Swiss pension in Italy: AVS, pension fund and taxation

Who this guide is for

Our guide to cross-border workers' retirement covers your working life: contributions, 2nd pillar and pillar 3a while you work in Switzerland. This one covers the next step: retiring while living in Italy, whether you lived in Switzerland (in Ticino, for example) or commuted across the border. The rules are largely the same for both.

Your AVS pension paid in Italy

The AVS pension is exportable: you receive it in full while living in Italy. For people resident abroad, the Swiss Central Compensation Office (CdC/SAK, in Italian CSC) in Geneva is generally responsible. If you are already living in Italy when you retire, you normally apply through INPS, which forwards the claim to the CSC. If you already draw your pension in Switzerland and then move, your file is generally transferred from the cantonal office to the CSC.

The CSC pays the pension monthly in francs to a Swiss account or in euros to an Italian account, at the exchange rate of the day: in euros, the amount moves with the currency. The CSC periodically asks for a life certificate; reply on time, or payments may be suspended.

Swiss and Italian years: aggregation

Under the Swiss-EU Agreement on the Free Movement of Persons, which applies the EU social security coordination rules, insurance periods in both countries are added together to establish the right to a pension. But each country only pays its own share (pro rata), based on its own years: you will receive two separate pensions, one from the AVS and one from INPS, each at its own age.

Italian and other EU/EFTA nationals cannot get their AVS contributions refunded: refunds are reserved for nationals of countries without a social security agreement. Your Swiss years remain on record and turn into a pension.

The 2nd pillar (LPP/BVG): pension, lump sum and vested benefits

At retirement you choose between a pension and a lump sum according to your fund's regulations, even if you live in Italy. The law guarantees at least a quarter of the mandatory LPP savings as a lump sum; many funds allow more, but the choice often has to be announced in advance.

If you leave Switzerland before retirement, a different rule applies: the mandatory LPP portion cannot be paid out in cash if you move to an EU/EFTA country where you are compulsorily insured for old age. It stays in a vested benefits account until retirement age (withdrawal at the earliest 5 years before). The extra-mandatory portion can generally be withdrawn when you leave.

Any lump sum (2nd pillar or pillar 3a) paid to a non-resident is subject to Swiss withholding tax, at a rate that depends on the canton where the paying institution is based. Under the Swiss-Italian double tax treaty, this tax can generally be refunded if you prove, with a certificate from the Italian tax authority, that the benefit has been declared in Italy, usually within three years.

Taxation in Italy: the 5% regime

Once resident in Italy, you are taxed there on your worldwide income. For benefits from the Swiss AVS and occupational pension system there is a special regime: article 76 of Italian Law 413/1991 provides for a 5% withholding applied by the Italian intermediary (the bank) receiving the payment. According to the Agenzia delle Entrate, it covers both pensions and lump sums from the AVS and LPP.

If the money does not go through an Italian intermediary, it generally has to be reported in your tax return at the same 5% rate. For pillar 3a, the 5% regime is not explicitly provided for, and its treatment in Italy must be assessed case by case. Always check with the Agenzia delle Entrate or an Italian tax adviser before choosing between a pension and a lump sum.

Reporting duties and health insurance

As an Italian resident you generally have to report foreign financial assets, such as a Swiss bank account, in the RW section of your return, and the IVAFE wealth tax may be due on them. Ask your adviser whether and how a vested benefits account must be reported.

For health insurance, EU coordination applies. If you only receive a Swiss pension, you generally remain insured in Switzerland and get treatment in Italy through an S1 form registered with the local ASL; if you also receive an Italian pension, you are generally insured in Italy. Check before moving with the Common Institution under the Health Insurance Act (kvg.org).

Example: Marco moves back to Italy at 65

Marco, an Italian national, worked 7 years in Italy and then 37 years in Ticino, where he lived. At 65 he moves to the province of Como. His estimated AVS pension is about CHF 2,000 a month and his pension fund balance is CHF 300,000, which he takes as a lump sum. Everything is paid into an Italian account.

With 7 years in Italy he would not reach the 20 years INPS requires on his own: thanks to aggregation, he will still receive a small pro rata Italian pension from 67, on top of the AVS.

Plan before you move

The big decisions (pension or lump sum, timing of the withdrawal, which account to be paid into) are made before you move. RetirePlan estimates your AVS pension and 2nd pillar for free, compares pension and lump sum and shows how long your savings will last, with as many scenarios as you like.

If you would like a specialist to review your plan, an optional expert analysis is available.

Frequently asked questions

Can I receive my Swiss pension in Italy?

Yes. The AVS pension and pension fund benefits are also paid to residents of Italy. For people living abroad, the Swiss Central Compensation Office in Geneva is generally responsible; it pays the AVS pension in francs to a Swiss account or in euros to an Italian one.

How is a Swiss pension taxed in Italy?

Pensions and, according to the Agenzia delle Entrate, lump sums from the AVS and LPP are subject to a 5% withholding (art. 76 Law 413/1991) applied by the Italian bank receiving the payment. Without an Italian intermediary they generally have to be declared. Have your case checked by a tax adviser.

Can an Italian citizen get AVS contributions refunded?

No. AVS refunds are reserved for nationals of countries without a social security agreement with Switzerland. For EU/EFTA nationals, Swiss years remain on record and give a right to an AVS pension at the reference age.

Can I withdraw my 2nd pillar if I move to Italy before retirement?

Only partly. The mandatory portion generally stays in a vested benefits account until retirement age if you are compulsorily insured in Italy. The extra-mandatory portion can generally be withdrawn when you leave. At retirement age you can take the lump sum according to the regulations.

How is a former cross-border worker's pension calculated?

Like anyone who has worked in Switzerland: the AVS pension depends on Swiss contribution years (44 for a full pension) and average income, while INPS pays a share for the Italian years. The 2nd pillar depends on the savings built up.

Is Swiss pillar 3a taxed at 5% in Italy?

Not necessarily. The 5% regime is designed for the AVS and occupational pensions; for pillar 3a, the treatment in Italy must be checked case by case. In Switzerland, a 3a lump sum paid to a non-resident is subject to withholding tax in the institution's canton.