← The guide

Guide · Money

The 7% flat tax: who qualifies, and which towns count

Italy's best-kept retirement incentive is a town-by-town decision, not a national discount.

What it is

Since 2019, Italy has offered foreign pensioners an optional tax regime (article 24-ter of the tax code): move your tax residence to a qualifying town, and all of your foreign-source income — pension, dividends, interest, rents from abroad — is taxed at a flat 7% instead of ordinary Italian rates, which run from 23% upward. The regime lasts for the tax year you move plus the nine following — ten years in all — and it replaces regional and municipal surtaxes too. As a bonus, you are exempt from the foreign-asset reporting (Quadro RW) and the foreign wealth taxes (IVIE/IVAFE) that otherwise apply.

The four requirements

1. You draw a pension from a foreign payer — Social Security, a state pension, or a private pension paid by a non-Italian entity. (An Italian INPS pension alongside does not disqualify you, but a foreign one must exist.)
2. You were not tax-resident in Italy for the five tax years before the year you elect the regime.
3. You move from a country with a tax-cooperation agreement with Italy — the US, UK, and Canada all qualify.
4. You register as resident in a qualifying town — and actually live there. The Agenzia delle Entrate checks that the move is real: registry entry alone, with your life clearly still elsewhere, is the classic way people lose the regime.

Who it actually pays for

The 7% regime is for everybody who qualifies, not for millionaires — there is no income or wealth threshold (the €200,000-a-year lump-sum regime under article 24-bis is the one designed for the very rich, and it is a different animal entirely). But “open to everybody” is not the same as “pays for everybody”. Three things decide it:

• The savings scale with your income. The 7% replaces ordinary Italian rates of 23% to 43% plus surtaxes — the more foreign income you have, the more the flat rate saves you each year.
• Small pensions can do worse. The 7% is charged on your gross foreign income with no deductions and no credits. Under ordinary taxation, a modest pension benefits from pension deductions that can push the effective rate near zero — so below a certain income, electing 7% actually costs more than it saves.
• You give up the Italian foreign tax credit on income kept inside the regime. If your home country withholds tax at source — the US does on dividends — that foreign tax becomes an added cost instead of an offset, unless you carve that country out of the regime (a per-country election exists). Whether carving out wins is arithmetic, not instinct.

Where it clearly shines: mid-to-high foreign income, and Americans in particular — the US credits the Italian 7% against US tax on the same income, so the net effect is close to paying US rates only, with Italy's foreign-asset reporting and wealth taxes gone on top.

Want to know where your break-even sits? Whether the 7% regime pays for your pension, Social Security, dividends, and rental income is a personalized analysis — treaty allocation, home-country crediting, and the carve-out question all move the answer. That mapping is part of every Feasibility Review: book your intro call and we run your actual numbers.

Where it applies

The town must be in one of eight southern regions — Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, or Puglia — or on the designated lists of earthquake-zone comuni from the 2009 L'Aquila and 2016/2017 central-Italy events (which is how parts of Lazio, Umbria, and Marche qualify).

Since 7 April 2026, the town's population must be 30,000 or under — raised from 20,000 by the 2026 PMI law (art. 26, Law 34/2026), which brought dozens of mid-size southern towns into the regime for the first time. The population that counts is the ISTAT figure at 1 January of the year before you move, and later changes don't matter as long as you stay put (Agenzia delle Entrate, Circular 21/E/2020). Move to a different town, and the new town is re-checked.

Towns that qualify — well-known examples

Several thousand comuni qualify, so no honest list on a web page is complete. These are names retirees ask us about, all under the 30,000 line at the latest ISTAT count:

• Sicily: Taormina, Cefalù, Noto, Castellammare del Golfo
• Puglia: Alberobello, Polignano a Mare, Locorotondo, Otranto, Galatina
• Calabria: Tropea, Pizzo, Scilla
• Campania: Sorrento, Positano, Amalfi, Agropoli
• Basilicata: Maratea, Castelmezzano
• Abruzzo: Sulmona, Guardiagrele, Penne, Pacentro
• Molise: Isernia, Agnone
• Sardinia: Bosa, Castelsardo, Santa Teresa Gallura, Villasimius
• Earthquake-zone comuni (Lazio, Umbria, Marche, Abruzzo): Norcia, Amatrice, Accumoli — from the designated 2009/2016/2017 seismic lists, same 30,000 cap

Some famous names do not qualify — Syracuse, Lecce, Monopoli, Vasto, Termoli, and Alghero are all over the line. And watch the borderline cases: Ostuni has hovered right around 30,000 for years, so its ISTAT figure at the January before your move is the deciding document, not a blog post (including this one).

Before you count on it

The 7% regime is elected in your Italian tax return for the year you move, paid in one instalment, and it interacts with your home country's rules — the US still taxes its citizens worldwide, so treaty credits matter. This page is orientation, not tax advice: the regime should be confirmed with a commercialista who knows your specific income mix before you choose a town around it.