At the end of 2024, the Deutsche Rentenversicherung was paying around 1.7 million pensions abroad, of which just under 245,000 went to German nationals. Italy ranks among the most sought-after destinations. The Mediterranean climate, the quality of life, and, in certain regions, favorable tax conditions make the country particularly attractive for retirees from German-speaking countries. Those planning to take this step should, however, clarify a few things in advance.
The good news first
The German pension is paid abroad as well. Those who move to Italysimply need to notify the Deutsche Rentenversicherung of their new address. The transfer is then made directly to an account of their choice, keeping a German account is entirely possible, while an Italian account is practical but not strictly required. The complications begin when it comes to taxes.
Where is the pension taxed?
That is the central question for anyone moving to Italy on a German pension. The answer lies in the double taxation agreement between Germany and Italy. It determines which country holds the right to tax and prevents the same income from being taxed twice.
For statutory pensions from the Deutsche Rentenversicherung, Germany retains the right to tax as the so-called source state. Italy may levy additional tax, but only to the extent that the pension would be taxable under German tax law. The tax paid in Germany is credited against any Italian liability.
The situation is different for occupational and private pension benefits: here, Italy as the country of residence holds the right to tax. Civil service pensions and payments from public-sector employment, on the other hand, remain subject to German taxation. The system is therefore complex in practice and depends on the sources that make up the pension. Professional tax advice is strongly recommended.
The flat tax for retirees in southern Italy
Italy has created a special incentive for retirees from abroad: the so-called flat tax for pension immigrants. Those who establish their residence in a municipality with fewer than 20,000 inhabitants in southern Italy, Sicilia or Sardegna can pay a flat rate of seven percent tax on all foreign income for up to ten years. That represents a significant advantage over standard Italian tax rates, which can reach up to 43 percent.
This provision applies only to foreign income and requires that the individual has not been a tax resident of Italy in the previous five years. Further information is available from the Agenzia delle Entrate, the Italian tax authority.
What about pension entitlements accrued in Italy?
Those who worked in both Germany and Italy before retirement acquire pension entitlements in both countries. These are calculated separately and paid out separately, by the Deutsche Rentenversicherung on one side and by the Italian INPS on the other. There is no combined total pension, but contribution periods completed in one country can be taken into account when calculating pension entitlements in the other.
Health insurance in retirement
Retirees moving from Germany to Italy initially remain enrolled in German health insurance. This insurance issues the so-called S1 form, which is submitted to the local Italian health authority, the ASL. With this form, the retiree is enrolled in the Italian health system and receives the same benefits as an Italian pensioner. Health insurance contributions continue to be deducted from the German pension and paid to the German health insurer, which then settles the resulting treatment costs with the Italian side behind the scenes. In practice, this means being treated in Italy, visiting an Italian general practitioner, obtaining Italian prescriptions, and using the system just like any local resident. The topic of health insurance in Italy has been covered in depth in a dedicated article .
What to Clarify Before the Move
The most important step is deregistering in Germany and notifying the Deutsche Rentenversicherung of the new address. Those who are already receiving a pension should also check whether health and long-term care insurance contributions will continue to be deducted from the pension, as this depends on whether one remains covered under the German health insurance system or switches to the Italian system.
From a tax perspective, consulting a specialist familiar with both systems is strongly recommended, since the overlaps between German and Italian tax law can be complex. The double taxation agreement protects against double taxation, but it does not protect against errors in the tax return.