Living abroad with an Italian pension or income: where you pay tax

By Andrea Matera, Dottore Commercialista and Chartered Accountant (ICAEW, ACCA) · Updated 22 October 2026

What Italy taxes if you live abroad

A non-resident is taxed in Italy only on income arising within Italy (arts 3 and 23 TUIR). Double tax treaties then allocate taxing rights between the two countries: where the treaty so provides, Italy gives up its right to tax, or the country of residence grants a credit for the tax paid in Italy.

INPS pensions and public-sector pensions: where they are taxed

• Private pensions (art. 18 of the OECD Model): as a rule taxed only in the state of residence. This covers INPS pensions of former private-sector employees and the self-employed.
• Public-sector pensions (art. 19 of the OECD Model): as a rule taxed only by the paying state, unless the pensioner is a resident and national of the other state, in which case they are taxed only in the state of residence. Public-sector pensions include, for example, those from the public employees' scheme (formerly INPDAP).
• INPS applies Italian withholding tax until you file a request for treaty relief together with certification of your foreign tax residence.

Each treaty has its own rules: some depart from the OECD Model and must be read one by one.

Italian rent, dividends and other income: how they are taxed

• Rent from Italian property: it remains taxed in Italy, under IRPEF (personal income tax) or under the cedolare secca (flat tax on rental income) for residential lets, and requires an Italian tax return.
• Dividends from Italian companies: 26% withholding tax, which the treaty may reduce, usually to 15%, either through a refund claim or directly via the intermediary.
• Self-employment: services performed in Italy remain taxable in Italy; those performed entirely abroad do not.
• ‘Schumacker’ non-residents: if you live in an EU or EEA country and earn at least 75% of your income in Italy, you are entitled to the same deductions and tax credits as residents (art. 24, para. 3-bis, TUIR).

Worked example: INPS pension and Italian rent from Spain

A former private-sector employee moves to Spain with an INPS pension of €30,000 gross and a flat in Milan let for €12,000 a year.

• Pension: under the Italy–Spain treaty it is taxed only in Spain. INPS must be asked not to apply Italian withholding tax; otherwise you pay twice and then have to claim a refund.
• Rent: it remains taxed in Italy, for example under the cedolare secca at 21% (€2,520), and must also be declared in Spain, which grants a credit for the Italian tax.

Risks of double taxation on Italian income

• Paying twice, in Italy through withholding and in your country of residence, without claiming treaty relief or the tax credit.
• Not filing the Italian tax return when one is due, for example for rental income.
• Residence errors: if Italy still considers you resident, it taxes all your income, wherever it arises.

How we handle your Italian income from abroad

• We check which treaty provision applies to each item of income.
• We ask INPS and other Italian bodies to apply treaty benefits and to refund excess withholding tax.
• We file your Italian non-resident tax return when needed and align the figures with your country of residence.

Frequently asked questions

General information, current as of 22 October 2026: it is not a substitute for advice on your own case.