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PENSIONS

How many years do I have to work in Italy to be entitled to a pension?

If you work in Italy, you’ll pay a chunk of your income towards your future pension every month. But exactly how many years of employment do you need to collect it?

Published: 5 September 2024 15:41 CEST
View of the main square in Ravello, on Italy's Amalfi coast.
View of the main square in Ravello, on Italy's Amalfi coast. Photo by Sterling Lanier on Unsplash

Whether retirement is coming into view or is still many years away in the future, you may be curious to know how pensions work in Italy.

After all, if you’re working in the country, a chunk of your income goes towards your future pensione every month. 

Generally speaking, Italy has three types of pension: the state pension, managed by national social security institute INPS, “closed” or professional pensions, and private pension funds. 

Of these, the first is the most common.

According to the World Economic Forum, Italy’s state pension is among the most generous in the world, but navigating it can be far from easy.

How does the system work?

Italy has a “notional defined contribution” state pension system, meaning that your state pension amount depends on how much you and your employer contributed to the pension system over your years of work. 

Generally, your employer contributes €2 for every €1 you do.

Calculations for how much state pension you’ll receive is complicated. 

READ ALSO: Can you transfer your Italian pension if you move abroad?

Briefly, the  amount will be calculated based on your and your employers’ total contributions over the course of your working life, adjusted according to some variables.

These include the country’s rate of growth in gross domestic product (GDP) since you started making contributions, cost of living fluctuations and a ‘transformation coefficient’, which varies depending on how old you are at the time you claim your pension.

What is the pension age in Italy?

All Italian residents are entitled to claim a state pension once they reach 67 years of age, provided they have made contributions for at least 20 years.

Anyone who has made less than 20 years of contributions may still receive a pension (known as pensione di vecchiaia, or age-old pension), but at a lower rate and under very strict criteria.

READ ALSO: How many people successfully apply for Italy’s flat tax for pensioners?

It can be possible to retire early and access a state pension (this is known as pensione anticipata) as long as you’ve made at least 42 years and 10 months of contributions if you’re a man, and 41 years and 10 months of contributions if you’re a woman.

Alternatively, if you’ve made contributions for at least 20 years and contributed enough that your monthly pension amount is calculated to be 3 times the minimum social allowance (assegno sociale) – that’s at least €1.603,20 for 2024 – you can retire as much as three years early (aged 64). 

It’s worth noting that Italy’s retirement age is not permanently fixed: it’s pegged to average life expectancy and re-evaluated every two or three years, so it may be different by the time you retire.

Italy’s pension age is set to be reevaluated in 2026.

What about my contributions in other countries?

If you’ve contributed to a public pension scheme in another country for part of your working life, the good news is that this money could still be of use to you.

Italy has signed a number of bilateral agreements and treaties that mean those contributions can more often than not count toward your Italian pension amount.

Any contributions made within the European Union are guaranteed to be included in your calculations, and Italy has bilateral agreements with Canada, the US, and Australia too.

Following Brexit, the UK lost its bilateral agreement with INPS. 

However, you may be able to consolidate your pension amounts using a British Qualified Recognised Overseas Pension Scheme (QROPS), which allows for the transfer of UK pension amounts abroad under different rules.

Please note that The Local cannot advise on individual cases. For more information about how Italy’s pension rules may apply in your circumstances, consult an Italian commercialista or another qualified tax professional.

Member comments

  1. I think that UK pension contributions made before the end of the Brexit transition period (31 Dec 2020) still count towards the 20 years in Italy because they are protected under the terms of the withdrawal agreement, but I can’t find and document or web page that specifically says so. Is it correct?

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For members

TAXES

How much should you pay your Italian accountant to do your taxes?

Italian taxes are notoriously difficult to navigate and even trickier to deal with yourself, meaning you may want to turn to a 'commercialista' for help. But how much should you pay for their services?

Published: 18 September 2024 12:42 CEST
How much should you pay your Italian accountant to do your taxes?

If you ask someone in Italy who a commercialista is, you may get several different answers: accountant, consultant, financial advisor or administrator.

In fact, they can be all of these at once as, along with the patronati, they’re residents’ first port of call when dealing with the complex bureaucratic processes surrounding almost anything official in the country.

