Tax Regimes · Art. 24-ter TUIR
Italy's 7% Flat Tax for Foreign Pensioners
Move to a small town in southern Italy, pay 7% on all your foreign income for ten years. In 2026 the regime covers towns of up to 30,000 inhabitants — here is exactly how it works.
Disclaimer: This page is a general summary and not legal or tax advice. Figures were last verified in July 2026 against the consolidated text of art. 24-ter TUIR as amended by Law 34/2026. Obtain tailored advice before relying on any regime.
01
How Does the 7% Regime Work?
Article 24-ter of the Italian Tax Code offers holders of a foreign pension who move to a qualifying southern municipality a substitute tax of 7% on all foreign-source income — of any category, not just the pension. Dividends, interest, capital gains and foreign rental income are all covered. The regime lasts for the year of the move plus the following nine tax periods (max 10 years).
The regime also exempts foreign-held assets from the IVIE and IVAFE wealth taxes and from foreign-asset reporting (quadro RW) — a substantial simplification compared with ordinary residency. Italian-source income, including rent from Italian property you buy, is taxed normally under the ordinary rules.
02
Who Qualifies — and Where?
- — Foreign pension — you must receive a pension (public or private) paid by a foreign entity. There is no minimum amount.
- — 5 years abroad — you must not have been an Italian tax resident in the 5 tax periods before the move.
- — Cooperation country — you must relocate from a country with an administrative cooperation agreement with Italy (EU states, the UK, the USA and many others qualify).
- — Qualifying municipality — your new residence must be in a town of up to 30,000 inhabitants in Sicilia, Calabria, Sardegna, Campania, Basilicata, Abruzzo, Molise or Puglia (or certain earthquake-affected municipalities in central Italy).
The population threshold was raised from 20,000 to 30,000 inhabitants by Law 34/2026, in force since 7 April 2026 — an expansion that added scores of attractive towns and that much of the online guidance published before April 2026 does not yet reflect. For moves made in early 2026 into towns between 20,000 and 30,000 inhabitants, the transitional treatment deserves case-by-case legal analysis.
03
7% Regime or €300,000 Flat Tax — Which One?
The two regimes serve different profiles. The art. 24-bis flat tax (€300,000/year for 2026 entrants) makes sense for very large foreign incomes and imposes no location constraint. The 7% regime costs a fraction of that for retirees with meaningful but not enormous foreign income — the trade-off is living in a qualifying small town in the south. Deciding between countries? See Italy vs Portugal vs Spain for retirees.
Retirees typically pair the regime with the elective residence visa (for non-EU citizens) and a property purchase. Sequencing matters: visa, residence registration, property closing and the tax election each have deadlines that interact — planning the order before moving avoids losing the regime. See also our guides to buying in Puglia and Sicily, two of the regions where the regime applies.
Retiring to Italy
Plan the Move Before You Make It
Visa, residence, property and the 7% election interact — and the order of operations matters. We structure the sequence so nothing is lost.
Frequently Asked Questions
What is Italy's 7% flat tax for pensioners?
A substitute tax regime (art. 24-ter TUIR) under which holders of a foreign pension who transfer their tax residence to a qualifying municipality in southern Italy pay a flat 7% on ALL their foreign-source income — not just the pension — for up to 10 years.
Which towns qualify for the 7% regime in 2026?
Municipalities with up to 30,000 inhabitants (threshold raised from 20,000 by Law 34/2026, in force since 7 April 2026) in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, plus certain earthquake-affected municipalities in central Italy.
Who is eligible for the 7% regime?
Individuals receiving a pension paid by a foreign entity, who have not been Italian tax residents in the 5 tax years before the move, and who relocate from a country that has an administrative cooperation agreement with Italy (EU countries, the UK, the USA and many others qualify).
How long does the 7% regime last?
The year of the residence transfer plus the following 9 tax periods — a maximum of 10 years in total. After that, ordinary Italian taxation applies.
Does the 7% regime cover income other than the pension?
Yes. The 7% substitute tax applies to all foreign-source income of any category — pensions, dividends, interest, capital gains, rental income from foreign property — and the regime also exempts foreign assets from IVIE and IVAFE wealth taxes and from RW-form reporting.
Can I buy my home in a larger Italian city and still use the regime?
No. The regime requires transferring your tax residence to a qualifying small municipality and genuinely living there. Buying property elsewhere in Italy is possible, but your residence — where you actually live — must remain in the qualifying town.