The U.S.-Italy tax treaty splits retirement income into three separate rules, and which rule applies decides which country taxes you. A private employer pension and U.S. Social Security follow the country of residence, so Italy taxes them once you live there. A U.S. government, state, or military pension runs the other way and stays taxable only in the United States, until you take Italian citizenship. Individually funded accounts, the IRA, the Roth, and the 401(k), are the exposed category, because the treaty never names them, both of the articles that could apply hand the income to your country of residence, and nothing obliges Italy to respect the U.S. tax treatment.
This page takes the pensions and Social Security part of our complete guide to the U.S.-Italy tax treaty and answers it on its own. The order below follows the way the money actually gets classified: first the treaty rule that covers ordinary employer pensions and Social Security, then the separate government-service rule, then the retirement accounts the treaty never mentions. If you are still planning the move, the classification is worth settling before residence starts, which is what a pre-move tax assessment is built to do.
Which pensions does the U.S.-Italy tax treaty send to Italy?
People and pensions (Articles 14 to 22)
The personal-services articles allocate employment and professional income. Employment income is taxable only in the worker's home country when the stay in the other country is short, the employer is not local, and the cost is not borne by a local establishment. Notably, this treaty still contains a separate article for independent personal services with its old "fixed base" test, a provision the general model deleted in 2000, so the fixed-base concept remains live throughout the text. Directors' fees, by protocol, may be taxed at source only to the extent the work was actually performed there, which is more favorable than the usual rule that lets the company's country tax the whole fee. Performers and athletes are taxed at source only once gross receipts pass twenty thousand dollars for the year or presence passes ninety days.
Pensions are the heart of this part for most readers, and the treaty splits them into three different rules. Private pensions paid for past employment are taxable only in the country where the recipient lives.1 Social security runs to the country of residence as well: a benefit paid under one country's social security legislation to a resident of the other country is for the residence country to tax.2 In plain terms, U.S. Social Security received by a resident of Italy is Italy's to tax, at ordinary rates or under the 7% regime if the person qualifies. For a U.S. citizen, whether the United States may also tax it turns on the saving clause and on nationality, a point the tie-breaker and saving clause guide works through. Annuities are residence-only, but only if they meet a strict definition of a stated sum paid periodically for full consideration. Alimony and child support are dealt with too: they are taxable only in the recipient's country of residence, and taxable in neither country if the payer gets no deduction for them.3 The way that interacts with recent U.S. changes is fact-specific, so treat it as a flag to check rather than a rule to rely on.
The third rule, for government and military service, is the one that produces the largest single saving for many American retirees, and it has its own section below.
Going deeper: the interaction of Social Security, private pensions, and the 7% regime is covered in foreign pensions and Social Security in Italy.
Is my U.S. Social Security taxed in Italy in 2026?
It is, and this is the answer people are most often surprised by. The residence rule set out above is what puts the benefit in Italy's hands, and the nationality section below is where it turns around again.
Going deeper: the full order of operations on a Social Security benefit, from the treaty baseline through the saving clause to the credit, and the one exception that runs the other way, is worked through as an illustration in the complete guide to the U.S.-Italy tax treaty.
Is a U.S. government, military, or VA disability pension taxed in Italy?
Government, military, and VA disability benefits (Article 19)
Article 19 is the provision most likely to cut an American retiree's Italian tax bill, and it is worth isolating because it works differently from both private pensions and Social Security. Remuneration and pensions paid by a government, federal, state, or local, for services rendered to that government are taxable only in the paying country.4 A U.S. civil service pension, a federal employee retirement pension, a state or local government pension, and U.S. military retirement pay therefore remain taxable only in the United States and are excluded from the Italian tax base. The exclusion is effectively self-executing, though the pension should still be disclosed on Italy's annual foreign-asset report, and excluding it can drop the remaining income into a lower Italian bracket.
There is a nationality switch to watch, and it is the part that surprises people. The paying-country rule reverses where the recipient is a national of the country of residence, so once you take Italian citizenship Italy gains the right to tax the government pension.5 While you hold only U.S. citizenship and live in Italy, a U.S. government or military pension stays U.S.-only and out of the Italian base. Here is the subtlety most people miss. Becoming an Italian citizen does not move the pension out of the United States, because the saving clause still lets the United States tax its own citizen. It adds Italy as a second taxer, with Italy giving the credit as the country of residence. So naturalization turns a clean U.S.-only pension into income taxed by both countries and relieved by credit, not into an Italy-only pension. The AdE has applied this nationality test to public pensions in its published rulings.
