Italy remains a popular retirement destination for UK expats, thanks to its Mediterranean lifestyle, comparatively affordable living costs, and favourable retirement options. But when it comes to transferring a UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS), Italy presents a specific challenge: no pension schemes based in Italy are currently listed on HMRC’s approved QROPS register.
In this guide, we explain what this means for UK expats, clarify the rules around QROPS in Italy eligibility and taxation, and explore viable alternatives – such as transferring your pension to an international SIPP.
What You Will Learn
- Whether transferring a UK pension to a QROPS in Italy is permitted under current HMRC rules.
- What alternative pension transfer options UK residents in Italy should consider.
- Key tax implications, risks, and compliance requirements expats must understand before making a pension transfer decision.
Is It Possible To Transfer a UK Pension to a QROPS in Italy?
To transfer a UK pension abroad, the receiving scheme must qualify as a QROPS – meeting strict criteria set by His Majesty’s Revenue and Customs (HMRC). Italy currently has no pension schemes included on HMRC’s published QROPS list, meaning UK expats cannot transfer their pension directly into an Italian-based scheme.
No Italian pension scheme has appeared on HMRC’s published QROPS list since December 2016, when the remaining Italian schemes were removed following changes to the UK’s pension age requirements.
Guide
Retirement Planning And Pension Advice For British Expats In Italy
Retirement planning for British expats in Italy is rarely about a single pension or investment decision. This guide explains how retirement planning actually works in practice — from structuring and consolidation to drawdown and tax-efficient income.
Transferring Your Pension to an EEA QROPS
Although Italy has no local QROPS, UK expats can transfer their UK pension to a QROPS in another EEA country – such as a Malta QROPS – and withdraw funds in Italy. However, rule changes introduced at the Autumn Budget 2024 have added significant tax considerations.
New Overseas Transfer Charge Rules
At Autumn Budget 2024 (30 October 2024), the UK government removed the EEA/Gibraltar exclusion from the 25% Overseas Transfer Charge (OTC) with immediate effect. Until then, expats living in the EEA could transfer their UK pension to any EEA-based QROPS without triggering the OTC. Since then, the exemption most relevant to private individuals is the “jurisdiction-match” rule, although other statutory exemptions remain available in specific circumstances.
For example, if you reside in Italy and transfer a £300,000 pension to a QROPS in Malta, you will incur an OTC of £75,000. This charge can generally only be avoided where the statutory exemption conditions are satisfied throughout the relevant five full UK tax years following the transfer. For most individuals, this means being tax resident in the same jurisdiction as the QROPS.
Two further structural changes are now in force:
| Effective Date | Change |
|---|---|
| 6 April 2025 | EEA-based ROPS must meet the same scheme-type conditions previously applied only to non-EEA ROPS (occupational scheme established by an employer, overseas public-service scheme, or scheme regulated as a pension scheme in its host jurisdiction) |
| 6 April 2026 | All QROPS scheme administrators must be UK-resident |
Is a QROPS Still the Best Option for UK Expats in Italy?
While QROPS were once a flexible option for UK expats across the EEA, the 2024 changes to the Overseas Transfer Charge (OTC) have made them significantly less attractive – particularly for those retiring to Italy. To avoid the 25% OTC, the pension holder must live in the same country where the QROPS is based at the time of transfer. For expats already living in Italy, this effectively rules out QROPS in Malta, Gibraltar, or any other jurisdiction unless you are willing to relocate again or absorb a substantial tax charge. As a result, a QROPS will no longer represent the most tax-efficient solution for many UK expats living in Italy. There are still circumstances where a QROPS may remain appropriate, for example, where estate planning, jurisdiction-specific succession planning or other individual considerations outweigh the additional transfer costs.
Other Tax Implications To Be Aware of When Transferring to an EEA QROPS
Beyond the Overseas Transfer Charge (OTC), several additional UK tax rules may affect your QROPS transfer – especially if you access funds early or breach residency criteria.
Accessing QROPS benefits before the normal minimum pension age (55, rising to 57 in 2028) is only permitted in exceptional cases such as serious ill health. Otherwise, unauthorised payments may trigger HMRC tax charges of up to 55%, depending on the nature of the payment and the circumstances.
