Italy provides an optional regime designed to attract pensioners receiving a foreign pension who move to specific areas: a 7% substitute tax on foreign-source income (Art. 24-ter).
1) Who it is for (high-level)
The regime targets individuals who receive a pension paid by foreign entities, move their Italian tax residence to qualifying areas/municipalities, and meet prior non-residence and other conditions.
2) What the 7% applies to
The regime is commonly described as applying to foreign-source income across categories, within the scope of the option, replacing ordinary progressive taxation on those foreign items.
3) 2026 update: more eligible municipalities (up to 30,000 inhabitants)
A key expansion highlighted in 2026 commentaries is that eligible municipalities in Southern Italy can include those up to 30,000 inhabitants.
4) Duration and opting in
The option is described as lasting up to nine tax years and is generally exercised through the relevant tax return mechanism.
5) Why a pre-move review matters
Many retirees have multiple foreign income streams (pension, investments, rentals, capital gains). Before choosing the 7% option, you should confirm Italian tax residence timing, confirm the target municipality qualifies, and assess double tax treaty interaction and foreign withholding.
If you are considering relocating to Italy as a retiree, we can help you verify eligibility, select a qualifying municipality, and build a compliant relocation timeline.
Disclaimer
Informational content only. Eligibility and suitability depend on your personal facts and country of origin.