Social Security runs the opposite way, which is the irony worth holding onto. Italian citizenship makes a government pension taxable in Italy, but it makes Social Security stop being taxable in the United States, the reverse of what most people assume about becoming a citizen.
Veterans' disability sits in an even better spot. U.S. veterans' disability compensation is excluded from income under U.S. law, so the United States does not tax it.6 Italy's own logic tends to land in the same place, and the way to understand that logic is this: if a payment replaces money you would have earned, Italy treats it as income; if it compensates you for a part of your body that no longer works, it is not income, it is closer to depreciation on the asset. Military and VA disability usually fall on the non-income side. And even where a particular benefit does not clearly read as disability, it can often be treated as a government pension under Article 19, which lands in the same result: not taxed in Italy. For many disabled veterans the income is effectively untaxed on both sides.
Two caveats. The specific benefit and its Italian characterization always need checking, and where a benefit is a hybrid it is worth filing a ruling with the AdE to settle it before the return rather than after a letter. And all of this holds only while you are not an Italian citizen. Naturalize, and the nationality switch above can turn the Italian tax back on.
The boundary cases are private-sector pensions, which do not qualify for Article 19 and fall under the residence-only private-pension rule, and quasi-governmental employers, which can require a case-by-case ruling.
Going deeper: the government-pension rules, the nationality test, and the disability categories including VA benefits are covered in our guide to how Social Security and pensions are taxed in Italy.
The catch-all in Article 22 is more important than its position suggests. Any income not dealt with in the other articles is taxable only where the recipient is resident.7 Because undefined terms take their meaning from domestic law, an income stream the treaty does not specifically classify is characterized under the law of the country applying the treaty and, if it fits no named article, lands in Article 22 and is taxed by the country of residence. This is exactly the route the AdE took for an individually funded U.S. retirement account, as the characterization section below explains.
How does Italy tax an IRA, a Roth, or a 401(k)?
How Italy reads U.S. retirement income the treaty never names
The convention names "pensions," "annuities," and "social security," but it never mentions an individual retirement account, a Roth, or a defined-contribution plan by name. Characterization therefore decides the outcome, and the characterization runs along a ladder.
An employer pension paid for past employment fits Article 18 and is taxable only in the country of residence. A defined-contribution workplace plan funded through employment is the strongest candidate to sit inside the same article. An individually funded retirement account is the hard case, because Article 18 covers pensions paid "in consideration of past employment," and a personally funded account has a weak or absent employment link. It is also not an annuity unless it has actually been converted into a fixed periodic stream. When an account fits none of the named articles, the treaty's general definitions push the question to domestic law, and the income falls into the Article 22 catch-all, taxable only in the country of residence.
This is not theoretical. In late 2025 the AdE addressed an individually funded U.S. retirement account, paid out to an Italian-resident heir, where the account had been built from the deceased's own voluntary contributions and the United States had withheld tax on the distribution.8 The AdE held that the sum did not fall within the pensions article, because it derived from a voluntary savings vehicle rather than past employment, and that it fell instead within the other-income article, which likewise assigns exclusive taxing rights to the country of residence. The conclusion was that the income was taxable only in Italy, that the United States should not have withheld under the treaty, and that the recipient should seek a refund of the U.S. tax and, failing that, invoke the mutual agreement procedure. The same ruling treated the payment, under Italian domestic law, as pension-type income subject to separate taxation in the hands of the heir.
Two lessons follow for any American with these accounts. First, the treaty hands Italy the taxing right over individually funded U.S. retirement income. Both candidate articles, pensions and the catch-all, are residence-only, so the result converges on Italy regardless of which one applies. The planning question is not whether Italy may tax it but how Italy will characterize and rate it. Second, and more painful, the treaty does not oblige Italy to respect the U.S. tax treatment of the account. There is no provision that deems a Roth distribution tax-free in Italy, no return-of-basis rule, and no general command to recognize a U.S. plan. The only recognition mechanism is a narrow rule for cross-border contributions by a temporary secondee, gated on the competent authority agreeing that the U.S. plan corresponds to a recognized Italian pension fund, and it says nothing about how distributions are taxed. The realistic working assumption is that Italy will tax a Roth distribution that the United States treats as tax-free, and will tax a traditional account distribution as ordinary income, with the U.S. treatment offering no shelter on the Italian side.
Going deeper: how Italy characterizes and rates IRA, Roth, and 401(k) distributions is covered in IRA, Roth, and 401(k) in Italy.
What does each type of retirement income look like at a glance?
The table below is the summary of everything above: which treaty article governs each kind of retirement income, whether Italy taxes it, and whether the United States still reaches it.
