News brief · Taxation

Italy: the 7% southern regime extended to attract retirees

Italy's regime for foreign retirees taxes foreign-source income at a flat rate, provided they settle in a small municipality in the south. This geographical condition is the heart of the scheme, and its real difficulty.

By Editorial team · on May 28, 2026

View of the Colosseum — Photo: FeaturedPics — Wikimedia Commons (CC BY-SA)

What the regime provides

Italy's regime for foreign retirees applies a substitute tax to the foreign-source income of a person receiving a pension who transfers their tax residency to Italy.

The rate is 7%¹, and the regime applies for 9 years².

The decisive condition is geographical: the move must be to a municipality with a population not exceeding less than 30,000 inhabitants³, located in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Apulia.

This ceiling was raised on 7 April 2026: it was previously less than 20,000 inhabitants⁴. Some municipalities that were not eligible at the time have therefore become so — the reverse is not true.

The same ceiling applies to municipalities affected by the 2009 earthquake in the L'Aquila area and the 2016 earthquake in central Italy, which give access to the regime outside the eight listed regions.

The scheme requires that the person has not been an Italian tax resident during the periods defined by law, and it covers people coming from a state that has an administrative cooperation agreement with Italy.

What the geographical condition implies

The regime is not a general attractiveness scheme: it is a regional development policy. Its purpose is to repopulate and economically support municipalities in the Mezzogiorno that are in demographic decline.

This purpose explains its constraints and its consistency. It also explains why it is not comparable to the Greek regime for retirees, which imposes no location requirement and lasts 15 years⁵ at a rate of 7%⁶.

For an applicant, the question is therefore not one of tax but a practical one: are you prepared to live in a municipality of a few thousand inhabitants, often far from an international airport and a referral hospital?

Medical provision is the first point a retiree should examine. Small municipalities in the south are served by local facilities, but major procedures require travel, sometimes over long distances.

In return, property prices there bear no comparison with those in Italian cities, and some of these municipalities have set up welcome schemes for newcomers.

One point needs to be checked municipality by municipality: the population figure used is the one recorded at a reference date set by law, not today's population. Checking is therefore essential before any purchase, and it must be done against the official list, not an estimate.

What the regime does not cover

The substitute tax applies to foreign-source income. Italian-source income remains taxed under the ordinary scale, whose top marginal rate reaches 43%⁷.

The France–Italy tax treaty also determines how pensions are treated. Public pensions generally follow a different rule from private pensions and may remain taxable in France.

This point is decisive and often discovered after the move. A former civil servant and a former private-sector employee are not in the same situation, even though they settle in the same village.

We do not publish the list of municipalities affected by the 2009 and 2016 earthquakes or the exact conditions on prior non-residence: they appear in legislative annexes whose current version we have not been able to verify.

Italian inheritance duties, on the other hand, are very favourable: 4%⁸ in the direct line and between spouses, with an allowance of €1,000,000⁹ per beneficiary. This is an estate planning argument separate from the regime itself.

What to do

Check the eligibility of the target municipality: region, population, any special list.
Have each pension classified under the France–Italy tax treaty.
Check the conditions on prior Italian non-residence.
Examine local medical provision and the distance to referral facilities.
Keep an eye on the 183 days¹⁰ threshold, which establishes Italian tax residency.

Finally, this regime must be clearly distinguished from Italy's two other schemes: the one for new residents, based on a flat tax of €300,000¹¹ for 15 years¹², and the one for inbound workers. None can be combined with another, and the choice depends on the nature of the income.

Please note

General information, as of the date shown. A draft reform is not a rule in force: check the conditions with the authorities or a professional before deciding. Terms of use and disclaimers

