How Do You Move to Italy Without Wrecking Your Retirement? The Glide Slope

The emotional sequence that follows is recognizable. First comes the shock of the Italian tax assessment, which rarely matches what the real estate agent, the relocation agency, or the expat Facebook group described. Then comes the comparative realization. In the United States they were a comfortable middle-class or upper-middle-class household. In Italy, where most of their neighbors live on an INPS pension plus a family property, their assets place them in the top 5 to 10 percent of the country by wealth. Then, sometimes, comes resentment. The tax system feels punitive. Italy feels ungrateful for the new tax revenue and the sacrifices they made renovating a house that was in disrepair.

In almost every case, the underlying problem is not that Italy has high taxes. The underlying problem is that Italy and the United States are two countries with very different tax systems built to incentivize very different behaviors, and the client spent forty years optimizing their life around one of them without knowing the other existed. When they moved, the assets they had accumulated under American incentives collided with an Italian tax code that rewards different choices. Nobody told them this in advance because nobody on either side of the Atlantic was in a position to.

This article is about what we wish every retiree knew two years before the plane ticket. It describes the JSBC Glide Slope, the structured multi-year framework we use to prepare clients for an Italian move, manage their tax exposure during their first ten years of residency under the 7% pensionati regime, and land them into a stable Italian tax posture for the rest of their lives. We have borrowed the name from aviation. A glide slope is the stable, controlled descent of an aircraft from cruising altitude to the runway. Poor preparation, or last-minute corrections, do not just make the landing uncomfortable. They can make the landing impossible.

Below the article we have included an interactive timeline that walks through each stage with a composite $2.7 million household so you can see where real dollars move.

Why Moving to Italy Feels Unfair at First

Before getting into the mechanics, it helps to sit with the comparison that most new residents quietly make and rarely say out loud.

The median Italian household holds most of its wealth in a primary residence plus, for many families, one or two additional properties inherited through generations. Financial assets are a much smaller share of household wealth than in the United States. Most retirees live on a modest INPS pension supplemented by rental income or family support. Defined-contribution retirement accounts with seven-figure balances are not the norm. Broad stock market exposure is not the norm. The last century of U.S. equity appreciation, which turned a disciplined American saver with a 401(k) into a millionaire, did not happen in the same way for most Italian savers, who held more of their wealth in life insurance contracts, Italian government bonds, and real estate in small cities and towns that did not enjoy the Milan or Rome appreciation curve.

This produces a specific cognitive dissonance for the incoming American retiree. In dollar terms they feel unremarkable. They have a portfolio in line with what their professional peers at home retired with. In Italian context they are wealthier than 90 to 99 percent of the people they will meet at the market or on a walk in town. The Italian tax system, which was designed for the local distribution of wealth, does not have an American point of view of their income. It sees assets, a lot of them.

The second piece of the disorientation is that Italy does not actually have uniformly high taxes. It has specific high marginal rates on earned income, and it has very different replacement-tax regimes for capital. An Italian retiree living off a modest pension often pays a similar total tax burden to an American retiree of similar wealth in many high-tax states once healthcare costs are factored in. The tax friction Americans experience comes from the fact that the U.S. rules they optimized around (Roth distributions, tax-deferred compounding inside IRAs, qualified dividends, trusts) do not translate into the Italian system the way they assume, and the Italian rules that locals use to manage their tax burden (accumulating funds, private pension contributions, life insurance wrappers) do not translate back due to U.S.-side limitations.

Once you see the structural mismatch, the path becomes legible. The American retiree has to work around both systems, not pick one.

Two Tax Systems, Opposing Incentives

A short detour into why the two systems collide so badly is useful, because the Glide Slope only makes sense if you see it.

The United States generally prefers to tax income where it is earned, in the year it is earned, in the name of the natural person who owns it. Marginal rates on individual income are moderate by international standards, but the system is built around the expectation that most earned and investment income will flow through to an individual return. This is why the U.S. created S-corporations, disregarded LLCs, the qualified business income deduction, and a broad set of pass-through mechanisms. It is also why the U.S. has punitive regimes for both foreign and domestic holding companies (subpart F, GILTI, the accumulated earnings tax, the personal holding company tax) that discourage high earners from parking income inside a corporate shell at a lower corporate rate and deferring personal taxation.