In addition, residency rules introduce three separate post-transfer windows:
- Certain payments from a transferred QROPS remain subject to UK pension tax rules during the relevant five full UK tax years following transfer. After those five years, UK tax generally only applies if you are a UK resident at the time of the payment.
- The QROPS scheme manager must report payments to HMRC for ten tax years from the date of transfer — this is a reporting obligation, not an additional tax charge on you.
- If the conditions supporting an Overseas Transfer Charge exemption cease to be met during the relevant monitoring period, HMRC may retrospectively recover the charge.
Can You Transfer a UK Pension to a Non-QROPS Scheme in Italy or EEA?
While transfers to arrangements that are not recognised as QROPS may be possible in limited circumstances, they will generally result in unauthorised payment tax charges.
| Charge | Explanation |
|---|---|
| 40% Tax Charge | This is the minimum HMRC tax liability for unauthorised transfers to non-QROPS schemes. |
| Unauthorised Payment charge | Transfers to unapproved schemes are typically treated as unauthorised payments, triggering charges of up to 55%. |
| Additional Penalties | Further tax penalties may apply depending on the size of the transfer and your residency status. |
In addition to punitive tax treatment, transferring to a non-QROPS scheme may expose you to the following issues:
- Lack of regulatory protection: Non-QROPS schemes may not comply with UK or EU pension regulations, leaving you unprotected in the event of provider insolvency, fraud, or administrative failures.
- Unregulated investments: These schemes often permit access to high-risk or illiquid assets. If these investments perform poorly or are mismanaged, you may not be entitled to compensation – unlike with a UK-registered or FCA-regulated scheme.
To avoid these financial pitfalls, UK expats should consult a qualified pension transfer specialist. At Titan Wealth International, our experts help you assess cross-border pension options, ensure full HMRC compliance, and implement a retirement strategy that mitigates tax exposure and protects long-term savings.
Looking to Optimise Your UK Pension as an Expat in Italy?
QROPS Pension Transfer to SIPP
Reassess whether your QROPS still aligns with your long-term retirement goals. We’ll compare keeping it in Malta or Gibraltar with transferring to a UK SIPP—so you can weigh flexibility, regulation, and future value before making your next move.
A More Suitable Route: Transferring Your UK Pension to a SIPP
A Self-Invested Personal Pension (SIPP) – also known as an international SIPP for expats – remains a UK-registered pension arrangement offering a high degree of investment flexibility available to both residents and non-residents. It offers a robust alternative for UK expats who wish to retain control over their retirement assets while remaining under the protection of UK regulation. The key benefits of a SIPP are:
- Pension consolidation: Transferring your pension to a SIPP enables you to consolidate multiple pension pots into a single structure, simplifying portfolio management and retirement planning.
- Broad investment access: SIPPs offer exposure to a wide range of investments, including UK and overseas equities, commercial property, structured products, and cash holdings.
- Estate planning flexibility: You can nominate any beneficiary to receive your pension upon death. Funds can be passed on as a lump sum, drawdown, or annuity.
- Where death occurs before age 75, beneficiaries can often receive pension death benefits free of income tax, provided the benefits are designated within the applicable two-year period and remain within the deceased member’s available Lump Sum and Death Benefit Allowance (LSDBA), currently £1,073,100.
- Deaths at 75 or over trigger income tax at the beneficiary’s marginal rate on withdrawals.
- From 6 April 2027, most unused pension funds will generally become chargeable for UK inheritance tax (IHT) purposes, subject to tax at up to 40% above the available nil-rate bands. For HNW UK expats already resident in Italy, this change interacts with the post-April-2025 UK long-term resident IHT regime. Under these rules, individuals who have accumulated sufficient years of UK tax residence may remain within the scope of UK IHT on their worldwide assets for a graduated period of between three and ten years after leaving the UK.
- Flexible contributions and withdrawals: You control how much you contribute and when. Once you reach age 55 (57 from 2028), you gain access to tax-efficient withdrawal options, including lump sums and income drawdown. For example, you can choose to draw 25% tax-free and leave the remainder invested to grow, drawing income monthly, quarterly, or as needed – depending on your personal cash flow needs. Under the UK–Italy Double Tax Agreement, pension income is generally taxable in Italy where the recipient is resident, subject to the treaty and any applicable exceptions.
