They spent years working in San Marino, crossing the border every day, and now that they are retired they find themselves at risk of being taxed twice on the same pension. Italy’s tax authority maintains that pensions accrued in San Marino must be declared and taxed in Italy; San Marino argues the opposite. Caught in between are hundreds of families who keep receiving tax collection notices while the two states fail to reach an agreement. Now trade unions are calling for those notices to be suspended until negotiations are concluded.
The request for a moratorium comes from CSdL, CDLS and USL, which have disclosed the outcome of a meeting held on 18 September with Italy’s Deputy Minister of Economy and Finance, Maurizio Leo. The meeting was promoted by Secretary of State for Finance and Budget, Transport and Energy Marco Gatti, and was also attended by the president of CSIR.
The urgency stems from the fact that the problem is spreading. Objections raised by the Emilia-Romagna Revenue Agency originally concerned 2019 tax returns, but the same individuals have since received demands for subsequent years as well, while other pensioners have in the meantime been drawn into the dispute. According to the unions, a measure is needed to bridge the time required to reach an agreement, particularly for those who have already paid taxes in both countries.
The legal crux of the matter remains the same: the two administrations interpret the tax treaty in opposite ways, with San Marino holding that these pensions should be taxed only in the country that pays them, while Italy maintains they should be taxed only in the country of residence. The unions consider the Italian tax authority’s interpretation unfounded and point to rulings by Italy’s Court of Cassation (Corte di Cassazione) on the meaning of the term “social security” as used in the treaty. The principle they invoke is simple: taxes should be paid in one country only.
On the table, however, is also Italy’s request to change the rules by introducing concurrent taxation, whereby tax would be paid in both countries, with a balancing adjustment in Italy and recognition of a tax credit for amounts already paid in San Marino. San Marino’s government has also put forward its own proposals for revision. The discussion has also touched on how the Republic’s pension system works, which provides public support to ensure adequate income levels even for low- and middle-income pensioners—a factor the unions say must be taken into account when discussing taxing rights. The unions also point out that no withholding tax is applied, where required, on INPS pensions paid to San Marino residents.
The aspect the unions view with the most optimism concerns the process itself. Both governments have announced that technical working groups will be set up shortly, and according to CSdL, CDLS and USL, “the positions did not appear to us to be set in stone, not even regarding the possibility of identifying alternatives to concurrent taxation.” The president of CSIR has called for a solution favorable to former frontier-worker pensioners, pointing to the arrangements Italy already applies to those who worked in Switzerland and the Principality of Monaco. For the unions, the right to a tax credit remains a non-negotiable point.
In their statement, the three unions also thanked Secretary of State for Foreign Affairs, Political Affairs, International Economic Cooperation and Digital Transition Luca Beccari, Italian Senator Domenica Spinelli, and Ambassador Fabrizio Colaceci for their involvement in the matter.