For retirement savings, the U.S. system explicitly subsidizes tax-deferred accumulation as a supplement to an underfunded Social Security system. U.S. self-employment tax is 15.3 percent on earnings up to the Social Security wage base, which is roughly half of what a comparably situated Italian self-employed worker pays into Gestione Separata (currently around 26 percent for most categories). The U.S. answer to that thinner public pension is generous individual retirement accounts. A traditional IRA lets you deduct up to $7,000 per year (plus a $1,000 catch-up over 50) and a 401(k) lets you defer up to $23,500 (plus a $7,500 catch-up) in 2025 figures. A solo 401(k), which combines employee and employer contributions for a single-owner business, allows up to $70,000 per year (or $77,500 with the age-50 catch-up, and $81,250 for the new age 60 through 63 catch-up). Roth IRAs, 457 plans, SEP IRAs and HSAs all layer on additional tax-advantaged capacity. The tax code is inviting you to accumulate for retirement.

Italy goes the other way on almost every one of these choices. Contributions to an Italian private pension fund (fondo pensione, the structural equivalent of an IRA) are deductible only up to €5,164.57 per year. That number is not an accident. It is the euro-converted legacy of a ten-million-lire ceiling from 1961, and the fact that it has not been meaningfully updated in decades tells you how Italy views private pensions. They are allowed, they are marginally incentivized, but the state does not want high earners using them to defer large amounts of income into a later tax year at their marginal rate. The main public pension (INPS) is mandatory, heavy, and designed to be the primary retirement vehicle.

On the investment side, the Italian system is built around accumulation rather than distribution. The default retail products are accumulating UCITS funds, unit trusts, and life insurance capitalization contracts, all of which let the investor roll up returns inside a wrapper and defer Italian tax to the eventual liquidation event. Italian capital gains are then taxed at a flat 26 percent imposta sostitutiva, with preferential rates on government securities at 12.5 percent, and the system assumes you are perfectly happy to wait twenty or thirty years for the taxable event. Holding companies, which the U.S. treats with suspicion, are normal and often tax-efficient in Italy. Italian inheritance taxes are among the lowest in the developed world (rates between 4 and 8 percent with substantial exemptions), so accumulating wealth inside a structure and passing it down intact is a reasonable long-term plan.

The American retiree arriving in Italy is therefore carrying the wrong set of tools. IRAs that are there to supplement Social Security become taxable distributions taxed by Italy, with the Italian tax credited on the U.S. return. Roth distributions, which are the cleanest U.S. product, are taxed by Italy as pension income on the full gross amount, although the Italian tax authority has never ruled on a Roth by name. Qualified dividends, which are lightly taxed by the U.S., are taxed at Italy’s 26% flat rate, and on U.S. dividends the United States keeps its 15% treaty slice before crediting the Italian tax, so the two stack. Meanwhile, the Italian products the retiree would logically gravitate toward (accumulating funds, life insurance wrappers) are PFICs and foreign trusts on the U.S. side, and carry punitive tax treatment there.

No Joint Returns in Italy

One structural point surprises almost every American couple: Italy does not have joint tax returns. Each spouse files a separate Modello Redditi PF, and income is taxed in the hands of the person who owns the asset that produced it, so how assets are titled between two spouses changes the Italian bill. American couples have usually spent decades optimizing around a single Form 1040 and paying little attention to whose name is on which account, which leaves one spouse pushing into higher Italian brackets while the other's bracket capacity goes partially unused. Part of the planning work is therefore to redeploy jointly-held and spouse-movable assets between the two names while the couple is still U.S.-resident. We set out the mechanics, and which accounts can and cannot be moved, in how Italy taxes married couples on separate returns.

The rest of this article is about how we navigate the broader mismatch over a five-to-fifteen-year planning horizon so the client does not pay a structural tax penalty on assets they spent a career building.

The Glide Slope for Moving to Italy, in Five Stages

We use the aviation metaphor because retirees, more than any other client category, are uniquely exposed to a rapid descent. An earner can absorb a bad tax year with a better one. A retiree cannot. The assets they are drawing from are fixed in size. A poorly structured early retirement in Italy, paying full double-taxation friction on a portfolio designed for U.S. retirement, can compress the usable lifetime of a portfolio by years. The retiree does not always see this until it is already happening. At that point the runway is short.

The Glide Slope consists of five stages. The first two happen before the move. The middle stage is the ten-year window of the 7% pensionati regime. The last two happen as the regime expires and the client transitions into a permanent Italian tax posture.

Stage 1: Planning (T-minus 1 to 2 Years)

The planning stage normally starts twelve to twenty-four months before the move. The goal is to produce a written tax memo that inventories every asset the client holds, classifies each under both U.S. and Italian rules, and recommends a sequence of restructurings that can be executed while the client is still a U.S. tax resident and before the Italian tax year in which residency will be established. This planning memo is the core of our pre-move tax assessment.

