Italy's 7% flat tax regime for foreign pensioners

According to the Agenzia delle Entrate, Italy's tax agency, individuals with pension income paid by foreign entities who transfer their tax residence to Italy can opt for a special regime: a 7% substitute tax, replacing Irpef (Italian income tax), on any category of income produced abroad, for each of the nine tax years the option is valid. The legal basis is Article 24-ter of the Income Tax Code (TUIR).

Source: Agenzia delle Entrate — Regime opzionale per i pensionati esteri, read 8 October 2026.

The regime applies if you move your residence to a municipality with a population of no more than 30,000 in one of these regions:

• Sicily, Calabria, Sardinia, Campania
• Basilicata, Abruzzo, Molise and Puglia

The agency notes the limit has been 30,000 since 7 April 2026; before that it was 20,000. It also applies to towns of up to 30,000 people affected by the 2009 L'Aquila earthquake or the 2016 Central Italy earthquakes.

The population figure that counts is ISTAT's official count on 1 January of the year before your first year under the regime — and it stays fixed for the whole option, as long as you don't move. From your second year, you can move to another qualifying town without losing the regime.

For a retiree drawn to southern Italy's villages and coastline, the regime can make a real difference. Tax rules depend on your circumstances and your home country's tax treaty with Italy, so take professional advice before you opt in — the Agenzia delle Entrate's guidance sets out the full conditions.

Living in Italy as a non-EU retiree usually also means the elective residence visa and, once resident, registering with the national health service — our Italy guides cover both.