- Cost-efficiency: Depending on the provider and investment strategy, SIPPs may have lower ongoing costs than some offshore pension structures.
QROPS vs. SIPP: Which Is More Efficient?
For many UK expats, SIPPs offer similar benefits to QROPS – such as investment freedom and flexible withdrawals – but often at lower cost and with greater regulatory transparency. Unlike many QROPS providers, SIPPs only permit clean share classes, which exclude adviser commissions. In contrast, some QROPS schemes allow non-standard share classes that include built-in commission charges. If you’re weighing the pros and cons of a SIPP versus a QROPS, it’s essential to consult a regulated pension transfer specialist. At Titan Wealth International, our advisers help you compare both structures based on your retirement goals, investment profile, and residency status.
Keeping Your Pension in the UK
Retaining your UK pension without transferring it is an option – but it comes with challenges for expats in Italy:
- Banking restrictions: Some UK banking providers restrict services for customers who become non-UK residents. While some pension providers can pay into international accounts, they may impose currency conversion charges or administrative fees.
- Double taxation risk: Under the UK–Italy Double Tax Convention, pension income is generally taxable in Italy once you are an Italian tax resident, although practical steps may be required to prevent or recover UK tax deducted at source. However, if UK tax is withheld at source, you may need to reclaim it using the appropriate mechanisms, such as the Foreign Tax Credit system.
- Currency exposure: Keeping your pension in GBP subjects you to exchange rate volatility. If the pound weakens against the euro, the real value of your pension income in Italy could decline, impacting your financial stability.
Book Your Complimentary QROPS Review
If you’re living in Italy and considering a QROPS—or already hold one based in the EEA—recent HMRC rule changes could have a significant impact on your pension strategy.
- Assess your liability for the 25% Overseas Transfer Charge (OTC).
- Review your QROPS fees, investment structure, and tax compliance.
- Determine whether your QROPS remains suitable—or if a International SIPP offers greater flexibility and efficiency.
Italian Tax Regimes That Change the Calculus for HNW Pensioners
Beyond the mechanics of UK pension transfers, three Italian preferential tax regimes can materially reduce the effective tax cost of drawing a UK pension as an Italian resident (and none requires a QROPS):
- Flat tax of 7% for foreign pensioners (Article 24-ter TUIR): New residents who relocate to a qualifying southern Italian municipality with a population below 30,000—in Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, or Sicily—can elect a 7% flat substitute tax on all foreign-source income, including UK pension income, for up to ten years. To qualify, the individual must have been a non-resident in Italy for at least five prior tax years and must receive a foreign pension, provided the statutory eligibility conditions are satisfied.
- €200,000 high-net-worth (HNW) new-resident flat tax (Article 24-bis TUIR): New residents who have not been Italian tax-resident for at least nine of the previous ten tax years can elect a €200,000 annual flat substitute tax on all foreign-source income, available for up to 15 years (€25,000 per additional family member). The headline figure for new applicants was raised from €100,000 to €200,000 in August 2024. Existing electors remain at €100,000.
- Impatriate workers regime: A preferential tax regime for qualifying employees and self-employed individuals who relocate their tax residence to Italy. Subject to meeting the applicable conditions, a significant portion of qualifying employment or self-employment income may be excluded from Italian taxation for a limited period.
For an HNW UK expat with a substantial pension pot, the 7% regime alone maycmay significantly reduce the effective rate of tax payable of a UK pension drawdown to a fraction of the headline UK marginal rate, making the choice between SIPP, QROPS, and lump-sum strategies materially different in Italy than in any other EEA destination.
Italian Wealth Taxes (IVIE 1.06% / IVAFE 0.2%) on UK Pension and Investment Assets
As an Italian tax resident, you may be subject to two annual wealth taxes on assets held outside Italy, including those in the UK:
- IVIE (Imposta sul valore degli immobili situati all’estero) on foreign real estate
- IVAFE (Imposta sul valore delle attività finanziarie detenute all’estero) on foreign financial assets
Note that the HNW flax tax regimes (7% and €200,000) exempt holders from both IVIE and IVAFEA.
IVIE
IVIE applies at a rate of 1.06% per year on the taxable value of property held outside Italy. The rate was raised from 0.76% under the Italian 2024 Budget Law.
