Lump sum drawdown from a UK pension in Italy

For anyone who is resident in Italy for tax purposes and is holding a UK personal pension, and is intending on drawing down the 25% lump sum from the pension whilst resident in Italy: you want to think before you do so.


For Italian tax purposes, the lump sum from a UK personal pension can be deemed to be income and therefore would be subject to IRPEF at your highest rate.  In other words it is added to your income for the tax year in which you withdraw the funds and tax is paid accordingly.

There does not seem to be any specific provision in the Double Taxation agreement between the UK and Italy to exclude or include the lump sum as taxed income and therefore it is highly likely that it is taxable from an Italian tax man perspective.

The same would seem to apply for a QROPS which has been set up outside the UK

Be warned!

If you would like more information or help in planning your pension/retirement planning in Italy then please get in touch with me on gareth.horsfall@spectrum-ifa.com or you can contact me on cell 3336492356