taxed by italy? By the way. This information is amazing
Dear Luis, If you will send me your email address, I will send you the list. I think Pescara is too far north as the Line for the 7% tax is approx. Middle Italy Rieti, / Lazio, parts of Umbria and south. Pescara is north of that. As to your SS, I do not believe it is taxed in general but, on the 7% scheme, I am not sure. I am not an Italian tax expert, but I am looking for one. Good luck, you will love Italy. Incidentally, if you do a dollar-for-dollar comparison, when what you get for your Italian taxes, they are not that bad at all. Chip
@@thelaughingretirement4714
Good morning. Please send me the information you have available. Thanks.
I am getting mixed information through a friends research about double taxation
The comune of Tocco da Casauria (located in Pescara province) qualifies because: 1) It is located in the region of Abruzzo; and 2) It has a population of about 2400.
What if you become an Italian citizen?
Nothing changes. You make money outside Italy you pay.
Are public pensions such as government pensions from America taxed? This video says all income is taxed and other videos say public pensions are not taxed. Which is it? Any help would be greatly appreciated.
AS a general rule, SS and pensions are not taxed! But if you use one of the new schemes they can be. This is a great question and I will relay this to our tax expert. Chip
PS My SS is not taxed... but I am not on any tax scheme either. Chip
As a retired federal employee with a government pension and social security, why would I narrow my choices to living in a small southern Italian comune to qualify for the 7% tax scheme if none of this income is taxable? I understand I’ll still be taxed by Uncle Sam but is there something I missed about Italian taxes?
Good questions, I'm confused about that, too. I have a government pension, no social security. But I will have to follow the RMD at some point. I don't see that any of this would be taxed in Italy, but like you, I might be missing something.
It is taxable. EVERYTHING you make outside of Italy is taxable. Even non taxable investment accounts and non taxed disability pensions. You can pay 7% or 43% depending on if you are willing to "narrow your choices".
What if someone moves to a town that has less than 20,000 residents and then before the 10 years expires the population climbs to over 20,000?
Does the 7% get Effected by the Increased Population?
Perfect. The plan is only good for 10 years.
I've seen from multiple sources that the answer is "no." If you move somewhere that already has over 20k pop, you're no longer eligible. But if the population climbs to over 20k while you're living there, you'll remain eligible until your 10 years expires.
Here is a question for which I'm still searching for an answer: To qualify for an Elective Residence Visa, which is needed to get the 7% tax incentive, a retired couple must have a passive income of at least $38k, per many, many sources. Per one of those sources, just having that passive income, or being eligible therefor, is not enough. You must have been actually receiving that amount or more, for at least a year before applying for the visa. Anybody know whether that's true?
The total of all of the passive income, including both US and Japanese social security, for which my wife and I are ELIGIBLE, exceeds that criterion, but we have elected to defer most of it. We still have funds from a recent house sale, so we don't really need the passive income yet. And by deferring it, we can get more later, when we do need it.
Hi, this is not true. I got my Visa a month and a half before I moved to Italy and before I actually started taking my passive income. So, no, I don't believe that is true. Also, you should know that the amount you need to prove you are available is governed by the Consulate that would give you your visa, so don't concern yourself with "many sources.' First, find the Consulate responsible for your state and, in some cases, county and get their requirements. Good luck Chip
When you say that Social Security is not taxed, which Government does not tax it? USA or Italian?
The Italians don't tax my SS income here in Italy. Chip
good to know.. what about these small towns in Liguria in the mountains with small populations under 2,000 residents ? Great video ! @@thelaughingretirement4714
Can I ask what town you live in, and if you like it? I've given up on Abruzzo for a variety of reasons, and have started looking in Lazio. I want to be near public transportation and plan on flying in and out of Rome. Would also love the towns in Lazio that are flat tax eligible. Thanks.
Dear J ....send me an email to info@thelaughingretirement.com and ask for the list of 7% towns, and you will have it shortly. Chip
No for Lazio
@@csabo1725 There are some towns in Lazio that qualify. Chip
There are a relative few small (pop.
@@davidecasassa8679 Interesting, I've been looking in that area, too. There's a fast train from Frosinone to Rome, which is good.
How do we contact you? I plan retiring in 2 years.
Go to The Laughing Retirement website and book a 20 min. chat with Chip
On which amount/income do you pay ss?
