Italy expands 7% tax break to 74 more towns for foreign retirees

Italy widens the 7% tax break for foreign retirees

Italy now lets more foreign retirees use its 7% flat tax regime after it expanded the population cap for eligible southern towns from 20,000 to 30,000 residents. The change took effect April 7, 2026 and adds 74 municipalities, many of them in Campania, Sicily and Puglia.

The regime lasts 10 years and applies to foreign-source income, including pensions, rentals and investments, for retirees who move tax residence to qualifying areas. It also exempts participants from wealth taxes on foreign assets and foreign asset reporting.

Who can use it

The rule is aimed at foreign pensioners, including AIRE-registered Italians who have lived abroad for at least 5 years. It doesn't cover active workers or digital nomads without qualifying pension income.

Qualifying retirees must move their tax residence to an eligible town and keep Italian residency for more than 183 days a year. The tax applies to all foreign income, even if the pension is small, while Italian-source income is taxed under normal rules.

What retirees need to do next

Applicants elect into the regime on their first Italian tax return, due the following year. The 10-year clock starts with the first full tax year of Italian residency and there’s no split-year treatment.

Newly eligible towns include Pompeii, Noto, Ostuni and Roseto degli Abruzzi. Retirees should check the latest town list and wait for further guidance from the tax agency before filing, especially if they moved in 2026. Read our full Italy guide for the complete picture and check nomad news for more updates.