Commercialisti are also the people who can file and submit your yearly tax returns for you. 

If you live in Italy or generate income in the country, you’ll likely need to file your taxes once a year during the so-called dichiarazione dei redditi (‘income declaration’). 

Unlike in other European countries, where it’s fairly easy for taxpayers to file tax returns independently, doing this can be very tricky in Italy, not least because of the complicated language being used. 

And mistakes can cost you dearly as the Italian taxman could charge you hundreds or even thousands of euros if you submit late, forget some details or enter the wrong information.

That’s why many around Italy choose to hire a commercialista. But how much should you pay for their services?

Overview

Commercialista fees can vary greatly depending on the type of services you need and the complexity of your financial situation.

If you’re an employee with a single source of income and are seeking help with filing taxes, or claiming tax deductions or incentives, fees will be on the low end of the spectrum. 

But if you have multiple sources of income, or have foreign income or assets and are subject to taxation in multiple countries, the commercialista will need expertise in international tax law, which may significantly raise costs.

READ ALSO: The Italian tax calendar for 2024: Which taxes are due when?

If you are a freelancer or the owner of a small business, you may need monthly consulting and regular services such as bookkeeping and VAT reporting. In this case, services may be bundled in an annual package. 

Finally, if you own a large business or corporation, you may need to hire more than one commercialista to deal with payroll management, VAT declarations, and corporate tax filings. 

Please note that the cost of a commercialista can also vary by region as prices tend to be higher in large metropolitan areas such as Milan or Rome, while you may find particularly advantageous rates in small towns and less populated areas around the country. 

Annual tax returns

According to financial advice platform Fiscozen, income tax filing services generally start at €120 but can rise to over €700 depending on your personal situation.

Generally speaking, tax filing fees are higher if you’re a VAT number holder (or partita Iva) as this entails more work on the part of the commercialista (think of all the invoices issued and claimable VAT detractions) compared to an employed individual or pensioner.

Paying taxes

Most types of taxes in Italy (from income to property taxes to waste collection charges) must be paid by completing and submitting form F24 (modello F24) with Italy’s tax office.  

A commercialista can do this for you, with services costing between €15 and €30 per form, according to online investment advisor Moneyfarm. 

Registering a new business

Freelancers and business owners in Italy are required to register with Italy’s tax office by getting a VAT number (known as partita Iva). 

If you’re starting out as a freelancer, hiring a commercialista to get your personal VAT number and set up an electronic invoicing system on your behalf will cost you €150 on average, according to Fiscozen.

Fees will be higher if you’re starting a new business as this generally involves more paperwork and compliance with a number of tax requirements. 

In this case, a commercialista’s services may cost anything between €300 and €500, though you’ll also have to factor in the payment of a number of taxes (including up to €200 for the Certified Start of Business Report, or SCIA). 

‘Year-long administration’

As mentioned earlier, if you are a freelancer or a business owner, you may need monthly consulting services, as well as regular bookkeeping, VAT reporting and – if you have employees – payroll management. 

In this case, commercialista services may be bundled in a gestione annuale (‘year-long administration’) package. 

According to Fiscozen, a 12-month package for freelancers operating under Italy’s flat tax scheme costs €60 a month on average (€720 a year). 

But costs can be much higher for freelancers working under the so-called regime ordinario (‘ordinary regime’) and business owners. 

In this case, you may pay anything from €2,000 to €4,000 a year depending on: number of clients, business size and number of employees (if applicable).

How can I find a commercialista?

All commercialisti in Italy must be registered with national association CNCDEC (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili). 

The association’s website gives you the option to look for registered professionals in your area (see an example via the screen grab below).

A screen grab of the search tool on Italy's national 'commercialisti' association's website

A screen grab of the search tool on Italy’s national ‘commercialisti’ association’s website. Source: Consiglio Nazionale dei Commercialisti

As with most things in Italy however, word of mouth is key, so make sure to ask friends and family for recommendations if you can.

Alternatively, online forums and message boards for foreign nationals in Italy often share names of professionals that are particularly experienced in international tax law.

Finally, you can also find a list of commercialisti working in your area in Italy’s pagine gialle (Yellow Pages). 

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