Most retirees who move to Italy can benefit from a flat 7 % tax on all foreign‑sourced income for ten years under Article 24‑ter of the Italian tax code. The rate applies to pensions, dividends, capital gains, and rental income earned abroad, replacing Italy’s progressive rates that exceed 40 %.
Eligibility and eligible municipalities
- First tier (Southern regions) – All municipalities in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia with a population under 30 000 qualify automatically. The threshold was raised from 20 000 earlier this year, adding many mid‑size towns with better infrastructure.
- Second tier (Central regions) – Only specific municipalities in Lazio, Umbria and Marche that were affected by the 2016 and 2009 earthquakes qualify. These are fewer but include locations close to Rome and newer reconstruction projects.
Choosing a location
Retirees who thrive tend to select a qualifying town 30–60 minutes from a larger city. This balance provides access to airports, hospitals and social activities while preserving the tax benefit. Examples often cited:
- Norcia (Umbria) – Gourmet town known for cured meats and truffles.
- Cittaducale (Lazio) – About an hour from Rome, offering capital‑city access without its cost of living.
- Sarnano (Marche) – Medieval hill town with thermal springs.
Southern Italy also offers numerous coastal and inland options in Puglia and Sicily. The final choice should reflect climate, community, and proximity to family.
Timing and policy context
The 7 % regime is a policy instrument and could change. Italy has already increased the income threshold for its separate flat‑tax regime for high‑earning newcomers (from €100 k in 2022 to €200 k in 2024 and €300 k for 2026 entrants). While the pensioner regime has not been altered yet, the recent expansion of the population limit suggests a current willingness to broaden the incentive. Because the rate is locked in for ten years once elected, entering the regime earlier secures the lower tax level.
What counts as foreign‑sourced income
- Included: UK private pensions, US dividend income, rental income from a property in Lisbon, capital gains on offshore portfolios.
- Excluded: Any income generated inside Italy—local employment, domestic rental properties, or businesses registered in Italy—reverts to the standard progressive tax rates. Retirees planning part‑time consulting or a small local venture should model these streams separately.
Who can apply
- Must receive a genuine foreign pension (state, private, or occupational).
- Both EU and non‑EU citizens are eligible.
- Must not have been an Italian tax resident in the five years preceding the election.
- After establishing residence, registering locally, and spending the majority of the year in Italy, the election is made on the first Italian tax return, starting the ten‑year clock. Family members can often be included, but each case should be reviewed individually.
Practical considerations
- Verify the municipality’s population figure and infrastructure (hospital, airport, expatriate community).
- Assess property prices; some towns may have inflated markets if the regime is already factored in.
- Ensure the residency requirement (majority of the year spent in Italy) can be met consistently.
- Plan for the ten‑year horizon, recognizing that the tax benefit ends after the period and future policy shifts are possible.
By selecting an eligible municipality that balances livability with tax advantages, retirees can enjoy a low‑tax environment while maintaining access to essential services and a vibrant community.
Source article: knightsbridge.ae
