The Italian 7% Pensioners Tax Regime: A Unique Tax Break for Foreign Retirees
Italy offers foreign retirees a flat 7% tax on all foreign income for up to 10 years—no wealth tax, no reporting of foreign assets, and no inheritance tax on foreign wealth. As of April 7, 2026, the regime is available in municipalities with up to 30,000 inhabitants in Southern Italy.
📌 April 2026 Update — Population threshold raised to 30,000
Effective April 7, 2026, Law No. 34/2026 (Art. 26, para. 1) has raised the population limit for eligible municipalities from 20,000 to 30,000 inhabitants.
This unlocks 74 new municipalities across Southern Italy — including mid-sized towns in Campania, Sicily, Puglia, Sardinia, Abruzzo, Calabria, and Molise that were previously excluded.
Introduction
Italy’s 7% tax regime offers foreign retirees a unique opportunity to relocate to select municipalities in Southern Italy and pay a flat 7% substitute tax on all foreign-source income. Introduced by Article 24-ter of the Italian Income Tax Code (TUIR), this regime is designed to attract pensioners from abroad by offering a simplified tax model, limited compliance obligations, and a low tax burden for up to 10 consecutive years.
This guide outlines the eligibility criteria, scope of income covered, geographical requirements, how to apply, and the key benefits and limitations of the regime.
You can find our Full Q&A on the 7% tax regime here.
What Is the 7% Tax Regime?
The 7% regime is a substitute tax regime introduced by Italy's Budget Law 2019 and clarified by Agenzia delle Entrate Circular No. 21/E of 17 July 2020.
Eligible individuals who relocate to a qualifying municipality and receive a foreign pension may opt to pay a flat 7% tax on all of their foreign-source income, regardless of the total amount.
💡 The tax is final: no progressive rates, no additional tax brackets, no further taxation on the income covered.
✅ Key Benefits at a Glance
✔️ Flat 7% tax on all foreign-source income✔️ Valid for 10 tax years✔️ No IVIE/IVAFE (no wealth taxes on foreign assets)✔️ No RW section filing (no reporting of foreign assets)✔️ Simplified tax return — reduced compliance obligations✔️ Available to individuals not previously tax resident in Italy for 5 years
⚠️ Important: The 7% regime does not include any exemption from inheritance or gift tax. Italian inheritance and gift tax rules apply as normal to all residents, regardless of tax regime.
👤 Who Can Qualify?
To access the regime, you must:
➡️ Receive a foreign pension (public or private)➡️ Have been tax resident outside Italy for at least 5 years before relocation➡️ Transfer tax residency to an eligible Italian municipality➡️ Have previously resided in a country with an administrative cooperation agreement with Italy (e.g. EU, USA, UK, Canada, Australia)
💰 What Income Is Covered?
The 7% flat tax applies to all foreign-source income, including:
✔️ Foreign pension income✔️ Dividends, interest, and capital gains from non-Italian investments✔️ Rental income from properties located outside Italy✔️ Trust distributions or proceeds from foreign retirement accounts✔️ Insurance or private annuity income from abroad
🔴 Excluded: Italian-source income is subject to ordinary progressive taxation as normal.
📍 Eligible Municipalities
The regime is limited to municipalities that meet all of the following criteria:
➡️ Located in Southern Italy (Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicily, or Sardinia)➡️ Population of less than 30,000 inhabitants based on ISTAT data as of January 1 of the year preceding the tax year➡️ Or among the municipalities affected by the 2009 L'Aquila earthquake (included thanks to DL 4/2022)
💡 The ISTAT population figure remains valid for the full 10-year regime period, even if the municipality grows beyond the threshold after you move.
🗓️ Duration of the Regime
📅 The regime lasts for 10 consecutive years — it cannot be extended🚫 It is lost if you move to a non-eligible municipality✏️ You can voluntarily opt out at any time via your tax return
📋 How to Elect the Regime
To activate the 7% regime:
Step 1 — Become an Italian tax resident in a qualifying municipalityStep 2 — Elect the 7% regime in your first annual tax return (Modello Redditi) after relocationStep 3 — Pay the 7% tax by June 30 of the year following the tax period (no installment plan available)Step 4 — Maintain compliance for all years of the regime
📌 Example: If you move to Italy in September 2025, you must elect the regime in your 2026 tax return (for tax year 2026) and pay the substitute tax by June 30, 2027.
⚠️ When the Regime Ends or Is Lost
The 7% regime automatically ends if:
🔴 The 10 tax years have elapsed🔴 You move to a non-qualifying municipality🔴 You fail to pay the tax on time or omit the election in the tax return🔴 The Italian Revenue Agency finds that eligibility requirements were not met
⛔ Once lost or revoked, the regime cannot be restored.
❗ Common Mistakes to Avoid
⚠️ Selecting a town that does not meet ISTAT population thresholds⚠️ Assuming Italian pensions or foreign income taxed only in Italy qualify⚠️ Moving to Italy and failing to register as resident with the Anagrafe⚠️ Believing the regime includes exemption from succession or gift tax — it does not⚠️ Missing the tax filing deadline or forgetting to elect the regime
💡 Strategic Considerations
📌 Consider moving after July 2 to avoid being considered tax resident in Italy for that calendar year, if needed📌 Always verify the ISTAT population data before choosing your municipality📌 Keep full documentation of pension source, previous residency, and municipal registration
🏛️ Final Notes
The 7% tax regime is not only a tax incentive — it's a lifestyle opportunity. With proper planning, it offers:
✔️ Simplicity and tax certainty✔️ A predictable annual tax burden✔️ Freedom from complex asset reporting✔️ A welcoming environment for retirement in charming Italian towns
⚠️ But it must be handled carefully — especially in terms of eligibility, timing, and reporting. A wrong step (wrong town, wrong filing) can make you ineligible or expose you to audit and penalties.
🤝 How Move to Dolce Vita Can Help
At Move to Dolce Vita, we provide full support to foreign retirees considering a move to Italy. Led by Italian tax lawyer Marco Mesina, we help you relocate with confidence and peace of mind.
We offer:
✔️ Pre-relocation tax and municipality eligibility analysis✔️ Support with immigration, residency registration, and Anagrafe filing✔️ Election of the 7% regime in your tax return✔️ Ongoing tax compliance and strategic planning✔️ Clarifications on international pension taxation and treaty application
Start Your Italian Retirement Smart
Thinking about moving to Italy with a foreign pension? The 7% regime could transform your retirement plans — if you apply it correctly.
👉 Want to check if your town qualifies?👉 Need to confirm your pension eligibility under treaty rules?👉 Want your tax return handled professionally?
Contact us today.