Sources and verification dates

1.
Italy, foreign retirees: substitute tax rate on foreign-source income : 7%
« prevede l'applicazione di un'imposta sostitutiva dell'Irpef con aliquota del 7% a qualsiasi categoria di reddito prodotto all'estero, per ciascuno dei nove periodi d'imposta di validità dell'opzione (articolo 24-ter del Tuir). »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
2.
Italy, foreign retirees: number of tax periods covered by the option : 9 years
« l'applicazione di un'imposta sostitutiva dell'Irpef con aliquota del 7% a qualsiasi categoria di reddito prodotto all'estero, per ciascuno dei nove periodi d'imposta di validità dell'opzione (articolo 24-ter del Tuir). — Agenzia delle Entrate, « Regime opzionale per i pensionati esteri » (mise à jour du 8 mai 2026). »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
3.
Italy, foreign retirees: maximum population of the municipality of settlement, since 7 April 2026 : 30,000 inhabitants
« Il regime di favore è applicabile se la residenza viene trasferita in uno dei comuni appartenenti al territorio delle regioni Sicilia, Calabria, Sardegna, Campania, Basilicata, Abruzzo, Molise e Puglia, con popolazione non superiore a 30mila abitanti (tale limite è in vigore dal 7 aprile 2026, in precedenza era 20mila abitanti). Possono beneficiarne anche i pensionati esteri che trasferiscono la residenza in uno dei comuni, sempre con non più di 30mila abitanti, interessati dagli eventi sismici del 6 aprile 2009 (“terremoto dell'Aquila”) o dagli eventi sismici del 2016 (“terremoto del Centro Italia”). — Agenzia delle Entrate, « Regime opzionale per i pensionati esteri ». »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
4.
Italy, foreign retirees: former population cap for the municipality, until 6 April 2026 : 20,000 inhabitants
« Il regime di favore è applicabile se la residenza viene trasferita in uno dei comuni appartenenti al territorio delle regioni Sicilia, Calabria, Sardegna, Campania, Basilicata, Abruzzo, Molise e Puglia, con popolazione non superiore a 30mila abitanti (tale limite è in vigore dal 7 aprile 2026, in precedenza era 20mila abitanti). Possono beneficiarne anche i pensionati esteri che trasferiscono la residenza in uno dei comuni, sempre con non più di 30mila abitanti, interessati dagli eventi sismici del 6 aprile 2009 (“terremoto dell'Aquila”) o dagli eventi sismici del 2016 (“terremoto del Centro Italia”). — Agenzia delle Entrate, « Regime opzionale per i pensionati esteri ». »
agenziaentrate.gov.itHistorical value, applicable until April 7, 2026
5.
Greece, regime for foreign retirees: period of application : 15 years
« Duration of regime's applicability • Fifteen (15) tax years. »
enterprisegreece.grVerified on Nov 2, 2026Verified source
6.
Greece, regime for foreign retirees: flat rate on foreign-source income : 7%
« Annual flat tax rate of 7% on total foreign source income. »
enterprisegreece.grVerified on Nov 2, 2026Verified source
7.
Italy: top marginal IRPEF rate : 43%
« fino a euro 28.000 : 23% ; da 28.001 fino a euro 50.000 : 35% [33 % depuis la loi de finances 2026] ; oltre a euro 50.000 : 43% — 14.140 euro + 43% sul reddito che supera i 50.000 euro. — Agenzia delle Entrate, « Aliquote e calcolo dell'Irpef ». »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
8.
Italy: inheritance tax rate in the direct line and between spouses : 4%
« 4% per i trasferimenti in favore del coniuge o di parenti in linea retta (ascendenti e discendenti), da applicare sul valore complessivo netto eccedente, per ciascun beneficiario, la quota di 1 milione di euro »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
9.
Italy: allowance per beneficiary on inheritances in the direct line : €1,000,000
« 4% per i trasferimenti in favore del coniuge o di parenti in linea retta (ascendenti e discendenti), da applicare sul valore complessivo netto eccedente, per ciascun beneficiario, la quota di 1 milione di euro. — Agenzia delle Entrate, « Imposta di successione – Aliquote e franchigie ». »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
10.
Italy: annual presence that establishes tax residency : 183 days
« A person is considered resident in Italy for income tax purposes if they meet at least one of the following conditions for most of the year (at least 183 days per year, or 184 for leap years) »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
11.
Italy, new residents: annual flat tax, moves from 1 January 2026 : €300,000
« la legge di bilancio 2026 ha elevato a 300.000 euro l'importo dell'imposta sostitutiva sui redditi prodotti all'estero da chi si trasferisce in Italia »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
12.
Italy, new residents: maximum duration of the option, from the first tax period : 15 years
« L'opzione è valida per un massimo di 15 anni dal primo periodo d'imposta di validità dell'opzione »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source