Like everyone, the amount you pay for SS comes from the SS admin. 1099 form. I have been told that in Italy, the SS is not taxed. It is taxed in the US, but that depends upon the tax law you fall under when you elect to reside in Italy. The 7% scheme is different! Chip
@@thelaughingretirement4714 Thank You. I meant INPS. I am German and interested in the 7%.
As I understand it, in the 7% scheme, SS is included in that number, though I have a different one. Sorry, but the best thing to do is to ask a commercialista,, in Italy. I am speaking to one this coming week chip
@@thelaughingretirement4714 Thank You!
Great informative video. How does a person who falls short of the 183 day rule fit in to the healthcare system? For example, a non-EU foreigner that spends something like 4 or 5 months of the year in Italy and has tax residency in another country (outside the EU)? Is that person eligible for the $65 per month public healthcare? Or is private healthcare required in that situation?
Dear Skranz, my inclination is to say no, as the Italian healthcare system is only available to residents. You would need health insurance covering you Worldwide, or private Italian Insurance, which goes to age 75 and includes preexisting conditions. The good [part here is that even on an out-of-pocket basis, the costs of Italian healthcare are very low
@@infothelaughingretirement3008 That's kind of what I was thinking. Thank you for the clarification.
@@infothelaughingretirement3008 Now please allow me to ask the same question from a different context.
How does a person who falls short of the 183-day rule fit into the healthcare system? For example, an Italian citizen that has never been tax resident in Italy, that spends something like 4 or 5 months of the year in Italy and has tax residency in another country (outside the EU)? Is that person eligible for the NHS since he's technically a citizen? Or is private healthcare, again, required in that situation?
What would happen if you buy a house in a qualified area, sign up for the flat tax, then live in northern Italy 99% of the year?
I have no clue… you need a commercialism’s to answer that questionC
It depends on what you tell the government. If you are honest with them about not residing in that home, you lose your flat-tax privilege. If you are not, and you get caught, you will lose an awful lot more. Bottom line: official residency is what qualifies you, not a property deed, not a rental contract, not citizenship.
AS an expat are you personally a citizen of Italy, or are you living there with a visa.
I am living here on a VISA
@@thelaughingretirement4714 SO what type visa and does this type of visa require you to pay Italian taxes.
@@DavidMoriconiM3inspect There are a few, but the 7% zones work well with an Elective Residency Visa. There is more than one tax scheme, and some of that depends on whether you are working or not. The 7% tax zones work if you are in those areas and if you are retired. Chip
Nervous about earthquakes
So money from an IRA or private pension is taxed?
As I understand it Yes. chip
When you take the money out? From IRA or 401k? So does make sense to take as much money out before moving and paying the uS taxes?
First, you should not have ANY money in a 401k if you are retired. Higher cost, more admin, fewer investments, less return. Second, transfer your 401k to an IRA. third take as much money out as you can without jumping a tax bracket or as much as you are willing to pay tax on! Fourth, the only way to lower your taxes is to use the advantage of the lower tax on various types of dividends. I am glad you are here. Watch the videos, then lets chat for free, no obligation, no pressure, info@thelaughingretireement.com
Chip...not clear on 7% tax yet. Is it 7% OF YOUR OVERALL PUBLISHED USA INCOME? OR 7% OF EACH INDIVIDUAL PUBLISHED INCOME? BIG DIFFERENCE!
Palmar I an not a tax expert but, I believe it is 7% of USA income. Chip
in poche parole i poveracci Italiani devono pagare le tasse per far fare la "Dolce Vita" ai vecchi ricchi americani
in short, the poor Italians have to pay taxes to let the old rich Americans enjoy the "Dolce Vita".
Guarda che mica sei tu a mantenerli, la pensione la ricevono dal loro paese; anzi, questi immigrati americani sono una manna dal cielo per quelle piccole realtà rurali del mezzogiorno che altrimenti si spopolerebbero del tutto. Questa gente viene qua, porta i suoi soldi (tanti soldi) per ristrutturare vecchie case e cascine abbandonate che altrimenti cadrebbero in rovina, rimettendo in moto e facendo girare l'economia locale dando lavoro a un sacco di persone, e voi vi lamentate pure? Ringraziarli in ginocchio dovreste, altro che. È proprio vero che l'italietto medio ha un fiuto per gli affari uguale a quello di un bradipo... Poi ci domandiamo perché le nostre migliori aziende se ne vanno tutte all'estero.
does anybody do videos on moving out of the US who aren't flat broke and looking for cheap living?
Scott we have two coming out onwhst we did and we are not flat broke... you cannot be broke and get an Italian LT Visa... next week will be the first in a series of 6 videos