Seven per cent on everything you earn abroad. For ten years.

Not just the pension — all foreign income. The conditions are precise, and in April 2026 the map of eligible towns grew considerably.

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What the regime gives you

Article 24-ter allows a person who moves their tax residence to Italy, holding a pension paid by a foreign entity, to apply a substitute tax of 7% in place of ordinary Italian taxation.

The detail that surprises people: it does not apply only to the pension. It covers all income of foreign source — pensions, dividends, interest, royalties, rents, capital gains, and proceeds from the liquidation of foreign companies. One flat rate, across the whole foreign side of your affairs.

It runs for ten consecutive tax years, and it also removes the foreign asset reporting obligation and the IVIE and IVAFE charges on the assets it covers.

For a retiree drawing 60,000 euro a year from abroad, ordinary Italian taxation would take a substantial progressive bite. Seven per cent takes 4,200 euro. Across ten years the difference is not marginal — it is the difference between two standards of living.

The four conditions

  • A foreign pension. You must hold pension income paid by a foreign entity. A state pension, an occupational scheme or a private arrangement can all qualify, but the payer must be foreign.
  • Five years of non-residence. You must not have been tax resident in Italy in the five tax periods preceding the one in which the option takes effect.
  • A qualifying municipality. You must transfer your residence to a municipality in one of eight southern regions — Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicily or Sardinia. There is also a separate provision for certain municipalities affected by earthquakes, with a threshold of 3,000 inhabitants.
  • A cooperating country of origin. You must arrive from a country with which Italy has an administrative cooperation arrangement in tax matters. Most of the world qualifies; a handful of jurisdictions do not.

The map just got bigger

Until recently the population ceiling was 20,000 inhabitants, which confined the regime to genuinely small towns and made it impractical for many people who wanted hospitals, airports and a functioning high street nearby.

On 7 April 2026, article 26 of Law 34/2026 raised that threshold to 30,000 inhabitants. It sounds like a technicality. It is not: it brought a large number of substantial coastal and provincial towns into scope, in all eight regions.

If you looked at this regime a year ago and concluded that nowhere suitable qualified, that conclusion is now out of date.

Checking eligibility means checking the official population figure of the specific municipality, not an estimate — and doing it before you sign anything.

What people get wrong

  • Assuming it is only for the pension. Many people elect the regime and continue to declare their investment income under ordinary rules, paying more than they need to. The substitute tax covers the whole foreign side.
  • Buying the house first. The property is chosen, then the municipality turns out to be over the threshold, or in the wrong region. The order is: verify, then buy.
  • Overlooking the country of origin condition. The cooperation requirement is easy to satisfy and easy to forget.
  • Moving in the wrong half of the year. Italian residence is acquired for the whole year or not at all. A transfer completed too late means starting the ten-year clock a year later than planned.
  • Ignoring the home country. Some pensions remain taxable only in the paying state under the applicable treaty — in which case the 7% may be doing less work than expected. Government service pensions in particular often behave differently.

Compared with the alternatives

The 7% regime is not the only route, and it is not automatically the best one.

  • Against ordinary taxation, it wins comfortably for most retirees with meaningful foreign income — but not for someone whose foreign income is modest and who would rather live in Milan or Florence.
  • Against the neo-resident flat tax at 300,000 euro, it wins for everyone except those with very large foreign income, where a fixed payment beats a percentage.
  • The trade-off is not fiscal but geographic: the 7% regime requires you to live in the south, in a town of limited size, for the duration.

Sixty seconds and six questions will tell you which of the Italian regimes is likely yours. The Tax Check is free.

Frequently asked questions

Does the 7% apply only to my pension?

No. It applies to all income of foreign source — pension, dividends, interest, royalties, rents and capital gains alike. This is the most commonly misunderstood feature of the regime.

Which towns qualify?

Municipalities in Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicily and Sardinia with a population of up to 30,000, following the increase from 20,000 that took effect on 7 April 2026. A separate 3,000-inhabitant provision applies to certain earthquake-affected municipalities.

How long does it last?

Ten consecutive tax years from the year the option takes effect. It cannot be renewed afterwards.

Can I move house during the ten years?

Within the eligible municipalities, yes. Moving to a town outside the qualifying set ends the regime.

Do I still have to report my foreign bank accounts?

Not for the assets covered by the regime: the RW reporting obligation and the IVIE and IVAFE charges do not apply to them. For many retirees this administrative relief matters almost as much as the rate.

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