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When Italy’s 7% Flat Tax Hurts Foreign Pensioners

Discover how U.S. government pensions can be tax-free for retirees in Italy, and why the 7% substitute tax regime might not be necessary.

30/01/2026
30/01/2026
when-italys-7-flat-tax-hurts-foreign-pensioners

Note: While this article focuses on U.S. government pensions, the same treaty logic often applies to UK and other government pensions. Always check the country of origin of your pension — it makes all the difference in how it’s taxed in Italy. This deep-dive began with a familiar frustration: British, American, and other retirees considering a move to Italy are often badly advised on how their pensions will be taxed. The final spark was a conversation with a U.S. Army doctor who, after a paid consultation with an Italian tax “expert”, was incorrectly told his federal pension would be fully…

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