Planning is not only about taxes. It also has to solve immigration. The U.S. retiree moving to Italy will enter under one of several paths, and each has its own tax and timing implications. The common paths include:

• Elective Residence Visa (ERV), the standard retiree route. Requires demonstrated passive income and a residence in Italy. Does not permit work for Italian employers.
• Digital Nomad Visa (DNV) for clients still doing remote work, with income requirements and employer-relationship rules.
• Investor Visa for clients willing to make a qualifying Italian investment (in Italian government bonds, an Italian company, an innovative startup, or a philanthropic donation) at the statutory thresholds.
• Ius sanguinis citizenship for clients with Italian-descent ancestry, which conveys full EU citizenship and eliminates the visa question entirely.
• Family ties paths for clients with Italian spouses or other qualifying relatives, which can lead to accelerated naturalization.
• Accelerated naturalization for clients with Italian spouses or other qualifying ties.
• Re-acquisition of Italian citizenship and other Italian-origin regimes for former Italian citizens who lost their citizenship under historic rules.

The visa path shapes the residency timing and, in some cases, the ability to avoid Italian residency in early years. It has to be worked out alongside the tax memo, not after.

The reason the planning window matters on the tax side is that once Italian tax residency attaches, many of the tools available to a U.S. resident disappear or become dramatically more expensive. The primary residence capital gains exclusion under IRC §121 and the 0 percent long-term capital gains bracket are the two clearest examples. Both are U.S.-resident tools bound to a U.S. tax year, both reset basis at little or no federal cost while they are open, and neither can be reached from an Italian return. We work through the two of them, and how Italy treats a later sale, in whether to sell appreciated assets before moving to Italy.

Roth distributions, and the question of what happens to Roth earnings after the Italian move, sit at the center of most planning memos. The Italian tax authority has never issued definitive guidance on Roth distribution treatment. The treaty does not shelter them: whether a Roth payout falls under the pensions article (Article 18) or the catch-all (Article 22), both give Italy, as the country of residence, the right to tax it, and nothing in the 1999 treaty carries over the Roth's U.S. tax-free status. The open question is how Italy classifies the income. The Agenzia has treated U.S. retirement-account payouts as pension income taxed on the full amount, and has rejected taxing them as investment income at 26%, but it has never ruled on a Roth by name, so a client under ordinary Italian residency is still taking a filing position every year. Under the 7% pensionati regime this matters less because the rate is low, but it still matters. Depending on age, the size of the Roth, and the client's risk tolerance, drawing down the Roth during the planning window (return of contributions tax-free, and accelerating earnings withdrawals if qualified) can remove this uncertainty before it attaches to an Italian return.

The specific interventions we typically consider in this window include:

• Immigration planning. Select the appropriate visa or citizenship path and align it with the tax timeline.
• Selling the U.S. primary residence under §121, and realizing gains in taxable brokerage accounts up to the top of the 0 or 15 percent long-term capital gains brackets, in the years when the client still has the room and the U.S.-resident status to do it.
• Drawing down Roth IRAs in specific circumstances. Roth distributions are the U.S. product whose Italian treatment is least settled, and clients often benefit from unwinding the Roth during the planning window (tax-free return of contributions first, then qualified distributions once age 59½ and the 5-year clock are satisfied).
• Initiating IRA distributions, including a §72(t) substantially-equal-periodic-payments plan for clients under 59½. The §72(t) plan provides pension-like income from the IRA without the 10 percent early-withdrawal penalty. For a client planning to claim the 7% pensionati regime, which requires qualifying foreign pension income at the time of residency, establishing a §72(t) stream during the planning window positions them to satisfy the regime's pension requirement in the first year of residency. The SEPP can be stopped once the client reaches age 59½, after which unrestricted IRA distributions are available.
• Asset redeployment between spouses to balance the taxable base on each spouse's future Italian return, since Italy does not have joint filing.
• Unwinding S-corporations, disregarded LLCs, and other pass-through entities that Italy will treat as opaque corporations and double-tax. We cover this in Why Americans Living in Italy Shouldn't Own an S-Corp or Disregarded LLC.
• Flagging any trust issues or Italian interpretation issues of complex U.S. structures (foreign-trust classification, entity opacity questions, holdings that Italy treats as non-compliant structures). In practice, most retirees we work with do not hold these, but the inventory still has to be done so nothing surfaces as a surprise after residency attaches.
• Confirming the target municipality qualifies for the 7% regime. Qualifying comuni are located in Southern Italy, Sicily, and Sardinia, with some qualifying municipalities in central Italian regions. The population threshold is small; current practice uses municipalities under the regime's cap.

