# Retiring to Italy



## fatgooner (Jan 10, 2017)

Hello Everybody.
My wife and I are hoping to take early retirement from public service jobs (ambulance service and teacher) and would like to move to italy with our 20yr old son. I am 55 and she is 53.

We intend to buy a property to live in (in Northern Tuscany) as well as a cheaper property to use as a rental income. The intention is my son will manage this property on a self employed basis. Not withstanding any rental income our combined income will be around 18500 euros a year. Will this be enough to satisfy minimum income amounts for 3 people. Will tax be an issue. Pension gets taxed at source in the uk.

Also what should we be doing in respect of health care. Sorry for so many questions but it all seems a bit overwhelming. Many thanks in advance.


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## GeordieBorn (Jul 15, 2016)

Welcome! A very exciting time I’m sure and you are doing the right thing by posting and asking questions. I’m sure you already have such, but a list of things to look at is a very good idea, two you seem to have covered already. I would put residency and tax at the top of my list, then suggest you look on the web for things like “getting residence in Italy”, “taxation in Italy”. Yes you will read a lot of rubbish, but also a lot of good stuff and a lot of other issues will come up to add to your list. Hopefully you will get a lot of answers here, but the more you find the better. We’ve only been to Northern Tuscany a couple of times, but found it to be a lovely area and houses are/were at a reasonable price when we were looking. I’m sure the amount you quote would be okay, but it depends very much on the comune you end up with. For an official figure it might be close, but I’d need to hunt out the link for the details. Taxation is a big issue as if you are here more than 183 days you could well be considered tax resident and Italy has a 23% tax rate. There could also be national insurance (INPS in Italy) implications, particularly for your son. I know this is an exciting time as lots of us have been there, but now is the time to have a level head and don’t let it cloud your decisions as it could be costly.


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## NickZ (Jun 26, 2009)

Actually if that's two pensions you'd have two basic exemptions. The real tax rate would be lower. 

I think you need about 6K per person for residency. If that's right you're at the limit. OTOH if you can show a similar amount in savings that counts.

The issue I'd mention is you don't seem to have a huge buffer. If the exchange rate goes against you will you be able to handle it. 

The two older members will get health care with there UK pensions. The younger is working and that should allow him to register that way.


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## GeordieBorn (Jul 15, 2016)

Nick these are not state retirement pensions if they are uder age 65, so would these exceptions still apply and what are they? That being the case they would not be covered for health care and if the comune pick it up they would need private cover. Think you have it about right regards the amount, but would still like to find the link someone posted recently with the exact amounts require as I think it may be a close thing.


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## NickZ (Jun 26, 2009)

Normally if you're receiving an EU pension the country paying the pension would pick up your health care costs.

You are likely right if they're not government pensions.


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## GeordieBorn (Jul 15, 2016)

Nick the pension has to be a state retirement pension to get a form S1 (EU form), like I said it's unfortunately 65+ now in the UK. I would be interested to know what these exceptions are for tax an if they also only apply to state pensions? 
I tried to find the "official" link I'm sure I'd seen, but to no avail. I came up with a number of comune sites such as this from Arezzo , but could not spot one for a Comune in nth Toscana. I think it gives the relevant information and seems to indicate they would be okay.


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## NickZ (Jun 26, 2009)

No. There is a basic exemption for everybody. 

For workers and pensioners 75 and under it looks like €7750

Over 75 €8000

But the higher the income the less of that deduction you get. There is a formula .

Google No tax area (might help to include agenzia entrate )


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## GeordieBorn (Jul 15, 2016)

NickZ said:


> No. There is a basic exemption for everybody.
> 
> For workers and pensioners 75 and under it looks like €7750
> 
> ...


Nick I've seen these figures before, but could not work out how the calculation is made and what exactly it is in respect of... This AdE (= HMRC for UK peeps) link goes on about tax for individuals and Irpef which I thought was a local tax, but perhaps not. To me it does seem like there is some kind of allowance, but I have no idea how it works, hence the initial interest... Was kind of hoping you may know more as I'm sure it would help a lot of people on this and other forums. 
I think this information for people like the OP and many more I know is critical. If there was no Italian equivalent to the UK allowance of £11000, then the OP would pay 23% tax on their €18000 total income. Roughly that’s about £1000 UK tax against £4000 Italian tax.


