7% Flat Tax for Foreign Pensioners: More Italian Towns Now Qualify
If you’re a foreign pensioner considering a move to southern Italy, the already-attractive 7% flat tax regime has just been made more accessible. From 7 April 2026, the population threshold for eligible municipalities in the Mezzogiorno has been raised from 20,000 to 30,000 inhabitants, opening the door to medium-sized towns with better infrastructure and services than the smaller villages that previously qualified.
What has changed?
The amendment is introduced by Article 26 of Law No. 34 of 11 March 2026 (the Legge PMI), which modifies Article 24-ter of the Italian Tax Code. The demographic cap rises by 10,000 inhabitants — everything else about the regime remains exactly as before. It applies to pensions from previous employment, or a State (old-age) pension.
How the regime works
Under Article 24-ter, eligible individuals pay a flat substitutive tax of 7% on all foreign-source income — not just their pension, but also dividends, interest, capital gains, and rental income — for ten consecutive tax years. To qualify, you must not have been Italian tax resident in any of the five years preceding your application, and you must transfer your tax residence to an eligible municipality in one of the eight qualifying southern regions: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, or Puglia.
Worth knowing
Pensioners with significant foreign assets may also want to consider the alternative neo-residents regime (Article 24-bis TUIR), which offers a fixed annual substitute tax of €300,000 with no geographical restriction. The best option depends on the volume and composition of your foreign income.
If you are already benefiting from the regime under the previous rules, nothing changes for you: the amendment has no retroactive effect.
Thinking about relocating to Italy on a foreign pension? Get in touch to find out whether the 7% flat tax regime could work for you.