The purpose of all of this is to move the client into the Italian system with a portfolio and an income profile that will be taxed at the lowest available rate on the Italian side.

One note on portfolio positioning. For clients who will not be claiming the 7% pensionati regime (because they want to live in Milan, Rome, or another non-qualifying city, or because their income mix does not fit), we often restructure the portfolio around growth-oriented, non-dividend-paying positions to defer Italian-side tax events and reduce the Article 23 creditability problem we cover in How to Invest as an American in Italy. Clients who will claim the 7% regime do not need this restructuring during the regime years. The 7% rate is low enough that optimizing dividend timing inside the window is not worth the transaction friction.

An Important Aside on Avoiding Residency Where Possible

For clients with the lifestyle flexibility, the best outcome is often to avoid Italian tax residency entirely, by staying under 183 days per year in Italy, keeping the family's home life outside Italy, and maintaining AIRE enrollment where it applies. Every year of Italian residency is a year of dual-system compliance, IVAFE and IVIE exposure outside the 7% regime, and wealth tax, and for a healthy early retiree there is rarely any urgency to attach it. The move date matters for the same reason: physical presence of at least 183 days in a calendar year (184 in a leap year, with any part of a day counting as a full day) is one of four independent ways to become an Italian tax resident. A client who arrives after early July cannot meet the day count that year, so the move year is usually not a resident year, as long as the family's home life, any civil-law residence and any anagrafe registration also moved after mid-year. If any of those was in Italy for most of the year, the client is resident for the whole year, back to 1 January. We cover the day count, the visa-holder exception and the AIRE mechanics in when in the year to move to Italy for tax purposes.

Stage 2: The Glide (First Regime Year through Year 9)

Once the client registers in the qualifying comune and elects the 7% pensionati regime, the planning picture simplifies dramatically. The Italian tax on covered foreign-source income becomes a flat 7 percent. IVAFE and IVIE disappear. RW reporting is substantially simplified. Most of the open compliance questions that drive cost and audit risk under ordinary Italian residency either disappear or become cost-irrelevant because the answer no longer changes the Italian rate.

Operational steps at the beginning of the regime window:

• Register residence at the Anagrafe of the qualifying comune. AIRE enrollment, if applicable, cancels automatically.
• Elect the 7% pensionati regime on the first Modello Redditi PF.
• Open an Italian bank account for local operational needs (utilities, property payments, day-to-day living). Do not open an Italian brokerage account yet.
• In the second year of the move (Year 2 of the regime window), draft the Italian public will (testamento pubblico) with an Italian notary, and have the existing U.S. revocable trust reviewed for Italian classification compatibility.

The client's income profile during this phase typically looks like this. U.S. Social Security is taxed by Italy first at the 7% regime rate, and, for a U.S.-only citizen, also by the United States under the savings clause of the U.S.–Italy tax treaty. The treaty treats the benefit as Italian-source for the U.S. foreign tax credit, so the 7% Italian tax is credited on the U.S. return: at modest incomes it cancels the U.S. tax, and a higher-income household pays the United States only the difference. A dual U.S.-Italian citizen resident in Italy owes the United States nothing on Social Security. Traditional IRA distributions are taxed by the United States as ordinary income and by Italy at 7 percent. The Italian 7% tax is creditable on the U.S. return as a foreign tax credit, but only against U.S. tax on the same income category, so the credit works only to the extent that income is also taxed by the U.S.

The strategic priority during the ten-year window is to drain U.S. tax-advantaged accounts at a steady, planned rate while the Italian tax is capped at 7 percent. The arithmetic is straightforward. Every dollar left in a Traditional IRA at the end of Year 10 is a dollar that will come out under Italian IRPEF at progressive rates in later years. Every dollar withdrawn during the regime is taxed by the U.S. at the client's low retirement-era marginal rate, with the 7 percent paid to Italy credited against that U.S. tax. The target rate is usually the total IRA balance divided by ten, adjusted for projected growth and for the different age and bracket capacities of each spouse.

The same logic applies to the Roth IRA. Although Roth distributions are tax-free in the U.S., Italy's classification of them is not settled. Under the regime, Italy taxes the full gross payout, contributions included, at 7 percent. Draining the Roth at 7 percent Italian during the regime eliminates the unsettled position without leaving money on the table under U.S. rules.

Stage 3: The Approach (Year 9 through Year 10, Pre-Exit Adjustment)

As the regime enters its ninth year, we conduct a new tax memo assessment. The question is which post-regime Italian incentives are currently available, at what rates, and to what asset categories, so that the Year 10 restructuring can be targeted at the correct assets.

