Italy’s 7% flat tax regime for retirees is one of many flat tax regimes that Italy offers for foreigners looking to call the country home. This particular regime just got more appealing to those with foreign pensions. We discuss why below.
What is the 7% flat tax regime?
In general, the 7% flat tax regime applies to non-Italian pensions, investments, rental income, and capital gains for up to 10 years when the person becomes an Italian tax resident (residing in Italy longer than 183 days per year). Along with this, there is no tax placed on foreign real estate or financial assets, and no requirement to report foreign holdings in the Italian tax return. The individual also must reside in a particular municipality in Southern Italy (more on this below). Finally, they must also have come from a country with a double taxation treaty, such as the U.S., UK, or another EU country.
What has changed in 2026
On April 7th, it was announced that the municipality requirements for the 7% flat tax regime would change. Before, qualifying municipalities had to have only 20,000 residents, while now that number has increased to 30,000. This is significant because roughly 74 mid-size towns now qualify, including Pompei, Taormina, Ostuni, and Noto, beautiful, historic places in sought-after regions like Puglia, Sicily, and Campania. Also, with larger towns comes access to better infrastructure and transportation services. There is also a better chance that foreign residents will be able to communicate in English, and that healthcare services will be more widely available.
How to know if you qualify
Persons who have not been an Italian tax resident for the past five years and hold a foreign pension can potentially qualify for the 7% flat tax regime. Note that this also includes Italian citizens, so long as they have resided outside of Italy (and formally registered with A.I.R.E.), so long as their pensions come from foreign sources. Finally, the person must also reside in a qualifying municipality which, as mentioned, is a town in Southern Italy (specifically Campania, Sicily, Puglia, Sardinia, Abruzzo, Molise, and Calabria) with 30,000 or fewer residents.
It is also important to note that there is no cap on your income.
Benefits of the regime
Along with owing less in taxes, those who qualify for the regime also have the benefit of exploring lesser-known areas of Italy. It is particularly rewarding for those who would like to avoid larger cities and the typical “tourist bubbles” of Italy, such as Rome, Florence, and Venice. By experiencing life in a smaller municipality, you would have the opportunity connect with a more local side of Italy, with the tranquility of the countryside and less crowded spaces.
Other tax regimes to consider
Along with the 7% flat tax described above, there is also a flat tax regime for high-net-worth individuals, placing a tax of €300,000 on qualifying persons (and an additional €50,000 for qualifying family members). There is also a flat tax for individual businesses, benefitting new businesses with certain revenue and expenses limits.
As always, it is advised to talk to a qualified tax expert to ensure that your own circumstances fit one of these regimes.
Conclusion
Interested in learning more or seeing how you can benefit from the 7% flat tax regime or one of the others? Italian Citizenship Assistance can help! Contact us today at [email protected].
