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The Case
The Applicant, an Italian citizen registered with the AIRE register since year X and tax resident in Singapore, states that he accrued a vested position in an Italian closed pension fund, linked to an employment relationship carried out in Italy until year X. Following the termination of the employment relationship and his transfer to Singapore, he ceased making any further contributions to the fund.
Although the taxpayer is currently below the age requirement set by Italian law for access to supplementary pension benefits, he nevertheless intends to proceed with the early full withdrawal of the accrued pension position, as permitted under the by-laws of Fund Alfa.
This gives rise to the question of whether Article 17 of the Italy–Singapore Double Tax Convention, concerning “Pensions and other similar remuneration,” applies, given that it allocates exclusive taxing rights over private pensions to the State of residence, i.e. Singapore.
The Applicant’s Position
In his interpretative position, the Applicant argues that the early redemption, although occurring prior to the attainment of pensionable age, nonetheless constitutes a form of payment attributable to supplementary pension provision and, as such, should be treated as equivalent to a “pension” within the meaning of Article 17 of the Convention.
By referring to Italian Revenue Agency Ruling No. 111/2023, the taxpayer maintains that the payment made by the Fund—even where paid in the form of an immediate full redemption—represents a benefit of a pension nature, deriving from a terminated employment relationship in the private sector. Accordingly, under this interpretation, taxing rights should lie exclusively with the State of residence, namely Singapore, resulting in the non-taxation of the withdrawal in Italy.
The Position of the Italian Tax Authorities: Presumption of Residence and Taxation in Italy
The Italian Revenue Agency first recalls the rebuttable legal presumption of Italian tax residence applicable to Italian citizens who transfer to countries included in the “black list” set forth in the Ministerial Decree of 4 May 1999, among which Singapore is included (Article 2, paragraph 2-bis, of the Italian Income Tax Code – TUIR).
However, the verification of effective tax residence falls outside the scope of the advance tax ruling procedure and, for the purposes of the reply, the taxpayer is therefore considered to be tax resident in Singapore, in line with his declarations.
Turning to the merits, the Agency recalls that:
- non-resident individuals are subject to Italian taxation on income produced within the territory of the State (Article 3, paragraph 1, TUIR);
- supplementary pension benefits, regardless of the manner in which they are paid, qualify as income assimilated to employment income (Article 50, paragraph 1, letter h-bis, TUIR);
- such income is deemed to be produced in Italy when paid by a resident entity (Article 23, paragraph 2, letter b), TUIR).
It follows that Fund Alfa, as an entity resident in Italy, is required to apply a withholding tax at source on the amounts paid as a result of the early full redemption (Article 24, paragraph 1-quater, Presidential Decree No. 600/1973; Article 14 of Legislative Decree No. 252/2005).
Treaty Interpretation: Article 17 Does Not Apply to Early Withdrawal
With regard to the Italy–Singapore Double Tax Convention, the Agency notes that the Convention does not expressly regulate benefits arising from the redemption of supplementary pension schemes. It is therefore necessary to determine whether such amounts should be:
- treated as income from employment (Article 14, “Personal Services”), or
- regarded as pension income derived from a former private employment (Article 17, “Pensions”).
A key element is whether the beneficiary has already acquired an enforceable right to the pension benefit.
According to the Agency, this condition is not met in the present case, since the Applicant:
- has not yet reached the statutory age requirement for entitlement to pension benefits;
- does not receive any pension already accrued;
- exercises an early redemption option that is not linked to a substitute pension benefit.
Consequently, the payment does not qualify as a pension or similar remuneration, but rather falls within the category of “other remuneration similar to wages and salaries”, governed by Article 14, paragraph 1, of the Convention.
Tax Effects: Taxability in Italy and the Role of Singapore
Since the pension position was entirely accrued during employment carried out in Italy, the Agency concludes that:
- Italy retains taxing rights over the income deriving from the early withdrawal (Article 14, paragraph 1, of the Convention);
- Singapore, as the taxpayer’s current State of residence, is required to eliminate any double taxation by applying the method set forth in Article 22 of the Convention.
Conclusions
Ruling No. 296/2025 provides an important clarification on the treaty interpretation of early redemptions of supplementary pension schemes. The Italian Revenue Agency reiterates a now well-established principle: supplementary pension benefits paid before the acquisition of an actual pension entitlement cannot be classified as “pensions” for the purposes of international tax treaties.
In the specific case, this results in:
- the full taxation in Italy of the redeemed amount;
- the obligation for Singapore to eliminate any resulting double taxation.
This ruling confirms the restrictive approach adopted by the Italian tax authorities with respect to early pension redemptions and underscores the importance of distinguishing between genuine pension benefits and early withdrawals not linked to a vested pension right.
