Is your pension tax-free in Albania?

In short

It depends on the type of pension. Private pensions from former employment, for example the typical INPS pension, can be taxable only in Albania, and therefore exempt in Italy. Public pensions, such as ex-INPDAP, state or military ones, remain taxable in Italy. It is the first thing to settle, before any other calculation.

You often hear, in general terms, of "zero tax" pensions in Albania. The reality is more precise, and it is set down in black and white in an official document.

Where the rule comes from

The difference is not our interpretation. It is set by the convention between Italy and Albania against double taxation, in force since 1999. A convention of this kind serves to establish, for each type of income, which of the two countries may apply tax, so that the same income is not taxed twice. For pensions, two articles decide almost everything: article 18 and article 19.

Private pension: where you live counts (article 18)

Article 18 says that pensions and similar payments, made to a resident of a contracting state in respect of past employment, are taxable only in that state.

In simple terms: if you receive a pension from former private employment, the typical INPS pension, and you genuinely reside in Albania, that pension is taxable only in Albania. This is why people speak of a pension being exempt in Italy.

How much Albania then actually charges on these pensions is a separate question, and it changes over time. It is a figure we keep up to date: check the verification date at the foot of the page.

Public pension: it stays in Italy (article 19)

For pensions paid by the state, the rule reverses. Article 19 establishes that pensions paid by a state are taxable only in that state. An Italian public pension, therefore, stays taxable in Italy even if you move to Albania: this applies to ex-INPDAP, state, military and public-sector pensions in general.

The same article provides a single exception: the pension becomes taxable in Albania only if the person is at the same time resident and a national of Albania. For most Italian pensioners this condition does not arise, and the public pension therefore continues to be taxed in Italy.

The less clear-cut cases

Not every pension fits neatly into one of the two boxes. A few examples:

• mixed careers, with part of the contributions in the public sector and part in the private;
• pensions from self-employment or the gestione separata, which do not arise from "past employment" in the sense of article 18;
• supplementary or other kinds of benefit.

In these cases the answer depends on the details of your position, and it is worth having it checked by a professional before taking any decision.

What it means in practice

Before looking at the cost of living, the house or the climate, the question to ask yourself is simple: what type of pension do you receive?

If it is a private pension, exemption in Italy is possible. If it is public, generally not. It is the first fork, and it changes the whole reasoning that follows, including the sums on how much you would really save. Starting here saves you from building an important decision on a wrong assumption.

Always to be checked

This guide explains the general rule, not your specific situation, and it is not tax advice. The rate Albania applies to foreign pensions can change over time: always refer to the verification date below. For your concrete case, and before moving your residence, consult a commercialista or a qualified professional. If you want a first orientation, write to us: sometimes the most useful thing is to understand in advance which questions to ask.