Once the new memo is complete and the available post-regime regimes are confirmed, Year 10 is the restructuring year. During Year 10:

• Finish draining the Traditional IRAs. Residual balances at year-end should be minimal.
• Finish draining the Roth IRA under the same logic.
• Begin shifting the taxable portfolio out of U.S. dividend payers and into the asset classes that will be taxed most favorably in Italy after regime exit. For most clients, this means direct ownership of non-U.S. dividend-paying stocks, direct ownership of Italian and selected developed-country government bonds (for the 12.5% rate), and non-PFIC structures where available.
• End of Year 10 is the target for completing the shift. At the start of Year 11, the client's balance sheet should be positioned for post-regime taxation.

One practical note on European investment products. There are very few European ETFs that are non-PFIC for U.S. purposes. The standard European retail investment products (UCITS funds, European ETFs, accumulating funds) are all PFICs. This means the post-regime portfolio generally has to be built from direct ownership of individual stocks and direct ownership of individual bonds, rather than from diversified funds.

Stage 4: Landing (After the 10-Year Regime)

A common worry we hear from clients approaching Year 10 is that their tax bill is about to explode. In practice it usually does not, if the Glide Slope has been followed. Italy has some of the highest marginal tax rates in Europe for earned income (IRPEF reaches 43 percent above €50,000 plus regional and municipal surtaxes), but it has lower effective rates on capital, interest, and real estate income when assets are held in the right structures. The Italian system is not a single tax code. It is a stack of optional replacement-tax regimes for specific asset categories.

The replacement-tax regimes relevant to a retiree post-regime include:

• 26% imposta sostitutiva on investment income. Dividends, interest from non-government securities, and most capital gains on non-tax-haven investments.
• 12.5% preferential rate on Italian government bonds (BTPs, BOTs, CCTs) and government securities of certain developed countries.
• Cedolare secca on Italian residential rental income, at 21% flat, replacing IRPEF on qualifying rentals.

Pensions and residual IRA distributions are taxed at IRPEF, the progressive individual income tax. Only capital, interest, and real estate income qualify for the replacement regimes above. For most retirees this distinction is manageable because pension income after the drawdown during the regime is modest, and the bulk of post-regime income is investment income that qualifies for the replacement rates.

For non-regime residents and post-regime residents, IVAFE (0.2% on foreign financial assets) and IVIE (1.06% on foreign real estate, reducible by foreign property tax credits) return. There is no real escape from wealth tax by repatriating assets into Italy. IVAFE only covers foreign-held financial assets. Italian-held financial assets (Italian brokerage accounts, Italian bank deposits above the threshold, Italian life insurance and investment wrappers) are subject instead to the imposta di bollo, Italy's stamp duty on financial assets, which operates as a parallel annual wealth tax at a similar effective rate. Post-regime clients therefore pay an annual tax on their financial asset base regardless of where the assets are held.

A retiree whose portfolio has been repositioned around these regimes during the Stage 3 restructuring typically pays 26 percent on investment income, 12.5 percent on the government bond allocation, and IRPEF on Social Security and residual pension income. The effective overall rate is frequently around 26 percent, which is higher than during the regime but manageable and comparable to what a similarly situated American retiree pays in a high-tax state.

The constraint on this strategy, and the reason the Year 10 restructuring matters, is that U.S. citizens cannot use these regimes cleanly on U.S.-source income because of the Article 23 creditability problem. Italy gives no credit of its own against a substitute tax, and on U.S. dividends the United States keeps its 15 percent treaty share before crediting the Italian tax, which produces effective double taxation of about 41 percent on U.S. dividends for a U.S. citizen Italian resident outside the 7% regime. Gains on U.S. shares and most U.S. interest come out near the Italian 26 percent. This is the interaction we cover in detail in How to Invest as an American in Italy: The Full Picture of What Breaks, and it is why the Year 10 shift into non-U.S.-source income is the cleanest path into the post-regime years.

Stage 5: After Landing (Estate Planning)

The final stage of the Glide Slope is fully operational once Italian residency is permanent and the post-regime income structure is stable. At this point the planning conversation shifts from income tax to estate planning, because the client is entering a phase of life where the question is no longer how to tax the next year of distributions, but how to pass the remaining assets to the next generation.

