Much has been written in the pages of Gazzetta Svizzera about the taxation of Swiss pension annuities received by Italian residents. We have always made a fundamental distinction between annuities received in Switzerland (credited to a Swiss account) and annuities received in Italy (channelled to an Italian account directly by the paying institution). We have always maintained that only in the second case (annuities channelled in Italy) would it be possible to benefit from the 5% preferential taxation. Instead, in the first case (annuities received directly in Switzerland) the annuities would be subject to progressive taxation (i.e. at a higher rate), subject to self-assessment (calculation) to be made in one's income tax return to be submitted to the Italian tax authorities. What we have always maintained, whether our readers liked it or not, was well founded on the current regulatory provisions as well as the interpretative provisions issued by the Italian Revenue Agency. This does not detract from the fact that this regulatory approach was often considered discriminatory, as it had the effect of applying different tax treatment to the same taxpayers, depending on where the income was received (in Italy rather than in Switzerland).
The above scenario is now radically changed following the entry into force of a provision contained in Law No. 197 of 29 December 2022 on the 'State Budget for the Financial Year 2023'. This rule (Article 1, paragraph 77) adds paragraph 1-ter to Article 76 of Law No. 413 of 30/12/1991, which provides as follows:
"1-ter. Any sums paid anywhere by the Swiss old-age, survivors' and invalidity insurance (OASI) and by the Swiss occupational old-age, survivors' and invalidity insurance (OP), including benefits paid by Swiss early retirement institutions, accrued also on the basis of social security contributions taxed at source in Switzerland and disbursed in any form and for any reason, received by resident persons without the intervention of Italian financial intermediaries in the payment, are subject to substitute taxation of income tax at the same rate as the withholding tax referred to in paragraphs 1 and 1-bis" (i.e. the 5% rate).
Under this rule, therefore, any distinction on the tax treatment of annuities depending on where they are received is eliminated. The important consequence is that pensions, both OASI and OP, will be taxed at the 5% rate whether they are channelled to Italy or credited to a Swiss bank account. The only difference between the various situations may concern whether or not the tax must be self-assessed in the annual tax return to be filed in Italy. We will see in particular how one should behave in the case of a OP pension channelled in Italy. The rule in question will certainly be the subject of interpretative provisions that will clarify these aspects. For the time being, the only certainty is the determination of the same tax rate of 5% in any situation. Moreover, the wording 'paid in any form and under any title' authorises the assumption that the lower rate is applicable to both benefits in the form of annuities and capital. As said, it will be appropriate to await clarifications on the matter from the Revenue Agency.
While waiting for clarifications, we advise those who have to decide first to follow the current practice: have the amount paid to their bank in Italy, inform the bank before the first payment (preferably by registered letter with advice of receipt) that the payment by ....... concerns the Swiss occupational pension, which must be subjected by the bank to the 5% tax pursuant to Article 76, paragraph 1bis, Law no. 431/1991; Circular of the Revenue Agency of 27.01.2020 no. 3/E.
In addition, the validity of this new regulation will be retroactive to 2015 and this will allow pensioners who had disputes with the Revenue Agency on these issues to resolve them positively.
avv. Andrea Pogliani