Retiring to Italy: Everything you need to know

Best Places to Retire in Italy

Your choice of retirement location will depend on a number of factors. If you have friends or family in Italy, you might choose to live close to them. You will also need to consider your own preferences. Would you like to live in a rural location, in the city or close to a beach? Consider your budget, lifestyle, and hobbies before making a decision.

If good weather is important to you, living in Italy is a great choice. On the whole, Italy enjoys mild winters and hot, dry summers, with plenty of sunshine all year round.

Visas and Residency in Italy

Elective Residence Visa (residenza elettiva; Italy Retirement Visa)

This long-stay visa is suitable for non-EU nationals who want to live in Italy and have sufficient finances to support themselves without having to work. Post-Brexit, this applies to UK citizens, as well as people moving to Italy from the US.

The Elective Residence Visa is the best option if you have a consistent passive income. This income can be from pension funds, investments or savings, as outlined by the Italian Ministry of Interior. Note that the Elective Residence Visa looks the same as the Italian Residence Permit, but it is only granted to people that meet the minimum income requirements to retire in Italy.

Eligibility criteria for the Elective Residence Visa:

• Completion of the Italy Long-Stay Visa Application Form
• Single applicants must show evidence of minimum annual income of €31,000
• Couples must show evidence of an annual combined income of €38,000
• If you have dependents accompanying you to Italy, the income requirement will increase by 20% for each dependent.
• Proof of a place to stay in Italy, such as a rental contract or evidence of home ownership
• Evidence of EU-wide health insurance to cover €30,000 medical expenses for a minimum period of one year
• Valid passport, which must be valid for at least three months following the visa expiry date. It must also have two empty visa pages.
• Two passport photographs
• Civil status documents, for example marriage certificate and/or birth certificate
• Satisfactory police clearance status from your home country

You must also agree to participate in educational classes to improve your Italian language skills and learn about Italian civil structures. 

How to apply for Italy's Elective Residence Visa

1. Contact the Italian Embassy or Consulate from your home country to book an appointment. If your country doesn’t have one, you can submit your application to a Visa Application Centre or another Schengen country.
2. Complete the Italy Long-Stay Visa Application Form. If applying as part of a married couple or civil partnership, both partners will need to complete and submit a form.
3. Collate the necessary documents.
4. Attend your appointment with all of the required documentation.
5. Pay the Italy Long-Stay Visa Application Fee (currently €116)
6. Wait for your application to be processed. The full process usually takes between three to six months.

A Long-Stay Visa will be valid for one year in the first instance. Once you have your visa, you can travel to Italy to apply for a Temporary Residence Permit. You must apply for this at the local police department within eight days of arriving in Italy.

Your Temporary Residence Permit will be valid for one to two years. After that, you can apply to renew it. After living in Italy for five years with a Temporary Residence Permit, you can apply for a Permanent Residence Permit.

Once you’ve lived in Italy for ten years with a Permanent EU Residence Permit, you can apply for Italian citizenship, which affords you the same benefits as an EU citizen. 

Italy's Golden Visa

To be eligible for the Golden Visa, you must have the financial means to make a significant contribution to the local economy. This might be an investment in a start-up business (minimum of €500 000) or a minimum €1 million investment in a business venture approved by the Italian government. You can also purchase government-approved bonds to a minimum value of €2 million. 

EU citizens in Italy

European Union (EU) citizens have the freedom to move from one EU member state to another. EU citizens who wish to retire to Italy must apply for a Temporary Residence Permit within eight days of arriving in Italy. As part of your application, you must provide evidence of sufficient financial means to support yourself, EU-wide health insurance and a valid passport.

The fee is approximately €27.50 and Temporary Residence Permits are valid for five years. After you’ve lived in Italy for five years, you can apply for a Permanent Residence Permit. 

UK Citizens - Accessing your UK Pension in Italy

If you are a UK resident and already receiving your UK state pension, you’ll need to get in touch with the International Pension Centre, HM Revenue & Customs National Insurance Office, as well as the local Tax Office.

If you wish, you can arrange for your UK pension to be paid directly into your Italian bank account. You’ll be paid in EUR, which means the amount you receive may fluctuate due to exchange rates.