Italian estate planning is substantively different from U.S. estate planning, and the most common mistake we see is the assumption that a U.S. revocable living trust, pour-over will, or dynasty trust will operate in Italy the way it operates in the U.S. It will not. Italy accepts trusts under the 1985 Hague Convention, but it does not treat them the same way. Italian civil law has forced-heirship rules (the legittima) that override testamentary freedom. Italian tax treatment of trust income and distributions depends on whether the Agenzia delle Entrate classifies the trust as transparent (flow-through) or opaque (taxed as an entity), and U.S. trust structures do not map cleanly onto those categories.

The core estate documents should already be in place. Because we draft the Italian public will and review the U.S. trust for compatibility in the second year of the move, the family enters this stage with the documents already signed. Stage 5 is mostly about keeping the documents current and using them.

The key planning elements are:

• A U.S. trust that is compatible with Italian classification for U.S.-held assets. Revocable grantor trusts typically work. Specific types of irrevocable trusts require review.
• An Italian public will (testamento pubblico) for any Italian-situated assets, which is filed with an Italian notary and is the cleanest way to pass Italian real estate and Italian financial accounts to heirs without probate delays.
• The U.S.-Italy inheritance tax treaty. Italy and the United States have one of the few bilateral estate-tax treaties the U.S. maintains, which matters because most developed countries do not have one. The treaty allocates taxing rights on different asset classes between the two jurisdictions and prevents full double taxation of an estate.
• Italy's low inheritance tax rates. Italian succession tax is 4 percent for transfers to spouse and direct descendants with a €1 million per-beneficiary exemption, 6 percent for siblings with a €100,000 exemption, and 8 percent for unrelated beneficiaries with no exemption.

For many of our clients, the estate planning stage is where the Glide Slope pays its deepest dividend. A retiree who has moved their assets into Italian or ex-U.S. structures during the Year 10 restructuring, with U.S. residuals held in a treaty-compatible trust, can pass meaningful multigenerational wealth at combined U.S.-plus-Italian tax rates in the low single digits to low teens.

A Worked Example: the Morettis

To make the mechanics less abstract, consider a composite client we will call the Morettis. Paul is 57, Anna is 55 at the planning date. They live in the Northeast, plan to move to a qualifying comune in Sicily, and expect to spend the rest of their lives in Italy with regular trips back to see children and grandchildren. They plan to move in the second half of the calendar year after next (Year 0 / move year), with the first full tax-resident year being Year 1.

Their balance sheet at the planning date (Year -2): Traditional IRA Paul $900,000; Traditional IRA Anna $250,000; Roth IRA Paul $180,000 ($80k contributions basis, $100k growth); taxable joint brokerage $620,000 with embedded $280,000 long-term gain; U.S. primary residence FMV $780,000, basis $220,000; anticipated Social Security at FRA Paul $30,000/year, Anna $18,000/year. Total approximately $2.73 million in assets before home sale.

Under the Glide Slope, the dollar flow looks like this. Use the interactive timeline below to walk year by year through the Morettis’ balance sheet, household income, and combined U.S. plus Italian tax bill.

If you want the static walk-through, the year-by-year detail follows.

Year -1 (Paul 58, Anna 56): Execute

Sell the U.S. primary residence while still U.S.-resident. Capture the $500,000 §121 exclusion on the $560,000 gain. Net U.S. federal tax on the $60,000 residual gain at 15%: approximately $9,000. Harvest $80,000 of long-term gains in the taxable brokerage at the 0% bracket. Take a Roth return-of-contributions distribution of $80,000 (tax-free). Initiate a §72(t) SEPP on Paul's Traditional IRA at $45,000/year. Complete asset redeployment between spouses. Total US tax this year: approximately $9,000.

Year 0: Move

Move to Sicily in the second half of the calendar year. If Italian citizens, AIRE enrollment cancels automatically at the moment of Italian registration. If not Italian citizens, simply register at the local Anagrafe. Purchase Italian residence approximately €150,000 to €200,000. Open an Italian bank account. Not a tax resident for Year 0, provided the arrival, the anagrafe registration and the family's move all fall in the second half of the year. The first Italian tax return is filed in Year 2 for Year 1 income.

Year 1 (Paul 59, Anna 57): First Regime Year

Elect the 7% pensionati regime on the first Modello Redditi PF. Paul reaches 59½ during Year 1 and stops the SEPP. Anna begins IRA distributions at $25,000. Roth drawdown at $12,000. Total household income approximately $100,000. Combined household tax: approximately $11,000 to $12,000.

