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Danish Note:While this article focuses on U.S. government pensions, the same treaty logic often applies to UKand 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 taxed in Italy. Duly frightened, the good doctor set his sights on a 7% tax town: a decision that would have cost him more, not less, in taxes. We wrote this piece to explain why the 7% regime is often unnecessary – even counterproductive – for foreign retirees receiving government pensions, and why these fortunate individuals can enjoy a tax-light retirement almost anywhere in Italy, not just in the designated towns. ANNUAL MEMBERS GET A ONE-HOUR PRIVATE CONSULTATION, AND A LOT MORE! The 7% Substitute Tax Regime for Retirees in Italy Italy’s 7% substitute tax regime is a special flat-tax program introduced…
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Luca Falda is a Veneto-born writer and strategist with a background in journalism, market research, digital publishing, and finance. A graduate of the University of Padua and a London Institute of Banking & Finance alumnus, he has held senior research roles at AOL, Townsquare Media, and Nordea before moving into investment and real-estate ventures. His work for Magic Towns Italy draws on deep local knowledge of the Veneto, long firsthand expat experience in the UK, USA, Denmark, Malta, and Italy.
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