What is the 7% regime for retirees in Italy?

A substitute tax of 7% on all foreign income for ten years, for holders of a foreign pension who settle in a qualifying municipality of up to 30,000 inhabitants in southern Italy.

Does Italy tax my home abroad if I retire there?

As an Italian resident the property is reportable and subject to IVIE, and rental income enters the Italian return, unless a special regime applies.

The dream is well documented. The arithmetic usually is not.

Q: Should I take my pension lump sum before moving to Italy?

Timing can matter significantly. Lump sums are treated very differently across treaties and the decision cannot be reversed once taken.

Where your pension is taxed, what healthcare costs, and which regime applies — settled before you move, not discovered afterwards.

Request a confidential assessment

Forbes Top 100International Accounting AwardsACCAICAEWLBS Executive Education

Where your pension is actually taxed

The first thing to establish is not the rate. It is which country has the right to tax the pension at all, and that depends on the applicable double tax treaty and on the kind of pension.

Private and occupational pensions are, under most treaties, taxable only in the country of residence. Move to Italy, and Italy taxes them.
Government service pensions usually behave the opposite way: they typically remain taxable only in the paying state, whatever your residence. This catches a great many former civil servants, teachers and military personnel by surprise.
State social security pensions vary by treaty and have to be checked individually rather than assumed.

The practical consequence is that two neighbours in the same Italian town, both retired, both drawing the same amount from the same country, can face completely different Italian tax positions.

The 7% option, and what it costs you in geography

Italy offers retirees with foreign pensions a substitute tax of 7% on all foreign income — not merely the pension — for ten years, provided the residence is transferred to a qualifying municipality in one of eight southern regions.

Since 7 April 2026 the population threshold has risen from 20,000 to 30,000 inhabitants, which brought a great many workable coastal and provincial towns into scope. If you dismissed this regime a year ago because nowhere suitable qualified, that judgement is now out of date.

The condition is real, though, and it is geographic rather than fiscal: for ten years, you live in the south, in a town of limited size. That suits some people entirely and others not at all — and it is worth being honest about which you are before optimising around it.

Healthcare, and the part nobody budgets for

Access to the Italian national health service depends on your status. EU pensioners transferring residence can generally register through the S1 route, with the cost borne by the paying state. Non-EU retirees typically register voluntarily, paying an annual contribution calculated on income, or hold private cover.

The service is good and inexpensive by international standards. What catches people out is the gap: the weeks between arrival, residence registration and enrolment, during which you are covered by neither system. It is entirely manageable, and entirely unpleasant if unplanned.

IMU on a second home, and the ordinary running costs of Italian property.
IVIE and IVAFE on property and financial assets kept abroad, outside a special regime.
RW reporting of foreign accounts and investments, with penalties attached to the omission itself.
Succession: Italian inheritance tax follows residence and reaches worldwide assets.

The book behind this page

The Italian Jungle — coming soon

Retiring in Italy

The 7% Southern Regime, Foreign Pensions, Healthcare and Wealth

The fourth volume of The Italian Jungle takes the whole retirement question apart: how each type of pension is treated, whether the 7% regime fits your life and not merely your spreadsheet, how healthcare enrolment actually works, and what happens to your estate. Leave your email and I will tell you the moment it is out.

Frequently asked questions

Will Italy tax my foreign pension?

Usually yes for private and occupational pensions, which most treaties make taxable only in the country of residence. Government service pensions typically remain taxable in the paying state instead. It depends on the treaty and on the type of pension.

Do I have to live in the south to get a tax break?

For the 7% regime, yes: it requires residence in a qualifying municipality of up to 30,000 inhabitants in one of eight southern regions. Other regimes carry no geographic condition.

Can I access Italian healthcare as a retiree?

Generally yes. EU pensioners usually register through the S1 route; non-EU retirees typically enrol voluntarily against an income-based annual contribution or hold private cover.

What happens to my house back home?

It remains yours, but as an Italian resident it becomes reportable and subject to IVIE, and any rental income enters your Italian return, unless a special regime covers it.

Should I move before or after I start drawing my pension?

It can matter a great deal, particularly where a lump sum is involved. Lump sums are treated very differently across treaties and are one of the few decisions that cannot be undone.

Continue reading

Book a consultation