Years 3 through 9: Steady Drawdown

Paul IRA $90,000/year, Anna IRA $25,000/year, Roth $15,000/year, taxable income $18,000/year. Paul reaches 65 (Year 7) adding the U.S. age-65 standard deduction. Paul reaches Full Retirement Age (Year 9) and begins Social Security at $30,000. Total annual household income $145,000 to $148,000. Combined annual tax: approximately $18,500 to $22,000.

Year 10 (Paul 68, Anna 66): The Shift

Finish draining the Traditional IRAs. Roth IRA emptied. Move the taxable portfolio out of U.S. dividend payers into direct non-U.S. dividend-paying stocks and a mix of Italian BTPs and selected developed-country sovereign bonds. The exact allocation depends on risk tolerance.

Year 11 (Paul 69, Anna 67): First Post-Regime Year

Anna begins Social Security at $18,000. The 7% regime has ended. Total household income approximately $108,000. Glide Slope combined tax $28,000 to $32,000.

The naive alternative. A Moretti who had never restructured the portfolio would still be sitting on U.S. dividend-paying stocks, U.S. bond funds, and legacy positions. The same $108,000 of household income would flow into Italy under full IRPEF (roughly 23% on the first €28k, 33% to €50k, 43% above €50k, plus regional and municipal surtaxes of roughly 1.2 to 4.2%), not under the replacement-tax stack. Under Article 23 the U.S. would credit the Italian tax on U.S.-source investment income only above the share the treaty lets it keep, 15% on dividends and 10% on interest. The naive path produces combined tax closer to $52,000 to $56,000 per year, roughly $22,000 to $25,000 higher than the Glide Slope path. That gap persists every year for the rest of the client's life.

Year 15 (Paul 73, Anna 71): Settled Post-Regime

Effective combined rate settles around 26% of gross income under the replacement-tax stack. Combined tax approximately $28,000 to $30,000. Naive comparison: an unrestructured Moretti household paying full IRPEF on the same investment income would owe approximately $48,000 to $52,000 per year, a recurring $20,000+ gap that compounds every year the client remains Italian-resident.

Year 25 (Paul 83, Anna 81): Estate Transition

Annual household income at this stage approximately $100,000. Annual combined tax under the replacement-tax stack approximately $26,000. Under the naive IRPEF path: approximately $47,000. Cumulative savings from the Year 10 replacement-tax restructure (Years 11 through 25, 15 full post-regime years): approximately $300,000 to $330,000. Italian public will executes Italian real estate transfer. U.S. revocable trust passes U.S.-held assets under U.S. rules. U.S.-Italy inheritance treaty allocates taxing rights. Italian succession tax at 4% on transfers to direct descendants above the €1M per-beneficiary exemption. Combined effective estate tax rate for the family typically in the low single digits to low teens.

Measuring the Savings

The Glide Slope produces savings in three distinct phases, and the largest of them is not the 10-year regime window. It is the permanent post-regime savings that run for the rest of the client's life.

Regime window savings (Years 1 through 10). During the ten years of the 7% pensionati regime, the Glide Slope typically produces $200,000 to $350,000 of tax savings relative to the naive alternative.

Post-regime recurring savings (Year 11 onward). This is the part most retirees underestimate. When the 7% regime ends, the Glide Slope client's portfolio is already positioned for the Italian replacement-tax regimes: 26% imposta sostitutiva on investment income, 12.5% on government bonds, 21% cedolare secca on any rental income. An identically-funded client who never restructured holds the same dollars in U.S. dividend payers and U.S. bond funds, paying full IRPEF (up to 43% plus regional and municipal surtaxes) with the U.S. crediting that tax only above the treaty's retained 15% on dividends and 10% on interest. For a household at the Morettis' scale, the annual gap is typically $20,000 to $25,000 per year, every year, for the rest of life. Over a fifteen-year post-regime period (Years 11 through 25), that alone accumulates to $300,000 to $375,000 in compounded savings.

Estate-side savings (Stage 5). Estate savings from a properly structured Italian public will, a U.S.-compatible trust, and use of the U.S.-Italy inheritance treaty typically add another $150,000 to $400,000.

Over the full 25-year horizon, the combined savings for a household with the Morettis' profile typically reach $700,000 to $1.2 million. The savings compound because every year of lower tax preserves invested capital that continues to compound.

The interactive timeline below walks through each of these stages year by year with the running numbers.

Why Italy Built This System

A fair question we hear from clients is whether the 7% pensionati regime is just a temporary incentive that could disappear, or whether there is something more durable behind it. Italy has extended the regime multiple times since its introduction and expanded the qualifying population cap.

