Banking, pensions and tax in Italy
Italy taxes residents on worldwide income, so a foreign pension is taxed at 23% to 43%, or a flat 7% for ten years in a small town in the South.
How your pension reaches a Italy bank, what Italy taxes, and what you still report at home. Checked against official sources on Oct 7, 2026.
- Tax on a foreign pension
- 7% to 43% Foreign pensions taxed; 7% in small southern towns. PwC Tax Summaries. Checked Oct 7, 2026.
- Top rate, local income
- 43% Over €50,000. PwC Tax Summaries. Checked Oct 7, 2026.
- US Social Security
- Direct deposit SSA POMS. Checked Oct 7, 2026.
- UK State Pension
- Uprated yearly GOV.UK. Checked Oct 7, 2026.
- Canada OAS
- Agreement Canada.ca. Checked Oct 7, 2026.
- US FBAR
- Over $10,000 Combined foreign accounts at any time in the year. FinCEN. Checked Oct 7, 2026.
Getting your pension paid in Italy
United States
Social Security
Yes. Social Security can be paid straight into an Italian bank account: the Social Security Administration routes international direct deposits to Italy through the Federal Reserve Bank of Kansas City and has a sign-up form for Italy (SSA-1199-IT).
SSA POMS. Checked Oct 7, 2026.
United Kingdom
State Pension
It can be paid into a bank in Italy or a UK account. Italy is in the European Economic Area, so the pension rises every year as it would in the UK.
GOV.UK. Checked Oct 7, 2026.
Canada
Old Age Security
Paid while you live outside Canada only if you lived in Canada for at least 20 years after age 18. Canada and Italy have a social security agreement (revised version in force since October 1, 2017), so periods in Italy can help you qualify.
Canada.ca. Checked Oct 7, 2026.
Other countries: check whether your pension can be paid abroad, whether it keeps rising with inflation there, and whether your country has a social security agreement with Italy.
How Italy taxes you
You become an Italian tax resident if, for more than 183 days of the year, you are in Italy, live there or have your main personal and family ties there; being on the resident register for most of the year is presumed residence. Residents pay income tax on worldwide income, including a pension, dividends, interest or rent from abroad, at national rates of 23% to 43% plus a regional tax of about 1.23% to 3.33% and a municipal tax of up to 0.9%. A new resident with a foreign pension who settles in a town of under 20,000 people in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia can instead choose a flat 7% on all foreign income for ten years. The income tax scale:
| Taxable income | Rate |
|---|---|
| Up to €28,000 | 23% |
| €28,001 to €50,000 | 33% |
| Over €50,000 | 43% |
PwC Tax Summaries. Checked Oct 7, 2026.
What US citizens still report
US citizens file a US return on worldwide income wherever they live; the US has an income tax treaty with Italy, which can decide which country taxes some income. Two reports cover money held abroad:
| FBAR (FinCEN Form 114) | Over $10,000 combined, any time |
| Form 8938, single, living abroad | Over $200,000 at year end or $300,000 any time |
| Form 8938, married filing jointly | Over $400,000 at year end or $600,000 any time |
FinCEN; IRS. Checked Oct 7, 2026.
Pension and tax questions
Can I get US Social Security paid in Italy?
Yes. Social Security can be paid straight into an Italian bank account: the Social Security Administration routes international direct deposits to Italy through the Federal Reserve Bank of Kansas City and has a sign-up form for Italy (SSA-1199-IT).
Will my UK State Pension go up each year in Italy?
It can be paid into a bank in Italy or a UK account. Italy is in the European Economic Area, so the pension rises every year as it would in the UK.
Is my pension taxed in Italy?
Yes. Italy taxes residents on worldwide income, so a foreign pension is taxed at 23% to 43% plus regional and municipal tax. In a town of under 20,000 people in eight southern regions, a new resident with a foreign pension can choose a flat 7% on all foreign income for ten years. US citizens still file a US return.
Do I still file a US tax return?
Yes, US citizens file on worldwide income wherever they live, and report foreign accounts on an FBAR once they pass $10,000 combined at any point in the year.
Does Italy tax foreign pensions only if they are brought in?
No. Italy does not use a remittance basis: tax residents pay income tax on income wherever it arises, so a foreign pension is taxed whether or not you transfer it to Italy.
How does the 7% flat tax work?
A pensioner who moves tax residence to a town of under 20,000 people in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia can opt for a flat 7% on foreign pensions and other foreign income. It lasts for the year you move and the following nine, and you choose it in your first Italian tax return.
Who cannot use the 7% regime?
Anyone who was an Italian tax resident in any of the previous five tax years, anyone without a foreign pension, and anyone moving from a country without an administrative cooperation agreement with Italy. It also applies only in qualifying towns: under 20,000 people, in the eight southern regions.
Can I get Social Security paid in Italy?
Yes. The Social Security Administration pays by international direct deposit into Italian bank accounts, with a sign-up form for Italy.
