Italy has always held a special place in the world’s imagination. The art, the cuisine, the rhythm of everyday life — it’s not just a country but a way of living. In recent years, Italy has also become a magnet for another reason: its welcoming stance toward foreign nationals and returning Italians through a range of special tax regimes that make relocation financially appealing.

These initiatives are not random incentives — they are part of a national strategy to revitalize small towns, attract skilled talent, and stimulate local economies. Whether you’re a retiree seeking a peaceful village life, a professional moving your work to Italy, or an entrepreneur looking for fiscal stability, Italy’s tax system offers tailored solutions that can dramatically reduce your tax burden while improving your quality of life.

A New Era of Fiscal Attraction

Since 2017, Italy has introduced several programs under its Income Tax Code (TUIR) designed to attract different categories of residents. Collectively, these regimes have positioned Italy as one of Europe’s most innovative and competitive destinations for relocation.

The four principal regimes are:

• The Impatriate Regime (Regime degli Impatriati) – for professionals transferring to Italy.
• The 7% Flat Tax for Foreign Pensioners (Art. 24-ter) – for retirees relocating to smaller municipalities.
• The Flat Tax for High-Net-Worth Individuals (Art. 24-bis) – for investors and global citizens.
• The Researchers and Academics Regime (Rientro dei Cervelli) – for scientists and educators returning or relocating to Italy.

Each offers a different type of incentive — but all share a common goal: to attract human and financial capital and to repopulate Italy’s smaller communities.

The 7% Flat Tax Regime: A Golden Opportunity for Retirees

Among these, the 7% flat tax for foreign pensioners has attracted the most attention internationally. Introduced in 2019, this special tax regime allows qualifying retirees to pay a flat 7% tax rate on all foreign-sourced income, including pensions, for up to nine years — instead of Italy’s standard progressive income tax rates (which range from 23% to 43%).

Key Requirements:

• Non-residency for the prior five years: You must not have been an Italian tax resident in the five years before your move.
• Foreign pension income: You must receive a qualifying pension or annuity from abroad.
• Residence in an eligible town: You must establish residency in a municipality with fewer than 20,000 inhabitants located in southern or certain central regions of Italy.
• Eligible regions include: Sicily, Calabria, Sardinia, Campania, Basilicata, Puglia, Abruzzo, and Molise — with recent expansions into parts of Marche, Umbria, and Lazio affected by earthquakes.

The benefit applies for up to nine consecutive tax years. Enrollment is done via your annual Italian tax return by checking the “7% substitute tax” option.

For many retirees, the savings are transformative. A foreign pension of €50,000 per year would result in just €3,500 of tax — compared to ~€15,000 or more under Italy’s regular income tax. Over a decade, that difference can fund a comfortable and culturally rich retirement.

Italy’s “7% Towns”: Where Life and Lifestyle Intersect

The towns that qualify for the 7% regime are spread across some of Italy’s most beautiful yet underpopulated regions. They include coastal villages, hilltop medieval towns, and tranquil inland communities, many of which offer remarkably low costs of living and high quality of life. I've been living in Italy for nearly 7-years and while I haven't been to all of these destinations, I know enough to feel comfortable with these descriptions below.

Here are a few examples that capture the diversity of life under the 7% program:

Tropea (Calabria)

Perched dramatically above the Tyrrhenian Sea, Tropea has been named one of Italy’s most beautiful villages. Retirees enjoy spectacular views, beaches, and an affordable lifestyle where the pace is as gentle as the sea breeze.

Cefalù (Sicily)

A stunning coastal town under the shadow of La Rocca, Cefalù blends history and leisure. With its Norman cathedral and vibrant seaside promenade, it offers both culture and convenience — and a supportive expat community.

Polignano a Mare (Puglia)

Known for its whitewashed homes and turquoise coves, Polignano offers Apulian charm with great connectivity to Bari and the broader Adriatic region. Affordable housing, quality healthcare, and year-round sunshine make it an ideal destination for retirees.

Venosa (Basilicata)

For those seeking a truly authentic experience, Venosa — birthplace of the poet Horace — offers quiet living among vineyards and Roman ruins. Cost of living is low, and community life is strong.

Camerino (Marche) and Norcia (Umbria)

These central Italian mountain towns, added to the regime after the 2016 earthquakes, combine breathtaking scenery with a sense of renewal. They attract retirees seeking meaning and contribution alongside beauty.

Why Pensioners Choose the 7% Towns

• Significant tax savings: The flat rate simplifies compliance and dramatically reduces taxes.
• Exemption from foreign asset reporting (RW form): Pensioners under this regime are not required to report foreign-held assets, easing bureaucracy.
• Lower cost of living: In many towns, a couple can live comfortably on a modest pension.
• Community and revitalization: By moving into these towns, retirees play an active role in helping rejuvenate local economies and preserve cultural heritage.
• Italian quality of life: From the food and wine to the warm social fabric, these towns offer the best of la dolce vita without the crowds or costs of big cities.

Other Tax Regimes for New Residents

The Impatriate Regime

For professionals relocating to Italy for work, this regime allows up to 50% of Italian-source income to be exempt from taxation for five years (and in some cases up to ten). It is ideal for remote workers, executives, freelancers, or entrepreneurs moving to Italy.

The High-Net-Worth Individual (HNWI) Flat Tax

Introduced in 2017, this program lets new residents pay a flat €200,000 annual tax on all foreign income, regardless of amount, for up to 15 years. It is designed for wealthy individuals and investors looking to establish long-term residence in Italy with maximum tax certainty.

The Researchers and Academics Regime

A special regime for scientists and professors relocating to Italian universities or research institutions. Eligible income is 90% tax-exempt for up to 13 years, depending on family circumstances — one of the most generous academic incentives in Europe.

Choosing the Right Regime

Each regime serves a distinct purpose, and the right choice depends on your background, income source, and life goals. For retirees, the 7% regime offers simplicity and savings. For professionals and entrepreneurs, the impatriate regime provides flexibility and incentives for Italian-source income. And for those with significant global income, the €200,000 flat tax ensures predictability and ease.

No matter which path fits your situation, the core message is clear: Italy is open for new beginnings. These regimes are designed not only to attract people but to integrate them — to help new residents become part of Italy’s living tapestry.

Final Thoughts

Relocating to Italy today is about more than a change of scenery — it’s a chance to build a new chapter within a country actively encouraging renewal and diversity. With well-structured fiscal regimes and an unparalleled lifestyle, Italy stands out as one of the most rewarding destinations for global citizens seeking both inspiration and financial sense.

Whether you’re considering the sunlit shores of Calabria or the serene mountains of Umbria, Italy’s tax incentives make it easier than ever to say benvenuti a casa — welcome home.

About the Author

David Cantor is an international immigration lawyer and founder of Relocate.world. He advises individuals and families navigating global relocation, with a focus on Italy’s evolving residency, tax, and mobility frameworks.