AOW and pension in Italy: everything to the state of residence — and the 7% regime

For pensioners Italy is fiscally the friendliest country of all the classic destinations — not through a loophole, but through a treaty from 1990 that has never been renegotiated.

The treaty: the state of residence wins, across the board

Most newer Dutch treaties keep a finger on your pension: a source-state levy, a threshold amount, a 20% ceiling. The treaty with Italy has none of that. Your private occupational pension is under article 18 "taxable only" in your state of residence — Italy. And because the treaty has no separate article for social security or annuities, your AOW (the Dutch state pension) and annuity fall under the residual article (article 22): again exclusively Italy — a different route, the same outcome. In practice that means: apply to the Belastingdienst for an exemption from wage-tax withholding for your pension fund and the SVB, and nothing more is withheld in the Netherlands. The one exception is the government pension (ABP from government employment): that stays Dutch, unless you become an Italian citizen as well as a resident. And this regime is staying: Italy is not on the Dutch negotiation agendas — checked up to and including the letter to Parliament of April 2026.

Assets that stay behind in the Netherlands

Three rules from the same treaty for whoever keeps a house, shares or savings. A let house in the Netherlands remains fully taxed in the Netherlands — income from immovable property belongs to the country where it is located (article 6). On dividend from a Dutch company the Netherlands as source state may withhold a limited amount: 15% in most cases, 10% with a holding of 10 to 50 percent of the votes, 5% above that (article 10). And on interest the source state may keep at most 10% (article 11). Whoever opts for the 7% regime below therefore reckons with two layers: what the Netherlands holds on to as source state, and the 7% that Italy charges on the foreign income.

The 7% regime: ten years of flat tax in the South

On top of that, Italy itself has an invitation ready. Whoever has a pension from a foreign provider, was not a tax resident of Italy in the past five years, and moves their residence to a municipality in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia with at most 30,000 inhabitants — that limit was widened from 20,000 in April 2026, which many sites still miss — can opt for a flat tax of 7% on all their foreign income. Not only the pension: Dutch savings, investments and rental income fall under it too. You choose the option in your first Italian tax return and it applies for the starting year plus nine following ones — ten tax years in total. Because the treaty lets Italy tax exclusively and sets no subject-to-tax requirement, the combination with a Dutch pension works — but have precisely this interplay confirmed by a tax adviser for your situation; that one conversation pays for itself twice over here.

The healthcare side: the lowest country-of-residence factor of the classic countries

As a pensioner your healthcare runs via the CAK: apply for the S1 form, hand it in at the ASL of your place of residence, and you are fully registered in the Italian system at the expense of the Netherlands. The contribution that stands against it is multiplied by the country-of-residence factor, and for Italy in 2026 that stands at 0.4641 — you pay less than half of the Dutch base, against 1.0 in Germany and Sweden. The healthcare allowance can also continue. Two dates to know: whoever wants to leave on early retirement must, as expected, be registered with the CAK before 1 November 2026 (after that only AOW and incapacity benefits still give access; the CAK itself still calls the date an expectation), and the protective assessment on your pension accrual is a paper matter within the EU — automatic deferral, and after ten years remission on request, as long as you do not surrender it.

In Vertrekklaar this is phase 2 of 5 of the journey: the same steps, but for your situation — in your order, tickable, and with the deadlines watched. See the whole journey to Italy.