However, an exemption applies where the calculated IVIE liability does not exceed €200. For instance, a property valued at €17,500 would generate an IVIE liability of €185.50 (€17,500 × 1.06%), resulting in no tax being payable.
UK property owners relocating to Italy should also consider the following:
- No remittance basis: Italy taxes foreign income as it arises. Rental income from UK property may therefore be taxable in Italy even if the proceeds remain outside Italy.
- Succession exposure: Italy operates a forced heirship (legittima) regime, which reserves fixed portions of your estate for close family members, regardless of your will. For this reason, it is often sensible to review ownership structures before becoming Italian tax resident, although any restructuring should take account of both UK and Italian legal and tax consequences. Doing so after becoming a resident can trigger taxable events and limit planning options.
- Reporting complexity: Multiple offshore structures, such as separate QROPS, offshore bonds, and foreign property, each require annual Quadro RW declarations. Consolidating holdings before establishing Italian residency may simplify the process.
IVAFE
IVAFE applies at 0.2% per year on the market value of foreign financial assets, including:
- Bank accounts
- Shares
- Bonds
- ETFs and investment funds
- Certain insurance-based investment products
As of the 2024 tax year, a higher rate of 0.4% may apply to qualifying assets held in jurisdictions designated as non-cooperative for Italian tax purposes. The UK is not included on this list.
The IVAFE treatment of a UK SIPP or QROPS depends on how the arrangement is characterised under Italian tax law.
Certain foreign pension arrangements may fall outside the scope of IVAFE where they qualify as supplementary pension schemes under the relevant Italian rules. However, the analysis is highly fact-specific and depends on the structure of the arrangement, the member’s rights, and the nature of the underlying assets.
Considering the complexity of legal characterisation, it is advisable to consult an Italian tax adviser knowledgeable in Italian fiscal law.
Frequently Asked Questions
The 7% regime applies to all foreign-source income, regardless of category, so regular drawdown is covered, as is the 25% UK tax-free lump sum.
Yes, by election. Under the 7% regime, holders are exempt from both IVIE and IVAFE on assets held abroad. The same exemption applies under the €200,000 HNW flat tax regime.
From 6 April 2027, most unused pension funds and death benefits will fall within the scope of UK IHT. Whether this applies to you depends on the new long-term resident test. Whether these rules apply depends on the new long-term resident framework, which considers an individual’s UK residence history and the applicable transitional provisions. Italian succession and gift tax may also apply to assets passing on death. However, the UK–Italy Estate Tax Convention provides mechanisms to mitigate double taxation where both countries assert taxing rights over the same assets.
Subject to the applicable legislative conditions, moving between qualifying municipalities does not necessarily end the regime. What terminates the regime is moving to a non-qualifying municipality, for example, relocating to a major city such as Naples or Rome. Note that the population threshold was raised from 20,000 to 30,000 inhabitants, effective 7 April 2026.
Although the UK treats the pension commencement lump sum as tax free, Italy may not recognise that exemption. Its treatment depends on Italian domestic law and the application of the UK–Italy Double Tax Convention.
Key Takeaway
UK expats cannot currently transfer a UK pension directly to an Italian QROPS because no Italian schemes appear on HMRC’s published QROPS list. The main alternatives are usually to retain the existing UK pension, transfer eligible benefits to a UK-regulated SIPP, or, in more limited circumstances, consider a QROPS established in another jurisdiction. A transfer to an EEA QROPS, including one based in Malta, may attract the 25% Overseas Transfer Charge unless a statutory exemption applies.
Each option has different tax, regulatory, investment, cost and currency implications. The appropriate approach will depend on factors including the pension type, transfer value, Italian tax residence, future residence plans, investment needs and the terms offered by the receiving scheme.
Cross-border pension transfers require coordinated UK pension and Italian tax advice. Titan Wealth International can help assess the available options and develop a retirement strategy suited to your circumstances, with appropriate regard to the relevant tax and regulatory requirements.
The information provided in this article is not a substitute for personalised financial, tax or legal advice. You should obtain financial advice and tax advice tailored to your particular circumstances and in respect of any jurisdictions where you may have tax or other liabilities. Titan Wealth International accepts no liability for any direct or indirect loss arising from the use of, or reliance on, this information, nor for any errors or omissions in the content.