If you prefer, you can continue to receive your state pension in your UK bank account. If you choose this route, you will need to make your own arrangements to transfer the funds into your Italian bank account, taking currency exchange rates into account. You can learn more about currency exchange in this Q&A with Fibre, International payment specialists.

The amount of tax you pay on your UK state pension in Italy will depend on how you are classed for tax. 

If you’re planning to split your time between living in the UK and Italy, you will probably continue to be classed as a UK resident for tax purposes. However, if you spend more than 183 days per year living in Italy, you will be classed as a non-UK resident. You’ll be given a codice fiscale, which is required to pay taxes.

If you are considered a non-UK resident for tax purposes then you will have to pay tax on your pension in Italy.

The foreign income tax rates are relatively low in Italy, and there is a 7% flat tax on foreign pensions. However, if you want to take advantage of this, you’ll need to choose to live in an area with a maximum population of 20 000 and within an eligible region. The regions in this scheme include Abruzzo, Puglia (also called Apulia), Basilicata, Calabria, Campania, Molise, Sardinia, and Sicily.

It is always wise to seek advice from an Independent Financial Advisor before making any decisions about your pension. 

Accessing a Private Pension

If you have a private pension, you will need to contact your provider to discuss the options. In most cases, you will need to convert your pension funds from your local currency into EUR, then pay the money into an Italian bank account.

To avoid paying transfer fees, you can open an international bank account that accepts both your local currency and EUR.

For the most favourable exchange rates, seek advice from an FCA-approved currency broker. 
 

Healthcare when retiring to Italy

Italy’s healthcare system is consistently ranked as being one of the best in the world by the World Health Organisation (WHO).

With the Elective Residence Visa, you’ll be able to register with the Italian National Healthcare System. This means you’ll have free access to a family doctor. If you need to be admitted to hospital, you may have to pay a small fee, although this is not always necessary.

If you’re moving to Italy from the US, you won’t be able to access Medicare in Italy. You will need to arrange private health insurance to cover things like private hospital treatment and specialist healthcare fees. 

Taxes when retiring to Italy

Even if you are not working in Italy, you will be required to submit an annual tax return by 31 July each year.

If you’re moving to Italy from the US, you will need to continue filing your taxes in the US as well. This can be complex, so you should seek advice from a US tax professional or financial advisor.

It doesn’t matter whether you are considered a resident or non-resident in Italy for tax purposes, you will still need to pay Imposta Comunale sugli Immobili (ICI) for second homes and rental properties. This local property tax is similar to Council Tax in the UK and property tax in the US. Rates vary according to region, and you don’t have to pay ICI for your primary residence.

You will need to pay Capital Gains Tax (CGT) on any profits you make when an asset is sold for more than its original purchase price. This includes the sale of property, although you don’t have to pay CGT if you’re selling a primary residence or one that you’ve owned for more than five years. In Italy, CGT is charged at 20%.

Inheritance tax ranges between 4% and 8%, which is not applicable in many situations. Suppose you inherit or are gifted property in Italy and intend to use it as a holiday home or secondary residence. In that case, you may be liable to pay 1% cadastral tax and 2% mortgage tax. You may have to pay a fixed inheritance tax rate if you use the property as your primary residence.

When renting out a property in Italy, you’ll need to pay tax on your income. If you’re classed as a resident in the UK for tax purposes, you’ll need to declare this income on your UK tax return.

Italy’s double taxation agreements mean UK and US citizens won’t be liable to pay tax twice.

If you buy a property to renovate, you may be entitled to claim 24% tax relief, subject to approval from the local Italian tax office before starting any works. 

Wills

British and American citizens retiring to Italy are advised to create an Italian Will. Beneficiaries of a Will that is not Italian will likely experience difficulty in transferring Italian assets because an Italian Notary Public must authenticate any Will prior to asset distribution.

Translating an English Will into Italian will likely cost more than making an Italian Will. Speak to a lawyer familiar with Italian and your national jurisdiction for advice. 

Conclusion

If you’re considering retiring to Italy, you’ll be spoilt for choice when it comes to amazing places to live. On a budget? Consider sunny Sicily, with its stunning beaches and relaxed way of life. Wine connoisseur? You’ll love life in Tuscany, with its rolling green hills, vineyards and unrivalled chianti. And if you want to enjoy a luxury lifestyle during your golden years, choose fashionable Milan with its vibrant culture.