Frequently asked questions
Does the U.S.-Italy tax treaty make my Social Security tax-free in Italy?
No. The treaty sends Social Security to the country where the recipient lives, which means Italy taxes it once you are resident there, at ordinary rates or at 7% if you qualify for the pensioner regime. For a U.S. citizen the saving clause lets the United States tax it as well, but the Italian tax is usually heavy enough that the foreign tax credit cancels the U.S. tax. If you are also an Italian citizen, the treaty takes the United States out and Italy taxes the benefit alone.
Does taking Italian citizenship help my pension?
It cuts both ways, and in the direction most people do not expect. Italian citizenship makes a U.S. government or military pension taxable in Italy as well, because the paying-country rule in Article 19 reverses for a national of the country of residence, and the saving clause keeps the United States taxing it too. The same citizenship makes Social Security stop being taxable in the United States. One gets worse, the other gets better.
Is a Roth IRA still tax-free once I live in Italy?
Assume it is not. There is no provision in the treaty that deems a Roth distribution tax-free in Italy, no return-of-basis rule, and no general command that Italy recognize a U.S. plan. Both of the treaty articles that could cover an individually funded account, the pensions article and the catch-all, assign the income to the country of residence, so the taxing right lands with Italy either way. The planning question is how Italy will characterize and rate it, not whether it may tax it.
What is the difference between a private pension and an IRA under the treaty?
A private pension is paid in consideration of past employment, which is exactly what the pensions article covers, so it fits a named article cleanly. An individually funded account is built from your own voluntary contributions, so the employment link is weak or absent, and it is not an annuity unless it has been converted into a fixed periodic stream. When an account fits none of the named articles it falls into the catch-all, which is also residence-only. The destination is the same; the route, and therefore the Italian characterization, is not.
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- 1999 convention, Article 18, paragraph 1. ↩
- 1999 convention, Article 18, paragraph 2. The saving clause in Article 1, paragraph 2 is set aside for this paragraph by Protocol Article 1, paragraph 2(a), for a resident of the other State who is a national of that State even if also a national of the first State; Article 1, paragraph 3(a) of the convention itself preserves only paragraphs 5 and 6 of Article 18. See also the IRS guidance on social security and equivalent benefits paid to residents abroad. ↩
- 1999 convention, Article 18, paragraph 5: alimony and child support are taxable only in the recipient's State of residence, and not taxable in either State where the payer is not entitled to a deduction. The paragraph defines "alimony" as periodic payments under a written separation agreement or decree that are taxable to the recipient under the law of the recipient's State of residence. ↩
- 1999 convention, Article 19, paragraphs 1 and 2: government-service remuneration and pensions are taxable only in the paying country, subject to the exception below. ↩
- 1999 convention, Article 19, paragraph 2(b): the paying-country rule reverses where the individual is both a resident and a national of the other country, so the pension is then taxable only in the country of residence. Unlike the rule for current government salaries in paragraph 1(b)(i), paragraph 2(b) has no exception for someone who is also a national of the paying country. For a U.S. citizen the saving clause still lets the United States tax the pension, because Article 1, paragraph 3(b) preserves the Article 19 benefits only for individuals who are not U.S. citizens. The Agenzia delle Entrate applies the same literal test under other conventions with identical wording: Risposta a interpello no. 172/2023 (Italy–United Kingdom, where nationality of the residence country alone suffices) and, marking the limit, no. 115/2023 (Italy–Germany, whose text excludes dual nationals). No published ruling applies it under the U.S. convention. ↩
- U.S. veterans' disability benefits are excluded from U.S. gross income under U.S. domestic law; see the IRS guidance for persons with disabilities. Their Italian characterization should be confirmed for the specific benefit, but as a veterans' benefit they are generally not included in Italian taxable income. irs.gov ↩
- 1999 convention, Article 22, paragraph 1. ↩
- Agenzia delle Entrate, reply to ruling request no. 290 of 12 November 2025, on the Italian tax treatment of a lump-sum distribution from an individually funded U.S. retirement account paid to an Italian-resident heir, applying Articles 18 and 22 of the 1999 convention and concluding exclusive Italian taxation, with the U.S. withholding to be reclaimed or addressed through the mutual agreement procedure. ↩
The information in this article is provided for general informational purposes only and does not constitute financial, legal, tax, or accounting advice. Any opinions expressed are solely those of the author and do not necessarily reflect the views of JSBC. You should not act or refrain from acting on the basis of this content without first seeking the advice of a qualified professional regarding your particular circumstances.