Italy’s 7% Tax Regime for Foreign Pensioners

Retire in Southern Italy with a Flat 7% Tax on Foreign Income

Italy offers one of the most attractive retirement tax incentives in Europe. The Italian 7% pensioners’ tax regime allows foreign retirees to relocate to Southern Italy and benefit from a flat 7% tax on all foreign-source income for up to 10 years.

This regime combines substantial tax savings, legal certainty, and an exceptional quality of life, making Italy one of the most competitive retirement destinations in Europe for internationally minded pensioners 🇮🇹

At Move to Dolce Vita, we assist retirees through every step of the relocation process, ensuring that the 7% regime is applied correctly and safely.

What Is the Italian 7% Pensioners’ Tax Regime?

The Italian 7% tax regime, introduced under Article 24-ter of the Italian Tax Code, is a special tax incentive for foreign pensioners who transfer their tax residence to specific municipalities in Southern Italy.

Under this regime, all foreign-source income is subject to a substitute tax of 7%, replacing the ordinary Italian progressive income tax rates, which can reach 43%. The regime may be applied for a maximum of 10 consecutive tax years.

A detailed technical explanation of how the regime works, including legislative references and practical examples, is available in our in-depth guide on the Italian 7% pensioners’ tax regime, which we regularly update based on official tax authority guidance.

Who Can Apply for the 7% Tax Regime?

Eligibility is strictly regulated. To access the regime, the applicant must meet all of the following conditions.

Core Requirements

The individual must receive a foreign pension, either public or private.
They must not have been tax resident in Italy for at least five years prior to the transfer.
They must transfer their tax residence to an eligible municipality located in Southern Italy.
They must effectively live in Italy and complete the official registration with the local municipality.

The regime is not automatic. It requires careful planning, correct residency registration, and a formal election in the Italian tax return. Many of the most common doubts raised by retirees are addressed in our dedicated Q&A on Italy’s 7% tax regime, which clarifies eligibility and procedural issues.

Which Income Is Taxed at 7%?

The 7% flat tax applies to all foreign-source income, regardless of its nature. This includes foreign pensions, interest and dividends from investments held abroad, rental income from foreign real estate, capital gains realized outside Italy, and any other income produced outside Italian territory.

In practice, if the income is generated outside Italy, it may fall under the 7% substitute tax.

Italian-source income, on the other hand, remains subject to ordinary Italian taxation and must be carefully managed to avoid unexpected tax exposure.

How Long Does the 7% Regime Last?

The regime may be applied for a maximum period of 10 tax years, starting from the first year in which Italian tax residency is established. Once the 10-year period expires, the regime cannot be renewed.

The benefit may also be lost before expiration if the legal requirements are no longer met, such as relocating to a non-eligible municipality or losing Italian tax residency.

During the application of the regime, foreign assets are not subject to Italian wealth taxes, and there is no obligation to file foreign asset monitoring forms. These aspects are explained in greater detail in our practical guide to the 7% pensioners’ tax regime, which is particularly useful for retirees with diversified international assets.

Where Do You Need to Live? Eligible Areas

To qualify for the regime, retirees must establish tax residence in an eligible municipality, typically located in Southern Italy. Eligible regions include Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicily, and Sardinia.

Municipalities generally must have fewer than 20,000 inhabitants and fall within the scope of the applicable legislation.

Selecting the correct municipality is a critical step. A wrong choice can result in the loss of the tax regime. Several location-related questions are addressed in our Q&A section on the Italian 7% tax regime, which helps retirees understand how municipal eligibility works in practice.

Why the 7% Pensioners’ Regime Is So Attractive

From a tax perspective, the regime offers a flat and predictable 7% tax burden, no Italian taxation on foreign wealth, and significantly simplified compliance compared to the ordinary Italian tax system.

From a lifestyle perspective, retirees benefit from a lower cost of living, access to Italy’s public healthcare system, a mild climate, and the opportunity to live in authentic Italian towns away from mass tourism 🌍

For many international pensioners, this combination makes the 7% regime one of the most attractive retirement solutions currently available in Europe.

How Move to Dolce Vita Assists You

The Italian 7% tax regime is extremely advantageous, but technical errors can have serious consequences.

Our assistance includes eligibility and tax feasibility analysis, relocation timing and tax residency planning, municipality selection and residency registration, support with visas and residence permits when required, correct election of the 7% regime in the Italian tax return, and ongoing tax compliance and advisory services.

All services are coordinated by Marco Mesina, Italian tax attorney, founder of Move to Dolce Vita, and lawyer admitted to the Milan Bar Association, ensuring a legally robust and tax-efficient approach.

Is the 7% Regime Right for You? Let’s Find Out

Every retirement project is unique. Pension structure, country of origin, asset composition, and family circumstances all play a role in determining whether the 7% regime is the optimal solution.

Contact us for a personalized assessment and discover whether relocating to Southern Italy under the Italian 7% pensioners’ tax regime can significantly reduce your tax burden while allowing you to enjoy retirement in Italy with confidence and peace of mind.

Move to Dolce Vita
Your trusted partner for relocating to Italy legally, tax-efficiently, and without stress.

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