The durability comes from the structural logic. Italy knows its default tax system was designed for a civil-law capital-accumulation economy that does not match how common-law retirees from the U.S., the U.K., or Canada organize their financial lives. The replacement-tax regimes are not discounts on a normal tax base. They are an acknowledgment that the standard Italian base produces incoherent results when applied to foreign-source income that has already been structured under a different legal system. Taxing an American IRA under Italian ordinary rules raises questions about whether it is a pension, an investment account, a trust, or an opaque entity. Taxing it at a flat rate takes all of those questions off the table. The simplification is deliberate.

We wrote about this at more length in our analysis of the regime's architecture in Italy's Impatriati and Flat Tax Regimes: 2026-2027 Rule Changes. Italy does not just want to attract new residents. Italy wants to attract residents whose tax profile would otherwise be a compliance nightmare for both sides, and the flat-rate replacement regimes are the cleanest administrative answer.

This is why we are comfortable building ten-year plans around the regime. The political and administrative logic supporting it is more durable than the fiscal incentive framing would suggest.

The Bottom Line on Moving to Italy

A retirement in Italy does not have to be a tax penalty. It is, for most of our clients, one of the most tax-efficient retirement destinations in the developed world, once the transition is structured correctly. The problem is that the transition has to be structured, and the window to do it meaningfully closes the day Italian tax residency attaches.

Most of what the Glide Slope accomplishes is not something you can retrofit once you are already in the system. The §121 exclusion on the U.S. home, the 0% long-term capital gains harvest, the Roth unwind, the §72(t) initiation, the asset redeployment between spouses, the entity unwinding, all of these are tools available to a U.S.-resident, not to an Italian resident. Waiting until after the move to think about them is usually too late.

The cost of starting one year late is usually tens of thousands of dollars. The cost of starting five years late is usually hundreds of thousands. The cost of starting after the 7% regime window has expired is frequently the entire difference between a comfortable Italian retirement and one that slowly erodes under double-taxation friction the client never built into the plan.

If you are considering a move to Italy, or you are already here and have never had a structured cross-border tax memo prepared, we would be glad to walk through the specifics with you. The Glide Slope is not a one-size formula. It is a framework we adapt to each client's balance sheet, timeline, and family situation. What every version of it has in common is that the work is most valuable before the move, and second most valuable in the first year after. The longer it is delayed, the fewer of the tools are still on the table.

Frequently Asked Questions

What is the JSBC Glide Slope?

It is the structured multi-year framework JSBC uses to prepare clients for a move to Italy, manage their tax exposure during their first ten years of residency under the 7% pensionati regime, and land them into a stable Italian tax posture for the rest of their lives. The name is borrowed from aviation, where a glide slope is the stable, controlled descent of an aircraft to the runway. The point of the metaphor is that poor preparation or last-minute corrections can make the landing impossible.

Why do American retirees often feel Italy's taxes are unfair at first?

Americans spend decades optimizing around U.S. rules such as IRAs, Roth distributions, and qualified dividends that do not translate cleanly into the Italian system. In Italian context their assets place them among the wealthiest 90 to 99 percent of the people around them, even though in dollar terms they feel unremarkable. The friction comes from this structural mismatch between two tax systems, not from Italy having uniformly high taxes.

Does Italy allow joint tax returns for married couples?

No. Italy does not have joint tax returns; each spouse files a separate Modello Redditi PF, and income is taxed in the hands of the person who owns the asset that produced it. This is why part of the planning work is redeploying jointly-held and spouse-movable assets between the two names so each spouse fills their own IRPEF brackets efficiently. Traditional IRAs cannot be retitled between spouses, but taxable brokerage and non-retirement accounts often can while the couple is still U.S.-resident.

How does the 7% pensionati regime change the tax picture?

Once a client registers in a qualifying comune and elects the regime, Italian tax on covered foreign-source income becomes a flat 7 percent, IVAFE and IVIE disappear, and RW reporting is substantially simplified. The strategic priority during the ten-year window is to drain U.S. tax-advantaged accounts such as Traditional and Roth IRAs at a steady, planned rate while the Italian tax is capped at 7 percent, since every dollar left in at the end of Year 10 comes out later under progressive Italian IRPEF.

When should retirees start planning their move to Italy?

Planning normally starts twelve to twenty-four months before the move, because once Italian tax residency attaches many of the tools available to a U.S. resident disappear or become far more expensive. The Section 121 home-sale exclusion, the 0% long-term capital gains harvest, the Roth unwind, the Section 72(t) income stream, spousal asset redeployment, and entity unwinding are all tools for a U.S. resident, not an Italian resident. Starting one year late usually costs tens of thousands of dollars, and starting five years late usually costs hundreds of thousands.