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## jljarvis (Sep 26, 2016)

I've just paid my private health insurance, it was E606 which I dont think is too bad.


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## NickZ (Jun 26, 2009)

The amount of the allowance the OP will get will depend on the breakdown. 

Best case it's two pensions of 9K each. They would then basically pay tax on 

9K less then allowance less any other deductions they might have. 

If OTOH it was 17K for one and 1K for the other. The 1K person would pay zero. The 17K would pay closer to 23%.

I'm not home now but when I get home (assuming the power etc is on) I'll dig up the formula and post it. The more you earn the less of the allowance you have. There is a cut off point the person ends up with no allowance. IIRC it used to work out about 30K . But there can be other deductions. 

IPREF is the national income tax. The larger cities can have an extra surcharge. I think some of the regions may also.


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## GeordieBorn (Jul 15, 2016)

Thanks Nick, that is where I've come across this local IPREF. The AdE link above has a bit on how the income tax is calculated, but it's been translated into English and I'm not too sure I'm reading it right. I can't work out if the exception applies to a total pension of <€7500 or this is an amount that can be deducted after the calculated rates against your income? The latter would indeed be very good for the OP and a lot better than the UK as there would be no liability for tax in Italy - surely too good to be true!

This is the relevant bit I was looking at:-
The steps to follow to calculate the tax

Total income – deductible costs and first house allowances = taxable income x *rates* = gross IRPEF

Gross IRPEF – ALLOWANCES (For dependent family members, *for type of income*, for costs incurred, others) = NET IRPEF

Irpef is not owed by taxpayers whose total income is formed by:

pension incomes up to 7,500 euros (if received for the entire year);

The bits in bold I find odd?


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## NickZ (Jun 26, 2009)

What do you find odd?

Types of income?

Employment income and pension is taxed normally.

Italian government bonds (I can't remember if this applies to foreign government bonds) are taxed at I think 12%

Investment income 26%

There is a type of rental contract with a fixed tax rate. It keeps changing :smash: I can't keep up. 

Calcola la tua Irpef

Play with that. It works with pension or employment income. It's always not binding on anybody but it'll give you a guide. Leave it at 2017


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## fatgooner (Jan 10, 2017)

Hi Nick and Geordie.
Thanks for your replies I am reading your discussion with interest. Did I read somewhere that it might be different if you receive a GOV pension such as teachers or NHS as this is our case.


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## NickZ (Jun 26, 2009)

You'll need to check tax treaties. They sometimes have different treatment for government employees. I've no idea off hand with UK


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## linzstock (Aug 14, 2015)

*Private Health Insurance costs., linzstock*



jljarvis said:


> I've just paid my private health insurance, it was E606 which I dont think is too bad.


Hi,

we are hoping to retire to Puglia, but are having to get PHI for 4 years until our state pension is due and we have been getting quotes, all of which have been really expensive- the cheapest so far has been over £3500 p.a. for both of us . We have struggled to find any info regarding this. One site offering info advised to not use Italian Insurance companies unless you are entitled to join and pay into their health system as most PHI's are to use in conjunction with it and would offer adequate cover. Any help regarding how to find out about this would be much appreciated. Thanks, linzstock


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## linzstock (Aug 14, 2015)

sorry omitted word in my previous post should say would NOT offer adequate cover


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## GeordieBorn (Jul 15, 2016)

fatgooner said:


> Hi Nick and Geordie.
> Thanks for your replies I am reading your discussion with interest. Did I read somewhere that it might be different if you receive a GOV pension such as teachers or NHS as this is our case.


Yep, that was another link I did mean to dig out you can get to the UK/Italy DTA in this LINK here, but I would suggest it's hard going! There is indeed a clause in there (which I may try to dig out tomorrow) regards government pensions which are taxed at source and can only be so. In the main this was I believe to account for the countries involved overseas workers (Civil Service), but it did/does also cover other workers. Not too sure how you would confirm this, but I'm pretty sure there is a good chance it would cover teachers and NHS staff... However I'm not too sure how much better off it makes the situation (Nick may know) as they may still be able to claim the difference paid in the UK to what is due in Italy?


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